1. A meeting on 15.01.2019 was held in Conference Hall, New Custom House, chaired by Principal Chief Commissioner of Customs, Mumbai Zone-I, and the same was participated by the DG, HRD, members of the Building Committee, PPP Expert for the project and officials of project consultant viz. M/s NBCC (India) Ltd. and associates viz. M/s ARCOP Associates and M/s TEEARCH working there under to discuss the revised proposal of plan on Wadala Enclave Project dated 11.01.2019 furnished by NBCC. The said revised proposal owed its origin to the meeting with the Revenue Secretary on 26.12.2018 at New Delhi.
2. The said meeting was attended by the following :
| 1. | Shri Rajeev Tandon, Chief Commissioner of Customs, Mumbai-I |
| 2. | Shri Banibrata Bhattacharya, DGHRD, CBIC, New Delhi |
| 3. | Shri Jagreeti sain Negi, Commissioner of Customs (General) |
| 4. | Shri Akhilesh Pandey, Addl. Commissioner of Customs |
| 5. | Shri Amit Ghawate, Joint Commissioner of Customs |
| 6. | Ms. Chintha Anna Issac, Addl. Commissioner of Customs |
| 7. | Shri Rasal Dwivedi, Dy. Commissioner of Customs |
| 8. | Shri K. K. Sharma, Asst. Commissioner of Customs |
| 9. | Ms. Keerthi Shree, Asst. Commissioner of Customs |
| 10. | Shri Devendra Kumar, General Manager, NBCC |
| 11. | Shri Nitin Gupta, ARCOP Associates |
| 12. | Shri Ramu, ARCOP Associates |
| 13. | Shri Tarun Motta, TEEARCH |
| 14. | Shri Collin D’souza, TEEARCH |
| 15. | Shri Devendra R. Verma, Supdt (P) of Customs |
| 16. | Shri Mahendra Yadav, Supdt (P) of Customs |
| 17. | Shri. Gaurav Sinha, P.O |
| 18. | Shri. Shailesh D. Deorukhkar, P.O. |
| 19. | Shri Sanjeev Meena, EO |
3. Shri Banibrata Bhattacharya, DGHRD was welcomed by all the participants and the meeting started by inviting Sh. Nitin Gupta, ARCOP, an architecture consultancy roped in by M/s. NBCC to give a presentation on the revised proposal for construction of Office cum residential Complex at the Customs Enclave Plot, Wadala. The Principal Chief Commissioner Zone-I joined midway, got apprised of the points discussed and appreciated DGHRD and other participants for carrying out the discussions on the expected lines.
4. Prior to meeting, the NBCC had provided soft copies of revised proposal on 11.01.2019. The proposal was studied by the Enclave team and the features cum variations from the earlier two proposals were enlisted and the same was discussed with Pr. Chief Commissioner and Building Committee members prior to the meeting. The DG, HRD had come with his own study, the Enclave team however brought to his notice the agenda enlisted by Enclave team for discussion. Additionally, all the participants were provided a printed copy of comprehensive revised proposal along with featured agenda before the presentation started.
5. The meeting commenced around 11.30 am and Sh. Nitin Gupta went on detailing out the FSI calculation, provisions of number of staff quarters under each type, zoning and the layout of the revised proposal. The presentation in a nutshell, was seen provisioning a CBIC office tower of about 112500 SQM, 3213 nos. of staff quarters (407271 SQM), sale residences of 201495 SQM, and 02 commercial sale towers of 85500 SQM and 99000 SQM respectively. The proposal envisions making use of full potential (4/5) and the entire constructions is proposed to be achieved in two phases, Phase-I & Phase-II. The phase -I will be using only free available FSI to make staff quarters spanning over 206263 SQM and sale residences limited to 102095 SQM. After completion of the project by end of Phase-II, a total of 905380 SQM BUA was proposed to be achieved.
6. The points under discussion comprised of multiple issues, arising basically due to the variation in the figures as compared to the previous two proposals. Certain discrepancy in calculation too was marked by the building committee upon which Sh. Gupta assured to re look into the figures and correct if required. Few of the issues were straightway addressed and others were assured to be addressed through subsequent communications from consultants. It is seen that some of the concerns still need deliberations and further clarity.
Following issues were covered the during meeting.
(i) Average Cost of construction is lower than earlier proposals.
Current proposal estimates the rate of cost of construction in the range of
Rs. 2571 – Rs. 3716 for residential and commercial (office) respectively while, earlier the same was in the range of Rs. 5114 – Rs. 7569 for residential and commercial (office) respectively. The Building Committee raised concerns if the lower rate of construction cost accounted for, is going to affect the quality of the construction.
NBCC clarified that under the current proposal, the E & M cost has been taken separately as well as heights of building have been reduced. On account of a different approach adopted to compute the cost of construction the civil part of rate of construction is lower and is not going to affect the quality of construction. NBCC assured about the best quality of the construction and committee members looked satisfied.
By an email communication they have addressed the concern adding more clarity which reads as: “Average cost of construction is less than that of earlier estimate without compromising with any construction quality and it is mainly due to lower height of towers going up to 35 floor while earlier it was 45 to 50 floors height.”
(ii) Room Heights are reduced from the earlier proposals:
In the earlier proposals the height of the room was featured to be 3.3 Meter, but, in the revised/current proposal it has been reduced to 3.2 Meter. The building committee wanted to make sure if the currently factored room height falls within the standard. The NBCC explained that the height is on the outer limit of CPWD norms i.e. 2.9 Meter. The members of the building committee looked satisfied with the explanation.
Further NBCC through email communication have added more clarity which reads as: “Room height considered as 3.2 Mtr. in place of 3.3 Mtr considered in earlier estimate and it is sufficient for residential apartments and we will get a clear height of 10 feet which is more than standard height for high rise towers.”
(iii) Fire Fighting Area coverage reduced from the earlier proposals:
The Building Committee members raised the concerns on fire fighting area coverage having been reduced to 15% in respect of Residential constructions from earlier 100% coverage.
GM/NBCC explained that the same was done to reduce the cost of construction but it will be ensured to make the coverage fully compliant with the extant fire norms before implementation. DGHRD expressed his views that there should be no deviations from prescribed fire-fighting norms which Building Committee members unanimously concurred to.
Further NBCC through email communication have added more clarity which reads as: “Fire fighting area will be as per the drawing approved by the Mumbai Fire service departments and for estimate purpose reduced area has been considered in the residential towers. It is ensured that fire norms applicable for high rise residential towers in Mumbai will be strictly followed without any deviation.”
(iv) Building Heights have been reduced from the earlier proposals taking up more ground coverage
Heights of towers have been reduced to 34/35 floors for residences from earlier 45-50 under current proposal. Shri Nitin Gupta, ARCOP explained that the height of the buildings have been reduced to bring down the cost of construction with aim to eliminate viability gap existing with earlier 4/5 FSI proposition.
On the concern of loosing more of open ground space, Sh. Gupta maintained that lowering the heights of towers would of course lessen the open space by certain extent, but the social infrastructure planned under earlier proposals, was going to remain unaltered.
Further NBCC through email communication have added more clarity which reads as: “In the current proposal nos. of towers will increase due to lowering of building height and obviously the ground coverage will increase. Lower height towers construction time will be less and project can be completed faster.”
(v) Anticipatory Cost Index @ 6.5% is not reflecting as per the earlier proposals:
Building committee members raised concerns on apparently inaccurate methodology of cost estimation, wherein an Anticipatory Cost Index was not factored.
Basically, in the last proposal of plan (FSI 2.07) dated 19.11.2018, and the proposal prior to that, the cost of construction was factoring anticipatory Cost Index @ 6.5% to cover up future escalations on account of delay in A/A & implementation of project but under current proposal, this index has not been factored.
GM/NBCC explained that under the proposal dated 11.01.2019 the latest cost index issued by CPWD (PAR index 145) had been taken into account for construction cost and presumption was that there would be no delay in administrative approval of the project. Considering these two aspects, anticipatory Cost Index has not been taken into account for the current proposal.
Further, NBCC through email communication have added more clarity which reads as: “Anticipatory cost index @6.5% has not been considered in the current PAR estimate because the latest notified cost index by CPWD as on 7th Dec, 2018 has been considered for calculation of PAR cost and it is presumed that there will not be any delay in A/A & implementation of project.”
(vi) Capacity of STP has been reduced from the earlier proposals:
The building committee raised concerns on apparently reduced STP capacity as compared to earlier full FSI proposal of the project. STP components include Sewage Treatment Plant, water treatment pumps, sewage sump pumps, drainage sump pumps etc.
Building Committee Members looked concerned as the project lies in Salt Pan Area and prone to flooding etc. and voiced this aspect to be relooked into.
GM/NBCC explained that no compromise on the provision of Sewage Treatment Plant, water treatment and drainage equipments had been made and the same will be re-looked into.
Further, NBCC through email communication have added more clarity which reads as: “Capacity of STP and other E&M services will be designed as per prescribed norms and requirement of the project and it is obvious that storm water drainage, landscaping and other development work quantity will get reduced due to increase in ground coverage area.”
(vii) Fungible Premium does not form part of total premium payable to state shown under Statutory Fee Schedule of the Proposal
The calculation of statutory payment schedule does not show the fungible premium anywhere. Instead, it shows Staircase premium. This is despite the fact, that fungible FSI is part of total permissible FSI computed for construction area under current proposal phase II.
Shri Nitin Gupta, ARCOP explained that staircase area against which premium is factored is a part of fungible area. The committee however failed to understand, as fungible premium and staircase premium are two separate terms under DCPR-2034 with their individual rates. And, again why only a part of total fungible FSI (234728sqm) has been considered for premium calculation, when any amount of fungible FSI is subject to payment of premium? The total staircase FSI adds up to 24179+22140+48273+13500 = 108092 SQM as compared to total fungible FSI of 234728 SQM shown on FSI calculation Sheet.
(viii) Premium Payable is lower despite there is no change in Total Built Up area and rate of Premium from earlier scenarios.
Supposedly the proposal dated 11.01.2019 having its origin in the meeting with RS dated 26.12.2018 had to be equally large as the initial mega plan with only increase in saleable area to meet the viability gap otherwise crept in the initial mega proposal that remained under deliberation prior to State denial of premium waiver on 23.10.2018.
Under this impression, the building committee was not sure as to how the total premium payable to the state comes down to 1350 cr. from earlier 2205 cr. despite the additional fact that rate of premiums pegged at 50% for additional FSI & 60% for fungible area remains unchanged by the state.
Upon ambiguities raised, Shri Nitin Gupta, ARCOP explained that only actual usable staircase area, which is a part of fungible area has been taken into account for calculation of premium. Further, as the staircase needed lesser of area, the premium is lesser this time around. Building committee however, requested the consultants to again verify the calculation from the factual accounts.
To, the understanding of Enclave officers the premium calculation ought to have been calculated not only on staircase area of 108092 SQM, it should have been calculated on entire fungible area of 234728 SQM because the entire Fungible area has been made part of BUA.
It is however understood that under reworked plan the total built up area is only 905380 SQM as compared to 1035722 SQM of initial mega plan. And, possibly 256,000 SQM less considered area on computation of premium has made the difference in amount of total premium payable.
Further NBCC through email communication have added more clarity which reads as: “It has been decided to get the statutory payment calculation verified from the local town planning authority and they are confident that there will not be any difference in amount calculated in the estimate.”
(ix) 3% Contingency Does not factor in phase I Construction cost.
Although, 3% contingency forms the part of Phase II construction cost, it was found missing in phase I construction cost. GM/NBCC has explained that they would verify the same and the committee would be intimated accordingly.
Further, NBCC through email communication have added more clarity which reads as: “The 3% contingency will be added as per PAR norms in phase-I estimate and it was an overlook.”
(x) 5 years Maintenance cost factored in full FSI Construction but not in FSI 1.33.
GM/NBCC explained that the maintenance cost factor has been tentatively taken from the year 2023-24 and can be modified as per the actual completion of the phase-I or complete construction as per the requirement.
Further NBCC through email communication have added more clarity which reads as: “The 5 years maintenance cost has been considered for full FSI estimate as per discussion held at New Delhi and it is mainly for the purpose of balancing the viability of the project on self sustainable model.”
(xi) Freshly Introduced FSI of 43,600 SQM which was never a part of previous proposals
A free gain in FSI of 43,600 SQM is a new introduction to the entire available FSI for the project and has been shown as 2.5 times of Amenities & ROS. This although looked an aberration from the fact, but later it stood clarified.
Shri Nitin Gupta, ARCOP explained that there is a provision of 2.5 times setback against the Amenity space & ROS also, if the area is surrendered to the state government in compliance to AOS obligation. And, because under current proposal, the School and Hospital are eliminated, this additional 43,600 SQM of FSI is free extra eligibility.
Further NBCC through email communication have added more clarity which reads as: “As per DCPR clause no.4.1 table no.12A there is provision for 2.5 times FSI to be compensated in lieu of land reserved for public purpose and transferred to local body. This FSI will not be applicable if land is not transferred to local body.”
Despite all clarification in place however, this remains to be understood that the total free FSI available because of this factor coming into play has not been used in constructing the Phase I. It may be noted that Phase I uses only 308358 SQM while total free FSI available is 369257 SQM.
(xii) Ruling out construction of School & Hospital
The proposal dated 11.01.2019 eliminates construction of School & Hospital.
Shri Nitin Gupta, ARCOP explained that this has been done as per discussion held at New Delhi in meeting on 26.12.2018. This elimination was also to cope up with viability gap. Sh. Gupta went on explaining that call has to be taken by the department whether to construct the school & hospital against the obligation of AOS or to surrender the land (10%) to state government and avail 2.5 times FSI in constructing residences and offices.
DGHRD asked the members present in the meeting for their view and members seemed divided on views of retaining school and hospital as part of the project.
(xiii) Turning the earlier CBDT office Tower into Saleable office Space.
Sh. Gupta explained that this has been done only to fill the viability gap. DG, HRD however, insisted that the CBDT tower should have been in place. And incorporating the same could be explored by the Project consultant.
(xiv) Apparent viability Gap for starting Phase I
Mandatory payment required to be made to the state government prior to commencement of the 1st phase is Rs. 115 Crores, whereas the seed money proposed by NBCC is Rs. 90 Crores. Building committee raised the concerns as to how the fund gap was planned to be met out?
Shri Devendra Kumar, GM/NBCC explained that even in the phase-I, there will be sub-phases and approvals from MCGM will be taken sub-phases basis. Meaning, the entire 115 crores will not be required in one go and the process of approvals for other sub-phases will be initiated after booking of flats under first sub-phase.
Building committees seemed skeptical of the time window of 03 years set for completion of phase I.
(xv) Apparent viability Gap for starting Phase II
At the end of phase I, surplus fund is 72 cr. as per the proposal presented by NBCC. In contrast, the premium amount alone for starting phase II, is 1350cr (which as per team’s calculation goes to 2100cr). It is important to note that Phase II will be using all paid FSI which requires paying the premium in advance to state before approval of phase II.
Shri Devendra Kumar, GM/NBCC explained that the final phase will also be divided into sub-phases and approvals will be taken accordingly.
Building committee members looked however skeptical that dividing the phase II in sub phases, meeting another timeline window of 03 years could be pretty difficult.
(xvi) Apparently, higher sell ratio to build Govt portion.
As per the proposal dated 11.05.2019, the proposition aims selling almost 43% of BUA to build 57% of BUA for Govt use apparently a gain of 14%. The proposal suggests selling 385,995 SQM to fund 519,771 SQM of ours. Building committee marked that for a mere net gain of 14% and that too over a period of 10 years considering pains of compliances involved may not be the good proposition.
(xvii) Unduely Long Time Window for Completion of the Project.
It was marked by Building Committee that, to deal with crunches of funds and compliance of RERA, if phase I and Phase II are broken into sub-phases (registration under RERA in sub-phases) the project might prolong for 15-20 years or so, almost doubling the expected time window of 10 years under simply phase I & II.
7. FSI Sale Model: Members of the building committee were of the view that further sub-dividing the phases I & II, will extend the project completion time manifold. On this, Shri Ajay Saxena, PPP Expert advised that due to complexity of BUA sale model viz. Prolong duration of project, strict compliance of RERA provisions, market competition in sale of flats posed by private builders, marketing limitation of NBCC etc., this office should also explore the FSI Auction model, which is successfully adopted by MMRDA for funding of their projects.
Enclave officers along with DC Sh. Rasaal Dwivedi voiced concurrence with Shri Saxena’s views and asked Sh. Saxena to elaborate the concept of FSI sale model. Obvious reasons that seemed logical were that, constructing flats and selling them is all suitable for builders and developers and working in the shoes of builders/developers is fraught with many risks which department may not be able to
deal with. It was argued that, if the BUA sale model was that easy and beneficial, why MMRDA an infra specialist of state never adopted BUA sale model to fund their projects.
Sh. Saxena, also let the committee members knew that Enclave officers had also done their study on the model and they are already in the know of. Shri Saxena went on clarifying that this study was discussed with authorities but, given the scenarios of previous proposals at full wing, the option couldn’t be explored for want of desired attention. Sh. Saxena went on explaining that in case of FSI sale model, the project would get supported by the nearby developers as the model will not be into flooding their supply market. And, instead by fast completion of our offices and residences the area will develop and will cause appreciation to their sale.
On contrary, if we would go on built up sale model we might face competition from nearby developers for infusing supply to already unsold inventory at their disposal. They might resort to further lowering their sale price to pose difficulty. Further, the agents getting hefty commissions from private builders may not like to market our flats on sale.
DGHRD and members of the building committee got an impression that the practical challenges of compliances, competition and project delay are there and the committee should go on exploring the model and the modalities associated with the same. Accordingly, the DG, HRD tendered his suggestions that help of MMRDA may be taken for more details on the FSI auction model and its feasibility for the Wadala project. DGHRD also suggested for a clarity to be sought from Town Planning office regarding applicability of restrictions of 1/3rd sale in case of FSI sale/Auction.
Shri Ajay Saxena added that MMRDA is taking services of CBRE, a well known multinational company in the field of consulting, valuation advisory, market research in the field of Real Estate. And, if the department wished he could rope in CBRE for estimating the feasibility of the FSI sale model. This would expedite decision making whether or not, the FSI sale model could be adopted for funding the Wadala Project. Upon which the participants concurred with the idea of Sh. Saxena, PPP expert for the project. In response, Shri Saxena assured that he would do the needful by requesting CBRE on the basis of his individual goodwill.
8. The meeting concluded on a note of suggestions by DGHRD subsequent endorsement by Pr. Chief Commissioner of Customs, Zone-I:
(i) Calculation of FSI, premium and statutory payment etc. in respect of the proposal discussed to be verified from local authority.
(ii) MMRDA to be approached to get the five years data record of sale of land with full potential in the vicinity of Wadala plot.
(iii) To assess the anticipated land sale price with full FSI potential and its feasibility for the Wadala project basis MMRDA data and Consultation of a certified Real Estate Research Agency.
(iv) Demand survey of commercial and residential saleable built-up area to be done through CBRE already appointed by MMRDA for similar jobs in Wadala and surrounding area.
(iv) Clarity seeking from Town Planning office regarding applicability of restriction of 1/3rd sale in case of FSI Auction.
9. The meeting ended with vote of thanks to all the participants by the Principal Chief Commissioner of Customs, Mumbai Zone-I.
(K. K. Sharma)
Assistant Commissioner of Customs (CHS),
Mumbai Zone-I
Copy to:
- The Principal Chief Commissioner of Customs, Mumbai Zone-I
- The DGHRD, New Delhi
- The Principal Commissioner of Customs (G), Mumbai-I
- All members of Building Committee
- NBCC/ARCOP
- Shri Ajay Saxena, PPP Expert
>>><><>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Observations : Marked implications
Under Reworked initial mega plan dtd. 11.01.2019 only 112500 SQM as total Area was allocated to CBIC tower, this means the earlier 163000 SQM office of CBIC plan proposed under initial mega plan was too extravagant and by trimming unnecessary loading over actual carpet area, net covered area (BUA) 112500 SQM was also somehow sufficing to the needs of CBIC office space.
Also, we were constructing 1035722 SQM as total BUA under our initial mega plan while, only 905380 SQM was our total BUA under reworked mega plan dtd. 11.01.2019. Possibly this was due to some provision of DCPR 2034 which limits all compensatory FSI to remain under 4/5 and its not that the Setback benefit kind of FSI will not be exclusive to the scope of 4/5. That is setback benefit etc. has to be a subset of FSI 4/5
Reduced amount of 1380 Cr as total payable premium as compared to earlier 2205 Cr. can attributed to two reasons. First they have calculated the premium on only staircase FSI (108092 SQM) and not on entire Fungible FSI (234728 SQM) part of built up area. Second they are constructing only 905380 SQM under reworked 4/5 FSI proposal as compare to initial 1035722 SQM under initial 4/5 FSI proposal.
So effectively 256000 SQM less considered for premium calculation has made all this difference and there is no magic. It transpires that even at the rate of 50% ASR (Fungibles have 60% rate also) the amount ignored / less considered the premium is working out to 256000 SQM x 46000 x 50% = 588 Cr.