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The Brihanmumbai Municipal Corporation (BMC) has issued credit notes worth around Rs 350 crore to contractors in order to build houses for project-affected people (PAP) at Mulund, Bhandup and Prabhadevi. The contracts have been awarded to Swaas Construction Co, New World Landmark LL, and Classic Promoters & Builders, respectively. Instead of paying money, BMC issues credit notes to contractors undertaking such projects. The contractors or developers can use these credit notes to pay their municipal taxes or premium charges to BMC in future. They can even sell these credit notes to other contractors for money.
According to civic sources, most of the credit notes have been given to a contractor executing the Mulund project along with transfer of development rights (TDR) to construct over 7,439 PAP houses. Interestingly, the construction work hasn’t even started yet. A civic official justified it on the grounds that the contractor had already transferred the private land ownership of the plot in BMC’s name. The credit notes paid in advance to the contractor were for the mobilisation of resources to start work.
BMC aims to construct 40,000 PAP houses (each 300 sq ft) under the credit notes scheme. A work order to build 15,000 PAP tenements has already been issued to five contractors. BMC stated that work of its several infrastructure projects is affected due to several structures coming in their way. So, it decided to issue a work order for around 15,000 PAP houses, mostly in the eastern suburbs and Prabhadevi-Worli area. It shortlisted contractors for the work and cleared the work order in haste, admitted civic officials.
To build the 15,000 PAP houses, BMC provided two options to contractors. Under the first, contractors should have their private land parcel to construct the PAP houses for BMC. BMC pays them in TDR and credit notes which they can sell in the market to recover their expenses and profit. Under the second option, BMC provides its own land parcel to contractors to construct houses and pays them in the form of TDR and credit notes.
The Mulund, Bhandup and one of the two Prabhadevi plots are private lands purchased by developers to build PAP houses. At three other locations, BMC provided its land for it.
The civic officials said the credit notes’ worthiness will be equal to the money which will be calculated according to the market value of the plot at the time of signing the agreement. But there is no notification issued mentioning the credit notes valuation. The owner of credit notes can use them only to pay BMC for settling tax payments, purchasing TDR-FSI or other construction charges.
Civic officials admitted that the biggest legal hurdle in credit notes plan implementation is because there is no provision for them in MRTP Act. However, the state urban development department permitted BMC to implement the credit notes policy citing an earlier MMRDA precedent.
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