What are Regulatory Instruments?

Regulatory instruments comprise of all regulatory interventions which influence the land use
and built form through binding regulations. The various strategic planning tools discussed
prescribe a bunch of regulatory instruments.

Background

• Regulatory instruments - zoning and development regulations are key determinants of

land use and built form.
• There are limitations to the efficacy of these if they do not recognize the socio economic
realities of the people.
• An example of this is that the regulations prescribe very high planning and building
standards and rely on the enforcement capacities of the implementing agencies for
enforcing them
• Difficult to comply with, people build and the resultant built form is ‘informal’ – not
confirming to the standards
• Realistic standards need to be framed.
Types of Regulatory Instruments/ Development control as a whole

• Land Use Zoning

• Natural Hazards Zoning
• Heritage Zones and or Regulations
• Open and Green Space Reservations and Zones
• Agricultural Zoning
• Performance Zoning
• Sub Division and Specific Area Plans
• Floor Area Ratios
• Height Limitations
• Construction and Building Standards
• Building / Construction Permits
How are Regulatory Instruments used?

a) Land use regulations as a basis for negotiation

Between the public sector and private stakeholders to generate a city or a neighbourhood
level benefit.
Additional FSI to developer in lieu of creating a publicly accessible green or giving up land for a
wider right of way. This is the usual method for road widening in Indian cities.
can be subject to much abuse.
Leading to inadvertent consequences -
For eg., granting tradable FSI in case of heritage sites resulted in owners trading the FSI and
abandoning the heritage properties to dilapidate and collapse.

b) Mixing regulatory instruments

•Efficacy of regulatory instruments is limited in cities where the built form is largely informal.
•Combining a variety of regulatory instruments can create synergies and produce desired
outcomes.
 c) Transfer of Development Rights
Redirecting development that would otherwise occur on a land (the sending area)
to an area (receiving area) suitable for denser development. Regulatory flexibility in
that land use zoning without the TDR option would not have permitted.

Owners in sending area sell all or some rights to develop

Economic gain from sale compensates owner for restricted land use regulation
Owner in receiving area can go beyond landuse regulation as an insentive.

d) Land pooling technique (Land supply model)

• Irregular land pooled
• Reconstituted
• Serviced before handing over
• A portion taken out
• No financial botheration as compensation
• Fast and cheap
• Participation
Euclidean Zoning – conventional method
Isolating incompatible land uses

Performance zoning - Also called impact zoning or flexible zoning is an

alternative technique to conventional zoning.
Differing land uses produce varying external impacts, ranging from traffic
and noise to glare and waste generation(e.g. pollution, traffic
generation, aesthetics)

Performance zoning may allow all possible uses and establish a uniform
system of performance standards
Here the planner looks at effect rather than use.

Regulating the site

Site standards may include lot size, setbacks, height, floor area, building
coverage
Activity standards regulate the intensity or outputs of a user. Like internal
traffic patterns, daily vehicle trips, traffic congestion, water use, waste
generated, etc.
 Hybrid Zoning technique - “best elements of each practice
and integrates them into a new whole”

Application
- traditional Euclidean zoning districts, introduction of
incentive zoning to reduce parking and create affordable
housing, while implementing form-based regulations in
denser downtown areas.

Incentive Zoning - Flexibility in regulations based on the impact created

by the particular development

Modular Zoning
- Or ‘Composite Zoning’ is a type of Hybrid Zoning
- mixes and matches three components to create a wide variety of zoning districts
What are Economic Instruments?

•In general terms, economic instruments are financial rewards, incentives and penalties
that are applied to encourage behavior changes on the part of businesses, households and
individuals.

•Economic instruments comprise of all economic interventions which influence the land
use and built form embedded in regulations, policies, projects etc.

•As observed in the spatial planning tools vary across states, there is considerable variation
in the economic instruments as practiced across the states.

Economic Instruments helps in

• Improving land use efficiency
• Reducing spatial disparity
• Improving efficiency of transportation markets
• Improving efficiency of land markets
• Improving environmental quality
Types of Economic Instruments
• Improving land use efficiency
1. Accessible and Affordable Housing Finance
2. Parking Fees
3. Subsidized Transit

• Reducing spatial disparity

1. Below market rate housing
2. Cross subsidisation

• Improving efficiency of transport markets

1. Vehicle Use Fees
2. Road Tolls
3. Congestion Pricing
4. Alternate Vehicle Use
• Improving efficiency of land market
1. Property Taxes
2. Idle Land Taxes
3. Capital Gain Taxes
4. Cost Recovery Fees
5. Impact Fees
6. Betterment Fees
7. Locational Incentives
8. Transfer of Development Rights
9. Land Pooling / Readjustment
10. Land Sales / Leasing
11. User Fees

• Improving Environmental Quality

Treating wastewater before discharge
Grey water use
Rain water harvesting
Pollution check/ measure
What are Investment and Financial Instruments?

•Investment instruments refer to investments made by local, state or national governments

and their associated agencies which have significant impacts in shaping urban form.

•Financial instruments are cash, evidence of an ownership interest in an entity or a

contractual right to receive or deliver case or another financial instrument.

•Investments made by local, state or national governments and their associated agencies
can have significant impacts in shaping urban form.

An example of these is the investments in transportation networks.

Catalytic infrastructure as colleges, markets, etc can act as magnets to attract further
investments.

Types of Investment and Financial Instruments

A. Key form shaping investments

B. Raising capital for key infrastructure
Types of Investment and Financial Instruments
A. Key form shaping investments
Transportation and Trunk Infrastructure
•Transportation infrastructure such as roads and public transit systems are the prime and
most effective determinant for urban form in guiding expansion as well as renewing /
transforming urban cores.
•Other infrastructure such as water supply and sewerage can also play an important role in
shaping urban form but not as much as transportation as it tends to follow it.

Industrial Park
•Creating industrial parks / nodes can be powerful determinants of nodal development in
manufacturing cities.
•Best practices indicate that private sector should build and operate industrial parks and
role of the public sector should be to ensure provision of infrastructure, a liberal regulatory
environment and levy fees / charges.

Affordable Housing
•Local governments / planning authorities can shape urban form by releasing land for
affordable housing by the way of low rent housing targeting low income households, by
creating land parcels for such purposes through land readjustment schemes, delineating
affordable housing zones etc.

* Alternative to providing units, an idea that is being tested out in the Development Plan of
Ahmedabad is the creation of an affordable housing zone.
Public Private Partnership Zones

•Public private partnership (PPP) zones can be powerful instruments to leverage private
sector investments to develop high profile areas of cities in line with city development
strategies / objectives.

Examples of this can be city partnering with a developer to develop a lifestyle district,
theme park, industrial park etc.
•The role of the public authority would to be to provide land, equity etc.

*The Special Economic zones promoted by the Government of India can also be viewed as
an example
 Types of Investment and Financial Instruments
B. Raising capital for key infrastructure

Build Own Transfer

•A typical build, operate and transfer (BOT) scheme usually involves a private sector company
constructing a public facility (eg., public transit, expressway etc) based on the specifications
worked out by the public agency, operating it for an agreed period of time, retaining revenue
and then transferring it to the public agency.
•Many variations of this model have evolved over time – build own operate (BOO), build
operate transfer (BTO), design build finance operate transfer (DBFOT) etc.

Foreign Assistance
•Cities in developing countries can benefit from foreign assistance (for eg., grants or soft
loans for building infrastructure).
•Usually such assistance is dealt through national government.
•Such investments can play a substantial role in reshaping cities.

Examples:
•Reconstruction of Bhuj after the earthquake was funded by a soft loan by the Asian
Development Bank (ADB). given to the State Government of Gujarat
•There are many examples. In Bangkok 96% of the costs associated with a part of the subway
came from a low interest load provided by the Japanese Bank of International Cooperation
(JBIC). In Dar es Salaam, Tanzania, the World Bank to lend for the creation of a BRT system.
Land Value Capture

•Most cities can capture revenue from changes in the urban land value related to public or PPP
investments. This value capture can be used to build additional infrastructure and public
utilities, thus shaping urban form.

•Mechanisms to utilize land value capture include

1. provision of land to rapid transit developers in return for system development;
2. selling “excess” land near major public facilities;
3. sale of upgraded FSI rights in locations of value to the private sector;
4. land sales/leasing; and
5. land banking near major infrastructure for future use.

On Lending Mechanism

•On lending funds are usually national funds (often housed in a national bank or ministry)
that are lent to local governments at competitive interest rates in response to evidence of a
credit worthy fiscal track record and a clear rationale for a specific project.
•On lending mechanisms are particularly important to smaller cities that cannot access
commercial credit markets.

*An example of this is the Regional Urban Development Fund (RUDF) in Thailand or the TNUIDF
in Tamilnadu Urban Infrastructure Development Fund in India.
Issue of Municipal Bonds

•Municipal bond markets provide a vehicle to narrow the resources gap of local
governments. Municipal bond markets refer to loads by sub sovereign public entities,
directly or through their public corporations to fund general purpose expenditure or specific
projects.
•Municipal bond schemes vary from debt funding, based on the full faith and credit of sub
sovereign issuers, to revenue bonds secured by the earnings of such projects as water
facilities and toll roads.

*Issue of Municipal Bonds by Ahmedabad Municipal Corporation

National Transfers

•In most countries, national and sometimes state/provincial governments transfer fiscal
resources to urban governments that can be used to form shaping investments.
•Grants are not tied to specific projects with amounts determined by specific formulas such as
population, economic growth etc.
•In addition there can be performance based grants, grants for a specific use based on national
/ state priorities such as transit systems.
•Often such grants do have conditions that they are matched or a proportion is borne by the
local government.
What are Behavioural Instruments?

Behavioural instruments refer to interventions that attempt to change human behaviour.

In the current times they are initiated by both, the public sector and the NGO’s as well as
the private sector.
They are most effective when applied in conjunction with other types of instruments such
as regulatory and economic instruments.

Types of Behavioural Instruments

Campaigns

Governments usually undertake campaigns to induce behaviour that leads to more

efficient land use such a car pooling or increased use of public transit.
In the recent past many nongovernmental organizations and agencies promoting various
aspects of sustainable development and agencies are getting actively involved and
initiating campaigns.

Various mediums are deployed range from traditional print media, internet, television,
mobile phones, mobile broadcasts etc.
Public Supervision
•Public supervision is a process by which NGO’s or governments encourage people to report
violations of law regarding land use, environmental behavior or sometimes public places.
•Some of the successful examples are – maintenance of the Bandra Sea Promenade in
Mumbai where the residents associations stop people from littering and irresponsible
behavior; Clean Rivers Program in Indonesia where the local residents are encouraged to
report firms dumping waste into rivers.

Community Organizing
Sometimes neighborhoods organize protests over land use issues, either formally or
informally, and such actions can influence land use outcomes.
Community groups are also increasingly involved with local planners in determining land use
outcomes.

Education
Education, both formal and informal, can impact land use outcomes over medium and long
term time frames.
Special awareness sessions can be introduced as a part of the formal education, through
conferences, print media, social media etc.

Indicators
Indicators are used by planners and politicians to monitor impacts associated with
interventions. Indicators inform the public on progress made in improving the conditions
related to land use.
Best Practices

•International best practices in land use planning techniques have become increasingly
available worldwide owing to improved information technology such as the internet,
teleconferencing, Skype etc.

•Institutions at the international level such as the World Bank, Massachusetts Institute of
Technology, Lincoln Institute of Land Policy, Asian Development Bank etc are the major
sources of best practice information, especially over the internet.

* CRISIL, a global analytical company providing ratings, research, and risk and policy advisory
services, brought out a compendium of best practices. Many other agencies such as City
Managers Association in Gujarat also document best practices in India and disseminate
them online