Business models for TOD financing - WRI Cities Hub · Ms. Jaya Dhindaw, Strategy Head –...

A product of WRI Ross Center for Sustainable Cities

Business models for TOD financing Workshop

28th February 2017

2 | www.WRIcitiesIndia.org

Introduction: Transit Oriented Development (TOD) seeks to optimize the use of land through walkable urban development located near high-quality public transit, combining housing, office, retail and/or other amenities. The use of TOD as an urban growth strategy is relatively new in India but it is recognized by the national government as a legitimate and effective guide for the future growth of cities. As a result, the concept of TOD has become increasingly popular across Indian cities. In July 2015, the Ministry of Urban Development approved the Transit Oriented Development Policy for Delhi through an amendment of the Master Plan for Delhi-2021, with an aim to address the growing problems of pollution, congestion and shortage of homes for the poor and middle class in the state. Globally, one of the larger issues with implementing TOD is with respect to identifying and addressing systemic financing gaps. While TOD is a powerful tool for creating livable neighbourhoods along good public transit, several types of barriers exist to effectively operationalizing TOD, mostly relating to financing and channelizing the same towards TOD implementation. While there is ample literature on “what to do,” especially with respect to planning-design aspects, there is little understanding of “how to do it” to make it a city-wide, equitable development strategy that includes all public and private stakeholders. While the TOD Policy has been introduced in Delhi and is up for testing through the launched pilot project, it is crucial to look at financing tools and mechanisms that can render it effective. Comprehensive financial planning for continuous flow of required resources for implementation and sustainable operation is fundamental to achieve the set target. Furthermore, the economic condition of the city, political will and capacity among stakeholders are factors that can dramatically influence TOD outcomes. The Financing Sustainable Cities Initiative (FSCI), an initiative of WRI Ross Center for Sustainable Cities, C40 Cities Climate Leadership Group funded by Citi Foundation, are helping cities develop business models to accelerate the implementation of sustainable urban solutions and TOD is one of the key focus areas. The goal is to identify the ingredients of business models from sustainable urban projects around the world and sharing the experiences of cities and investors on what to invest in, how to pay for it, how to mobilize investment capital and how to structure contracts and institutional frameworks that will facilitate TOD implementation.

The objectives: 1. Knowledge exchange and capacity building through stakeholder interactions. 2. Development of a common language and discourse on business models for investing in TOD

implementation. 3. Improve market conditions and enabling environments through cross-sector (public-private)

and multi-level (local-national) dialogue (e.g. new policy, funding mechanisms, etc.) 4. Help cities and key stakeholders advance investments on the ground with deep technical

assistance and capacity building provided by the initiative.

Session Note: India's urban population is expected to reach 600 million by 2031. A huge task lies ahead for the government in terms of developing infrastructure to accommodate this growth. To this end, the Ministry of Urban Development (MoUD) has recognized Transit Oriented Development (TOD) as the urban growth strategy of choice. TOD implementation typically entails long gestation periods and requires significant capital investments, often without definite returns. Hence, positioning TOD for suitable financing and developing concrete policy frameworks and regulations is a crucial element for its success.

http://www.c40.org/

http://www.citigroup.com/citi/foundation/


Between local, state and central government, transit agencies, business community, philanthropies/leaders, community and community based organizations, developers and financial institutions that provide resources and support to the TOD process, the amount of capital available for financing TOD is adequate, but needs to be properly channelized to facilitate implementation. The project proponents must identify all the components being financed in a TOD and the best finance model to achieve this. Despite widespread acceptance globally, TOD cannot advance in India until the question of finance - “where will the money come from, how will it be channelized and for what elements?” - is answered. To facilitate an understanding of viable business models for implementing TOD, WRI India organized a workshop session, with an aim to discuss the finance models currently in use for large scale infrastructure projects, along with a few innovative mechanisms, that could solve the logjam TOD faces in India. The workshop session served as a platform to convene, build stakeholder capacity, and enable dialogue for establishing common understanding on the financing and implementation process of TOD.

Session Design: Introduction and welcome by BMRCL

Introduction presentation by Ms. Jaya Dhindaw, Strategy Head, WRI India

Presentation on Business models for TOD financing by Ms. Prerna V Mehta, Manager, WRI India.

Group activity session including report back from the groups

Introduction & Welcome: Mr. Vasanth Rao, General Manager (Finance), BMRCL laid out the context and need for the event. He expressed that TOD is an exciting space and provides an opportunity to explore new ways of generating revenue for mega projects. He welcomed WRI India team members and facilitated detailed introductions of the presenters, Ms. Jaya Dhindaw and Ms. Prerna V Mehta. At this point he handed over the session to Ms. Dhindaw for starting the intended workshop.


Session proceeding: Ms. Jaya Dhindaw, Strategy Head – Sustainable Cities, WRI India explained that addressing and fighting lock-in that leads to unsustainable practices is necessary and solutions are out there. Highlighting the problems that cities face today i.e. sprawl, congestion and inefficiencies, she showcased WRI India’s approach towards sustainable development. She discussed WRI India’s work focus and elaborated on the work engagements in Bengaluru city through a detailed presentation on “Unlock Bengaluru” and a video clip on the same. The session was then handed over to Ms. Prerna V. Mehta for presenting on Business models for TOD financing. Ms. Prerna V. Mehta, Manager - Sustainable Cities, WRI India, opened the session with a round of participant introductions, followed by dividing the audience into three groups in order to facilitate the group activity session to follow. She set the context of the dialogue by emphasising on the need for adopting TOD as urban growth strategy quoting urban sprawl data of Tier - I & II cities as one of the critical issues.

Her presentation showcased the TOD policy framework for various Indian cities and states, followed by three crucial elements for implementation of TOD i.e. Design, Regulatory frameworks, Financing and the TOD project cycle. Prerna discussed the factors that make financing/funding a crucial factor in successful implementation of TOD and elaborated on what TOD investments entails. At this point she posed three questions to the participants, which are detailed in Box No.1 as below:


After discussion around the challenges and opportunities for TOD implementation, Prerna shared that one of the most important opportunity is to facilitate TOD implementation through a ‘business model approach’. Further she explained that the business model approach helps in systematic understanding of options, build common language for stakeholder dialogue and creates a context-specific approach. The presentation further highlighted the four crucial factors of TOD investments namely, 1) investment components 2) funding sources 3) delivery mechanisms and 4) financing products. She explained that these answer the critical questions of: What needs to be financed? What are the funding sources? How will the process materialize for delivery as well as recovery and where will the financing come from? Each component was discussed in detail. Besides, few global examples were given with details on TOD investment components along with listing what Bengaluru is already exploring and how national/state governments can strengthen the facilitation of TOD investments. At this point the session was opened for a group activity.

Group activity: The group activity was tailor-made for participants who were asked to prepare the business model flowchart pertaining to their capacity as transit providers and facilitators. They were asked to identify investment components, potential funding sources and delivery mechanisms. Following this, they also had to spell out how BMRCL could contribute to the implementation of TOD.

Box No.1 Q.1: What are the Challenges in TOD implementation? Participant’s responses:

“Given the many factors and unpredictability involved, quantifying costs and returns are difficult (even if financial sources are identified). Should have a way to be able to estimate these.”

“TOD is very capital intensive, so need partnerships between 2-3 big players. Need carefully constructed PPP’s and important aspects like what components are outsourced under regulation, should be clear.”

“Inelastic taxation structures – the concept of taxation itself needs to change; we are not used to flexible taxation structures in India.”

“In existing urban areas it is difficult to realise 4 FAR. Also most space is in the private domain, so it is difficult to acquire land/space for public uses.”

“Severely lacking capacity at the local level to implement TOD, for eg, BDA has 1 planner!” Q.2: What are the Opportunities for TOD implementation? Participant’s responses:

“Indian cities are already dense and diverse – there is inclination towards mixed use development and transit systems already have good ridership numbers.”

“Rather than inner developed areas, there is a better opportunity to create TOD projects in outer, urbanizing peripheries.”

Q.3: What needs financing? Participant’s responses:

“Transit infrastructure and mode integration.”

“Supporting physical and social infrastructure augmentation and improvements.”

“Affordable housing in TOD influence zones.”


Group - A: Investment Components: Starting with investment components and within that, the tangible assets, the first group identified physical infrastructure such as footpaths, cycle lanes, utilities, street lights, water and sanitation, public spaces, landscaping, public toilets etc. Land was also seen as one of the most important tangible assets, followed by the transit system comprising of the metro rail itself, tracks, stations and also related developments such as commercial or retail and parking - all allied infrastructure that one needs to build along with these transit systems. Coming to intangible assets, the group looked at improving connectivity-accessibility in the area around the metro line. Convenience in terms of location, safety, provision of community amenities and aesthetics also prove to add intangible value to the space. Within processes it is the pre-operative processes like planning, DPRs, staffing, resources, O&Ms, revenue collection, construction/implementation, monitoring and evaluation that were considered.

Funding sources: Coming to funding sources, which can be differentiated as incentives, revenues and own sources. Incentives would be government grants, the Urban Transport Fund and even cess collection that is part of any service that leads to betterment. BBMP budgets and allocations, MP/MLA funds could also be utilized for certain TOD components like bus stands, etc,


Revenues are of two types - Fare box and Non-fare box. o Fare box includes tickets and fines o Non-fare box includes advertising and commercial rentals, parking charges, air space rights

and naming rights, increased FAR leading to increased property taxes, betterment levies, private funding for transit facilities. For eg, along the ring road there are numerous IT companies and Corporates that require better transit facilities coming into their area and are willing to provide funds for the same, or provide facilities like a dedicated walkway from their workplace to the station, to encourage and facilitate employees to access the metro stations. This is done by subsidizing transit passes for employees. Funds could also be got by leveraging private CSR funding and making use of space around/under metro stations. BMRCL could have its own offices (at certain metro stations) to save on rental expenditures. Could also co-ordinate with other public transit agencies like Railways and BMTC to share land/facilities costs in multi-modal hubs (which would benefit transit agencies as well as commuters) - for eg. in Byapanahalli where railways, metro, buses come together. Also, solar panels on the roof could help reduce demand from the grid and get a rebate on electricity charges.

Own sources are the equity – bonds and debt that will be acquired for the project.

Delivery mechanisms: Delivery mechanisms would include various national and state policies supporting TOD planning and implementation. This is filtered down to city level Master Plans/City Development Plans where there would be TOD zones which have special Development Control Regulations (DCRs) meant to incentivise or promote TOD in the area. The legal entities would include, PPP for certain components and SPV driven projects that bring together a variety of stakeholders and each of them contribute to the development of such projects. Contractual obligations would include MoUs and lease agreements.

On BMRCL’s role: BMRCL could facilitate procurement of additional funding through CSR and MP/MLA LAD funds for improving areas around the metro stations. One aspect BMRCL may look into is reduce its overhead expenses - especially the rentals it pays for office space, and instead construct on land already available with them, connected to the metro stations. Multi-modal integration (MMI) would help share and reduce the burden on BMRCL.

Discussion: Q. What was essentially missed out was how the delivery mechanisms would be tied to the funding sources, and going a step further, how these elements would relate to the investment components. The group answered this taking the example of the transit components, for which, the funding source would be own revenue sources and the delivery mechanism could be through an Engineering, Procurement, and Construction contract. If a commercial component is considered, the tangible asset would be the infrastructure around the metro station, funding source would be additional revenues from commercial space rents and the utilisation of advertisement and air space rights. The delivery mechanism could be a Public Private Partnership or a PPP combined with a SPV funding. When questioned about the capital revenue source, they explained that it would be through the public entity providing a grant as well as the private party bringing forward funds in the form of equity. The group was of the idea that it would aid the project better if there was a mix of funding sources, a hybrid system - which is a combination of equity and debt. Own source revenue may not be the ideal case.


Q. While indirectly it connects to the TOD project, when you say MMI, what exactly would be the role of BMRCL within the MMI? The kind of investment that BMRCL is undertaking to build a station, this could be complemented by a BMTC terminal or railway station supporting them. Ridership, connectivity, demand for space and in turn the rentals in the area all increase. The moment a such project comes into being, the usability of the space has increased. Q. Will BMRCL act as a coordinator amongst various stakeholders for the multi modal hub or will it provide space within its premises or will it take up the activity of making the connections and planning-design of the project? It should involve all these aspects. For example, like in the case of Byapanahalli, where metro, railways and city buses come together, BMRCL could facilitate the creation of a multi-modal hub, where land and other amenities are shared assets and costs are shared among the different transit agencies. In the case where BMTC owns the land, BMRCL could take up the role of facilitator. Q. It was mentioned that BMRCL could try and reduce their own overhead charges. Where does this saved expense go? When trying to save overheads like rent, the capital costs of building their own facilities are high, but in the long run, their operative cost reduces.

Comments from U. A. Vasanth Rao, General Manager - Finance, BMRCL

Two separate areas of thoughts were given by the group. The multimodal integration could happen in newer areas, where land is available. In developed areas where metro is already in place, care should have been taken to place stations or install bus stands in co-ordination. This has been successfully executed by the BMRCL. For example, Byapanahalli is connected to the railway station nearby and there is a bus terminus in the offing. Geentanjali Nagar is a similar case where there is the metro, KSRTC depot and a BMTC depot complimenting each other. However, the commercial component could have been better explored, if the transit systems came up at the same time.

The other point of BMRCL owning their own property to avoid rental expenses, the observation is that paying rents is a more viable and cheaper option that owning property, which will come with capital and taxation expenses. Revenue-wise we would earn good rentals from the space we development along with our metro stations … so its in fact better to earn higher rents on our properties and ourselves rent cheaper space elsewhere.

He discussed that the moment metro alignment route is finalised, automatically in those areas FAR can be increased as it is the best form of getting revenues. Those who want to make use


of the higher FARs along the corridor, GIS maps could be brought in to show which properties are eligible for higher FAR.

BBMP cannot go on increasing the radius up to which higher FAR could be availed. One of the instruments that could go a long way in promoting land monetisation is that the BBMP laws need to be a lot stricter than what it is today. If weak enforcement enables rampant violations and if those who violate go unpunished, why should those people who want higher FAR along transit corridors pay for the same? They could openly flout the rules and then hope for regularisation. One needs to create a market for Transfer of Development Rights (TDR).

He suggested TDR could be a multiplier that can be used for transaction. It is not popular today as it has not been given the level of importance it entails. BMRCL in lieu of payment of land acquisition compensation, can offer to pay through TDR. By this, the project costs can be reduced. For this to happen, BBMP must enforce the law, such that if a person is in violation of the law, the penalty ought to be paid by purchase of TDR. By buying TDR in the good market (to facilitate land acquisition for roads, parks etc) BBMP has managed to provide amenities and TDR also has been given a value. Thus, the laws ought to be more stringent for improvements to happen as an offshoot of metro rail connectivity.

Group - B Investment components The group felt that the investment components (what needs to be financed) resembled what was explained by group A. In addition to that, to make informed decisions, data is required. They suggested that it would also be important to put in place an ITS system (just like how BMTC is putting GPS systems into their buses to track them). It also important to analyse this data and make it open source.

Tangible components The group discussed that the tangibles would include multimodal integration along all station areas, TOD corridors and complete streets (not just enough land to put our infrastructure in place or sufficient for just the horizontal infrastructure - cannot think in isolation). They highlighted that the moment higher densities are considered, there is going to be a crunch for public and open space. It would be necessary to carefully analyse how requirements for public spaces can be adhered to. Such green and social infrastructure would have a sizeable monetary component. They suggested that it is necessary to consider land as a resource – on one hand, land being acquired for the project, and on the other, to buy land elsewhere as a land bank which can either be developed or traded later. In its efforts to realize TOD, BMRCL needs to become a profit making real estate agency in the city. Essentially, BMRCL would facilitate land pooling around the station area and then redevelop it (is this possible?). Other components to be financed would include station/ tracks/ transit systems, horizontal infrastructure, amenities and parking.


Intangible components These would include integration, connectivity, safety, accessibility (especially to open spaces), and predictability (everything around the TOD, you should be able to predict how long it takes to use - user should be able to plan the day to the last minute just by being along this TOD corridor. This also speaks of efficiency).

Processes Within the pre-construction phase, processes like policy formulation, planning and design (some amount of money needs to be invested in preparing DPRs etc.), procurement and tendering would be included. BMRCL needs to constantly be on the vigil for audits for environment safety etc., consultation, as it is necessary to know what we own and so some money ought to be put into surveys followed by acquisition of land. In the construction phase, quality control, monitoring and evaluation, operations and maintenance come into the picture.

Funding sources Primary funding sources would be the government. Financial sources would be banks and other international financial institutions. Innovative financing through taxation, betterment levy, bonds/ shares, property tax, through collection of stamp duty, cess collected through vehicle registration, fuel and through parking (maybe sale of parking lots or regular auctioning of parking/lots). Premium FSI (value capture) and advertisement and naming rights and leasing of own property.

Delivery mechanism The group suggested that we need to start with amendment to our existing rules and regulations. We want to create an SPV with committee heads like UD Secretary (Chairman), BDA (revenue collector). This would also include the BMRCL for operations and maybe an UMTA for planning and KTCPO (FAR, cess), MPC/BDA (zoning regulation), BBMP (bye laws, property taxes), Stamps & Regulations (reclassify zones). As part of the city master planning exercise, it might be better to classify TOD zones as a white or special zone and then have a local area planning exercise to figure out land uses and area specific regulations for the same. This becomes project oriented and creates a platform for BMRCL to become a real estate agent). This would also help to ring fence the revenue. The revenue from a area’s development goes back to the same area (revenue pooled to infrastructure cess). The pooled revenue would get distributed across these agencies (% of distribution across agencies). There was also a suggestion to merge the urban development and transport department or rather re-evaluate the capacities of each. For example, the buses come under transport department and the metro under urban development. So, it was suggested that at the broader level of governance, this ought to be integrated. BMRCL’s role BMRCL should venture mostly into accessibility by providing seamless footpaths for about two kilometre radius around the stations, develop cycle tracks, arrangement with IPTs (this is already happening - BMRCL is having tie-ups with shared mobility apps), incentivizing BMTC to provide better feeder services to the Metro. BMRCL could also act as a facilitator for using public transport in combination with NMT or IPT through agreements with places of employment and providing infrastructure for the same. An example of the Delhi Metro utilizing a public bicycle sharing system in partnership with a work place could probably be experimented with in Shantinagar, Bangalore. Some incentive system can be worked out for this.


Q&A

Q: How can the seamless connectivity of footpaths be realized? There are two ways that BMRCL’s role can be envisaged for infrastructure like footpaths, one is to identify that what facility can be taken up by BMRCLand second is to identify what they could fund or help realise in the city. BMRCL is already involved in building a road in Swastik Metro Staion and they are building footpaths and improving the area under elevated stations, creating designated IPT stands.

Q: As a follow-up question, in the extended influence zones, can you think of any collaborations facilitating this provision of amenities? From Byapanahalli to RMZ, a high-quality footpath and cycle track has been developed on the 700 metre stretch. This has been jointly done by BBMP and BMRCL including a part of it being funded by BMRCL and it uses a cycle sharing system. This is to be launched soon. BMRCL is looking at replicating this model. Another project coming up is a 2 kilometre stretch at Bagmane Techpark. What is key here is the project management where the larger idea is broken into smaller projects that are connected. CSR component of private firms could be utilized for funding such projects. On asking about BMRCL taking up the role of a real estate agency, the group pointed out that unless the area around the station is not examined for potential land pooling, it is going to be difficult for BMRCL to provide amenities. Indian cities cannot just follow models that have panned out in the West. We are a country that has a large population and densification has already happened. How it can work is by enforcing regulations - like preventing vehicles from coming to a busy shopping area supported by offsite parking. With land constraints, BMRCL cannot take up the responsibility of providing unlimited parking spaces.

Comments from U. A. Vasanth Rao, General Manager- Finance, BMRCL Mr. Rao was a little hesitant about the BMRCL taking up the role of a real estate agent/developer

which is a profit-making venture, as they are a public non-profit agency. He added that each organisation has been given a fixed set of responsibilities and gave example of BDA which he highlighted was a planning agency but eventually they ventured into being a development authority and now both their roles are diluted. He suggested that the regulations around land use should be stringent and should not be manipulated under pressure from other authorities/ political setups.

He discussed that the idea of building land banks could be effective. Where the land is available, all the infrastructure could be put in simultaneously with the metro expansion but he was wary about the idea of BMRCL becoming a real estate agent for the purpose. It was suggested that the model of BMTC could be studied for looking at property development. He added that since metro expansion is planned well in advance, land that adjoins or compliments the metro can be bought in advance to create a land bank. Before the land is bought, other aspects ought to be kept in minds like additional FAR, funds to be arranged, the zones need to be reclassified. The property charges are fixed based on the zones. The metro fund could be used for land acquisition. Metro expansion and land banking plans would also require studying and projecting urban growth patterns, availability of basic needs like water and power to assess the viability of taking the metro there. It could also work the other way round- where the metro and TOD projects focused on the transit corridor spurs urban growth in that direction. This is essentially putting the infrastructure in place before people and density comes in. The horizontal infrastructure also must be kept in mind for this to happen.


Group - C As most points were covered by the previous groups, they went about highlighting the main points.

Investment components In terms of the investment components, the main component would be land (pooling) acquisition and related costs. Physical infrastructure like housing, transit, utilities coming in would be the more tangible components. Whereas semi-tangible would be social infrastructure, comfort, safety (it can be measured but at the same time there is a psychological component to it), accessibility to services, schools, jobs etc. Intangible components would those comforts or benefits towards better health, socio-cultural aspects, etc. The group thought about the emotional cost- it is not always about the money, there might be attachment to what existed before and changes brought about by the metro should try and reduce this. It is important to look at the function of a social component within the densely populated area.

Funding mechanism When it comes to funding mechanisms, the group focused on the aspect of sustainability and

discussed that we cannot just resort to debt and equity. Capital cannot just come from loan borrowings - it needs to be sustainable as well.

They highlighted that the type of investment even for a single station will be to the tune of hundreds of crores and when we talk about higher densities and affordable housing accommodated there and utility shifting and augmentation, the number is much higher. This development multiplied by the total number of stations and the area that needs to be developed around it, the number is easily thousands of crores. Considering the constraints of building a business model for such high numbers within this workshop, the group developed mechanisms to split the costs. Consider a station in a highly developed area, with small plot holdings and 4-5 storey structures already in place (even if they are illegal). Even through additional FAR and value capture, BMRCL may not get sufficient finances required for that station.

They suggested that we cannot rely on land pooling in those areas as people would not be willing to sell the land close to metro stations. Forceful displacement may happen, but this model should not be followed as we are looking to retain a mixed income population living close to metro stations.

Congestion pricing could be a mechanism to get funds within the developed areas. BBMP budgets could also be linked to metro development. Funds could also be related to national/sub-national missions or schemes and corporate CSR funding. Where land is readily available for development/ redevelopment, through FAR and value capture or through a PPP model where we have equity coming in, we can think of obtaining funds for the project. For new projects, it is comparatively easier to get funds through value capture.

Delivery mechanisms In case of delivery mechanism, the master plan is important and there needs to be TOD zones overlay on it. Situating the TOD plan within the Master plan would make people aware of how development


would happen around the metro corridor. BDA could then become the planning agency for TOD that could prepare the local plans for TOD zones and then an SPV could be set-up for implementation.

BMRCL’s role BMRCL could stick to timelines to finish the metro on time. UMTA is an important institution in the case of Bangalore. We have several transport agencies who are independent and have their own funding sources, but if these are brought together and pool their funds together, it could prove to be a good exercise to obtain funds for TOD finance. The UMTA could be responsible for policy and plans, handle funds, enforce regulations, monitor and coordinate development and could comprise of the BMRCL, BMTC, traffic police, state transport operators and private operators. Currently, the DULT is unable to play the role of a coordinator amongst all the institutions as each of them have a separate mandate for operations and a specific set of objectives. BMRCL could also think about a model where it operates not just the metro, but other supporting systems like feeder buses, electric battery operated rickshaws as last mile connectivity.

Q&A

Q: Is BMRCL looking at catering to the TOD zones? One planning authority ought to do the entire planning. BMRCL could supply the metro corridor routes to the BDA who should then define the TOD zones. There should be a minimum and maximum possible development level that can be considered within them. Identifying TOD zones does not mean it will take off immediately. Developers may not have ready funds as soon as they begin the project, but may have to dig in to their existing pool of funds. Similarly, if BMRCL attempts to acquire funds right now, they may get it in hand by Phase 3 of the project. The money they get ten years later could also be used to pay off the loans for previous phases. The finance aspect must be considered with a pinch of salt, as it is not going to come immediately. All real estate developers who come to BMRCL might promise to bring in funds for developing around the new phases of the metro, but it does not come immediately. There should be careful consideration when it comes to naming rights - where there might be disputes on the station design and funds are stopped to BMRCL. And while the dispute continues, it’s BMRCL that is squeezed for funds.

Q: How are O& M managed by BMRCL and how crucial is it to the financing model? The biggest problem for TOD financing is going to be with respect to the metro. For the station, after 15 years of functioning, it would need just as much capital as when it was built for refurbishment of the station. In that case, grants and other funding through schemes may not be sufficient. There are many priorities of the government. Considering the scale and the required funds for the same, it would make sense to start small, like improving accessibility and slowly build the components layer by layer instead of all at once. Loan borrowings cannot happen easily and while planning and design might be smooth, when it comes to execution, there might not be sufficient funds. Improving horizontal infrastructure and access might be of top priority. TOD is not currently a priority. Pooling together various scheme-related funding and making a logical model out of it could prove to be successful. Value capture looks good on paper, when we actually want to implement it, it is difficult in most of the developed areas. The middle income group is already burdened with existing property taxes. When they are told about user fees and development charges, there is general opposition to the project itself and thus going for value capture in the current scenario might not be advisable.


A lot of money is being spent on various aspects of the metro. If the best source of funding is available at our disposal, there needs to be an authority like the UMTA that could direct and streamline these funds. It might also help to build on each layer of infrastructure rather than each infrastructure coming in as a standalone component and being completely unrelated to each other. Having the UMTA could mean maximising the funds that are being spent - getting the best value for money.

Conference closure: The conference ended with a vote of thanks from Mr. Vasanth Rao.

Key takeaways: 1. TOD Zones: As part of the city master planning exercise, it might be better to classify TOD zones

as a white or special zone that are overlaid on the master plan and then have a local area planning exercise to figure out land uses and area specific regulations for the same. Situating the TOD plan within the Master plan would make people aware of how development would happen around the metro corridor.

2. Creation of UMTA: BMRCL’s role in acting as a coordinator amongst various stakeholders for TOD projects need to be thought out. Introduction of a Unified Metropolitan Transit Authority should also be considered to streamline the responsibilities of various authorities and ensure a synchronized development despite of multiple stakeholders.

3. Capacity Building: Transit and development authorities in Bangalore lack capacity at the local level

to implement TOD. All authorities need to undergo capacity building to create a common understanding of TOD.

4. Law enforcement: One of the instruments that could go a long way in promoting land monetisation is that the BBMP laws need to be a lot stricter than what it is today. Strengthening the enforcement of laws will contribute tremendously in terms of being able to recover property tax and development charges on account of benefits related to TOD.

5. Expansion of BMRCL’s role: BMRCL is reluctant to take up the role of a developer as with existing

capacity, they are ineffectual to do so. Whether they should take up an active role in providing the infrastructure or resort to funding the infrastructure that supports the transit system needs to be explored. However, there are certain areas like accessibility improvement and creating market for TDR which can be facilitated by BMRCL for TOD zones.


Acknowledgements: BMRCL team:

Mr. Pradeep Singh Kharola, MD, BMRCL

Mr. Vasanth Rao, GM finance, BMRCL WRI India team: Sessions organizers:

Ms. Jaya Dhindaw

Ms. Prerna V. Mehta

Mr. Rajeev Malagi

Group activity moderators:

Mr. Pawan Mulukutla

Ms. Radha Chanchani

Mr. Rajeev Malagi

Mr. Himadri Das Session Rapporteur:

Ms. Radha Chanchani Session Photography:

Mr. Pawan Mulukutla

Mr. Rajeev Malagi Session logistics:

Mr. Rajeev Malagi

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