Urban Development Dept's rationale

The department contends that the land values in the vicinity of mass transit systems such as the Metro will go up once the projects become operational. “To capture the appreciation in the value of land, there is a concept of betterment levy, which is mandatory. This concept finds place in Section 20 of the Bangalore Development Act, 1976.”

The fee is to be levied on non-residential properties, particularly on land holdings the size of which exceeds a minimum threshold. The fee will also be imposed in impact areas that fall within a fixed distance of one km from where the new infrastructure project comes up. 

In its proposal for ‘innovative financing,’ the department explains that the Namma Metro Phase-I has thrown up a “very good lesson.” “It has been observed through anecdotal evidence that there has been a substantial increase in the values of properties abutting the Metro alignment.”

Besides levy of betterment fee, the department has also proposed other means of innovative financing to fund major transport infrastructure projects not just in Bengaluru but the entire state. 

These include exchange of developed lands for the lands required for a project, as compensation; premium FSI / FAR (Floor Space Index/Floor Area Ratio); cess on approval of new layouts; construction and exploitation of commercial spaces near important infrastructure projects; and generation of revenue through other sources such as  premium for road developments.