BENGALURU: The Chief Minister’s recent announcement to put on hold the previous government’s proposal to rebuild all its commercial complexes on a Public Private Partnership Mode is a huge blow to the Bangalore Development Authority, say top sources.
BDA has seven commercial complexes — one each at HSR Layout, Austin Town, Koramangala, Vijayanagar, Sadashivanagar and Indiranagar. BDA used to get annual rents ranging between Rs 6 crore and Rs 7 crore from the 566 shops there. Most of them are 30 years old and are in a pathetic state while many have remained vacant for years.
The contract to rebuild and operate them for the next 30 years was handed over to private parties on March 22 this year. While Indiranagar was contracted to Maverick Holdings and Private Limited, the remaining six were handed over to MFar Developers for completion. “While BDA was permitted to have revenue coming from 30 per cent of the space occupied by shops, the remaining 70 per cent was to go to the private party. In the case of Indiranagar alone, it was 35 per cent for BDA with the remaining for the private builder,” a highly placed source said.
For an organisation that is constantly in the red, this is “extremely bad news”, said an individual well versed with the finances of the organisation. “To build these complexes on our own, we would require anywhere between Rs 600 crore and Rs 700 crore. The government does not even provide BDA Rs 100 crore as grant when we desperately ask them for it. So where would we go for the money,” he said.
A BDA official sees political reasons behind the staying of the proposal. This also deals a blow to BDA’s credibility. “After the contract was awarded and a time frame of two years for completion was set in March, it has been put on hold. What happens to the investments and time made by the contractors in these ventures? In future, private firms will be very careful about responding to our tenders,” he added.
BDA is unable to remove many tenants who choose to stay put in these complexes. The contractors who have come to an understanding with many shops in Austin Town, Vijayanagar and Sadashivanagar have paid them a certain sum to vacate the place. But they are still there. “Now that BDA takes full ownership of the property, it would again prove a Herculean task to remove them,” he added.
Once the commercial complexes are redone, the authority expects an increase in its annual income from the existing Rs 7 crore to Rs 38.98 crore.
To the charge that the 30% to 35% revenue share earmarked for the BDA was a small sum, a source said, “In case of any private project, the agency would give around 40 per cent. But the land becomes their property. In the case of BDA, the land remains in their name. They continue to retain their property. It is up to them to further renew the lease or do something on their own in their land.”
BDA Commissioner G C Prakash did not respond to calls and messages.