Mumbai Mixed-use Projects Stuck Over Development Fee Dispute

At least 25 housing projects in the city are in limbo as developers and BMC spar over development charges in mixed-use projects. These are residential-cum-commercial projects where the former is predominant. Development charg

BY Realty Plus
Published - Tuesday, 15 Jun, 2021

Mumbai Mixed-use Projects Stuck Over Development Fee Dispute

At least 25 housing projects in the city are in limbo as developers and BMC spar over development charges in mixed-use projects. These are residential-cum-commercial projects where the former is predominant. Development charge for residential use is 4% of ready reckoner rate and 8% for commercial. Development charges is a vital revenue source for BMC. While Maharashtra Regional Town Planning Act allows this charge to be levied on the predominant use, BMC has been insisting on charging proportionately. If predominant formula is applied, a developer, especially in a large project, can save crores. Realtors said that when they apply for a mixed-use development to be charged at rate of predominant development which is residential, civic officials insist they obtain an order from court. BMC must treat a court order as a precedent and not insist on each developer obtaining a fresh order each time. Sathyen Prasad, a techno-legal expert to the real estate industry, said it is tantamount to mental harassment and a loss to the state exchequer as BMC, with a legal team at its disposal, prefers to fight it out despite being repeatedly rapped by courts. In two recent orders Bombay high court directed BMC to charge residential rate based on predominant use formula. For Incline Realty’s Borivli project, where 74% is residential, the court referred to the BMC law officer’s opinion who opposed development charges at commercial rate. In Oberoi Realty’s Goregaon project, it was said that the executive engineer and law officer clarified the project was predominantly residential. Yet BMC rejected the developer’s plea to recover charges at 4%.