Inequities of commercialisation – II-Ahmad Rafay Alam 1

Last year, I had written about the inequities of Lahore’s commercialisation policy (“The Inequities of Commercialisation,” The News 14 August 2007). This year, with Special and Review Committees formed to determine the future contours of the city’s commercialisation policy, there is opportunity to examine the subject in new light.
Earlier this year, in the spate of legislation, the local governments and development authorities in Punjab (including the LDA) were prescribed land-use conversion rules by the Government of Punjab. These rules are what regulate commercialisation and change of land use in Lahore and the rest of Punjab.Under the Lahore Development Authority (Land Use Conversion) Rules, 2008, the LDA was to create and notify a list of roads it had declared commercial till that date and then divide them into two broad categories: Category A, where over 50 percent of the plots on the road had already been commercialised; and Category B, where less than 50 percent stood commercialised. Based on this remarkably arbitrary distinction, these Rules then allow further commercial development only on Category A roads (although the current government has suspended the grant of further commercialisations, until the committees it has set up report on how steps in the future should be taken).

The LDA Rules require the LDA to prepare and notify a list of plots for which temporary commercialisation had been sought. Temporary commercialisation is permission to use residential land for commercial activity (subject to certain restrictions) on annual payment of a small percentage of the regular commercialisation fee. Temporary commercialisation had earlier been permitted by the LDA’s previous regulatory framework for commercialisation, the LDA Commercialisation Rules, 2001. The list prepared under the 2008 Rules has been divided into two categories: Category C, where payment of temporary commercialisation dues had been paid; and Category D, where payment is still outstanding. Based on this distinction, the LDA is to phase out temporary commercial use of Category C properties over the next decade and take recovery action against Category D plots.

The exact same approach has been taken by the rules notified for the various other development authorities in Punjab, that is, the Punjab Development Authority Land Use Conversion Rules, 2008. Local government, on the other hand, have been given a comprehensive, 55-page set of rules to govern the manner in which land is used and converted. Under these rules, the Punjab Land Use (Classification, Reclassification and Redevelopment Rules), 2008, local governments have to classify land use in the areas within their jurisdiction into six categories: residential, commercial, industrial, per-urban, agricultural and notified. Each classification is then to be sub-classified according to size of the plot and whether or not it is located in a built-up area. These Rules then go on the stipulate what are and aren’t permitted land uses in each classification. They set out exhaustively the procedure to be followed when permitting re-classification on plots to any other use and prohibit certain conversions altogether (for instance, re-classification from residential to industrial use is prohibited). No re-classification of schemes or plots can take place without public consultation. This is just the type of regulatory framework one expects from urban planners interested in mapping and controlling the growth of the city for the benefit of its residents.

Why are these two sets of rules which purport to do the same thing – the LDA and Development Authority Rules on the one side and the local government Rules on the other – so radically different? Herein lies the rub.

In its latest budget, the LDA estimates its receipts for the 2008-2009 year to be in the region of Rs2.38 billion. Of this amount, it is estimated that commercialisation fees will bring in about Rs300 million (13 percent of overall revenue). The largest single contribution, of Rs503 million (21 percent of overall revenue), is credited to the Sale of Building alone. This building, however, is the LDA Tower slated to be built on the Gulberg V area of Jail Road. Despite the fact that work on this building hasn’t actually begun, it is earmarked as an estimated receipt for this year. In fact, this same amount was also used as an estimated revenue receipt in last year’s budget. Of course, not a paisa has been actually received. The same fudging is true for the Rs68 million the budget expects will be received under the head “Recovery of Loan from WASA,” despite the fact that no recovery of this amount has actually been recorded in previous budgets.

If one excludes the revenue expected from the construction and sale of the proposed LDA Tower (the current real-estate slump and rise in cost of construction materials will also have a detrimental effect to this estimated receipt), then commercialisation fee jumps to second place after Collection of Fee & Penalties as one of the LDA’s main form of revenue. Also, the recent ban on further commercial activity means that the LDA will lose an estimated Rs150 million annually as compared to what it would have earned if it were allowed to commercialise land, as it has in the past decade.

With this in mind, it is perfectly clear why the LDA does no real urban planning and why the LDA and other government officials refuse to hear any suggestion that would curtail their ability to continue permitting the conversion of residential properties to commercial use. This is despite academic studies that have examined the effects of commercialisation in Lahore (you may look up on the internet UET’s Obaidullah Nadeem and Dr Rizwan Hameed’s excellent study on the haphazard commercialisation in Lahore). It is well understood that commercialisation has a detrimental effect on the environment, human health (by air and noise pollution), traffic and parking availability. Even the Assessment of Institutional Arrangement for Urban Land Development & Management in Five Large Cities of the Punjab prepared by the Urban Unit of the P&D Department accepts that the LDA’s commercialisation of Lahore has “violated its own schemes and encouraged unplanned ribbon development on commercial basis.” The problem with ribbon development – which is what we see in our cities – is that it leads to traffic congestion as only front-facing properties are developed to provide ease of access to automobiles. It is also inequitable in that properties immediately behind the first row of ribbon development are unable to exploit the market for their commercial space. This is why, for example, on Lahore’s Golden Mile of Mall Road, you will find dirty and congested little clusters of automobile workshops, caterers, tailors and other miscellaneous small-scale industrial use of land immediately behind some of the city’s most prized commercial space. Much more equitable and profitable is “nodal” development which allows for commercial activity on a 360-degree basis and distributes the benefits of commercial activity on land evenly.

I had occasion to advise someone involved in these committees and was amazed to hear that, of all the information, charts and statistics prepared and presented, no one in the entire government had provided any information as to what the current demand for commercial space in the city actually is. In other words, these commercialisation committees have been deliberating on what roads can or can’t be commercialised without any information as to the available commercial floor space or the floor space expected once all the plazas and high-rises under construction come on line. I was also amazed to find that none of the Committee Members had been shown a map of the city or explained the boundaries of the LDA’s Controlled Area and those within the jurisdiction of the City District Government of Lahore. Nor was there any physical representation of the roads and areas of Lahore where commercial activity takes place. I’m a lawyer; this isn’t my business, but what on earth are these people doing?

Commercialisation is an act of land classification. What it has become is a type of assessment of land revenue, with the LDA playing the part of a Zamindar/Collector and permitting commercialising on its own terms and for its own benefit. Nowhere in the world is commercialisation fees a form of municipal revenue. Commercialisation, if allowed at all, should be done in the best interests of the people of a city, the basis of proven demand for commercial space and only after the availability of sewerage, waste management, electricity, parking and traffic congestion are taken into account. Anything less is a fraud on the people.

The writer is an advocate of the high court and a member of the adjunct faculty at LUMS. He has an interest in urban planning. Email: ralam@nexlinx.



Source: The News, 18/8/2008

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