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Urban property ownership records background document

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The Urban Property Records Project of the Revenue Department of the Government of Karnataka, envisages establishment of a modern Property Record Management System in the cities of Karnataka using …

The Urban Property Records Project of the Revenue Department of the Government of Karnataka, envisages establishment of a modern Property Record Management System in the cities of Karnataka using modern Information and Geographic Information System technologies. The Project is being executed on a Public Private Partnership basis

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  • 1. Urban Property Records (UPR) Project1 Executive Summary1.1 In the last few years while there has been a manifold increase in property prices in Urban India, Urban land management practices have remained archaic. This is despite the fact that property forms a large component of savings of most middle class Indians. A McKinsey report published in 2001 had also indicated that distortions in India’s land markets are a major barrier to economic expansion. These out dated land management processes are leading to many illegal practices affecting common citizens, financial institutions banks and also Government which through its various agencies is the largest land owner.1.2 The Ministry of Urban Development (MoUD) of Government of India proposes to rectify these deficiencies by funding Municipalities for managing property records and use GIS technologies for this purpose. However Municipalities are fundamentally property tax collection agencies and not bodies for creation and management of property records and do not have rigorous processes or legal mandate for undertaking such complex property management functions. Further just use of GIS technologies without a comprehensive property management framework will lead to some unverified partial data being created in isolation leading to huge waste of tax payers resources without any consequent benefits.1.3 The Karnataka Survey and Settlement and Land Records (KSSLR) Department has embarked on a systematic plan for creation of Urban Property Records in the State commencing with 5 major towns of Karnataka. The KSSLR derives this mandate of management of Urban Property records of the State from the Karnataka Land Revenue Act 1964, which comprehensively defines creation and management of Urban property records through a due process of law.1.4 Prior to commencing the Project, the department engaged in a pilot to test various GIS technologies in a variety of field conditions. While the primary objective of the pilot was to field test various technologies, an important learning that emerged was Page 1 of 10
  • 2. that the task of identifying properties and their corner boundary points was the most important requirement for creating spatial property records. The Department felt that this critical responsibility needs to be performed by Departmental officers only.1.5 The KSSLR department identified the various components for creation of property records Management system. For the core area of creation of property records involving collection of spatial survey and title enquiry, a vendor has been engaged to support the Department and some tasks outsourced to it. To enable the Department to fulfill its role, a Project Management Unit comprising of senior officers of the department has been created and further 137 surveyors have been provided extensive training in modern methods of survey.1.6 The tasks of creating the software solution for management of the database of property records and creation and management of citizen centres have been outsourced to Private Partners. The Project envisages linkages of the property records system with databases of Urban Local bodies, Revenue Department and Registration department to enable seamless management of property data as well as property transactions1.7 Normally such activities like creation and maintenance of property records are thought of as sovereign functions of the Government, but the UPOR project is being outsourced on a PPP basis. A business model for the UPOR project has been devised involving delivering of property record services and charging user fees. Both work packages for various types of outsourced partners and the revenue sharing arrangements have been innovatively structured.1.8 The execution of the Urban Property records on a PPP basis has bolstered the capabilities of the SSLR Department and will enable delivery of these services in an efficient and citizen friendly manner. As is well known in such PPP projects, The Private partner brings manpower and technical capabilities and is incentivized to implement the project efficiently in a time bound and citizen friendly manner. The project outcome is enhanced as the work area of SSLR department is Page 2 of 10
  • 3. confined to discharging its core regulatory responsibilities and supporting the project implementation through its areas of expertise.2 Project Background2.1 Accurate and well maintained land records are of great importance to a smoothly functioning economic system as it enables faith in the transaction and a larger number of people can participate in land related transactions. A McKinsey report indicated that distortions in India’s land markets are a major barrier to economic expansion (‘India: The Growth Imperative – Understanding the Barriers to Rapid Growth and Employment Creation, McKinsey Global Institute, 2001). The requirement for well maintained land records is more so in urban areas, where the property prices are significantly high and urban economy comprises a very high share of the Country’s Gross Domestic Product (GDP).2.2 In absence of property records, Citizens feel that the property tax records maintained by the Municipal Corporations are in fact legal property records. Further citizens feel satisfied about the authenticity of their rights on a property based on the “Registered” property transaction document.2.3 In Karnataka, as per the Karnataka Land Revenue (KLR) Act 1964, the Department of Survey, Settlement and Land records (SSLR) is responsible for management and maintenance of property records in Urban Areas. The KLR Act provides a comprehensive framework to the Karnataka SSLR department for creation and management of urban property records. Further the act provides a due process of law and provisions for appeal for property owners who may be aggrieved in the process of creation of property records.2.4 The SSLR department continues to maintain urban property records in Bangalore, Mysore and similar other 41 towns of Karnataka. However both due to paucity of manpower and financial resources, the records in many of these towns have become outdated and further property records for the new areas of the city have not been created. Page 3 of 10
  • 4. 3 Modern Urban Property Records Management3.1 Given that Urban Property records don’t exist any, there is a need to undertake a survey of all properties both regarding their spatial dimensions and also the “rights “that exist on any property. Further there should be an exercise to determine how the present urban property has been derived from the original agricultural property.3.2 Any initiative for undertaking spatial survey of Property records should leverage modern Geographical Information Systems (GIS) technology.3.3 Once such a robust base data of urban property records is created, processes for administration of property records needs to be instituted such that these property records continue to remain current.3.4 To manage such a modern urban property records system there is a need for creation of a robust IT infrastructure for storage and management of the Property records database.3.5 Further Citizen Service centers need to be established for delivery of various services related to Property Records like issue of property records, acceptance of requests for mutations etc.3.6 Establishment of a modern system of Urban Property Management system as mentioned above is not cheap and may cost about for any city Rs. 200/- per property parcel. Thus such a cost for a metropolitan city like Bangalore with about 20 lakh property parcels may amount to Rs. 40 Crore.4 Urban Property Ownership Records Project of Karnataka4.1 Karnataka SSLR department given its mandate to maintain and manage urban properties initiated creation of property records for the entire state starting with the five cities of Mysore, Hubli-Dharwad, Mangalore, Shimoga and Bellary.4.2 There are many technologies to choose from for spatial data creation like ground based survey using Electronic Total stations (ETS) or Digital Global Positioning Systems (DGPS) or aerial survey techniques using Satellite based imagery. To understand the appropriateness of each technology, the department initiated a Page 4 of 10
  • 5. pilot project in 4 smaller towns of the State that had different terrain conditions where each of the above methodologies was tested. The results of the Pilot showed the clear advantage of ground based survey techniques through use of ETS and DGPS4.3 While the pilot was implemented for field testing of technologies, it was found out that for creation of accurate urban property records, both processes of Identification of properties and further determination of the corner points of the property was very important. This could be done accurately only by the officials of the SSLR department and hence in the final project execution, the Department decided to undertake these tasks to support the creation of property records.4.4 Given the requirement of both funds as well as additional manpower for such an exercise, the department felt that such an activity could be best executed under a Public Private Partnership (PPP) Model Basis4.5 The department felt that Vendors could be outsourced the following activities 1. Support the Department in creation of the base Urban property records data through spatial survey and collection of documents from property owners 2. Create the IT Infrastructure for management of the property records, 3. Create and manage Citizen Service Centres and Create back offices for processing of requests of Citizens regarding property records4.6 The Vendors would need to invest for the above tasks and recover their investment only through a share of the user charges for delivery of such services to citizens4.7 The Department would continue to discharge its core regulatory responsibility in the implementation of project and would have the following roles 1. Identify properties and the corner point of properties for the task of creation of spatial records 2. The KLR Act 1964 provides a due process for creation of property records and for this project also the Department would follows the necessary Page 5 of 10
  • 6. processes including inter alia serve notices to property owners, conduct enquiry on the property regarding, title and rights and trace ownership from conversion of the property from the time it was agricultural land to its current form as an urban property. 3. Approve any change to the property record5 Reason for PPP model of UPOR Project5.1 The Department decided to execute the Project on a PPP mode as the cost of creation and management of property records in five towns would be about Rs. 18 Crore and the Department had funding of only Rs. 5 Crore for such an initiative. Further such a project would need deployment of many types of skilled persons and the Department internally did not have so many people on its rolls, nor could it engage in such an elaborate recruitment exercise.5.2 Further it was seen that mostly Government departments are not able to complete the exercise of creation of property records for e.g. the Karnataka Urban Development Department has initiated such an exercise, but despite expenditure of few Crores, the project had not reached its desired objectives and is still in progress.5.3 Also from examples of Bangalore One, E-Seva, operation of Road Transport Organisation (RTO) it has been seen that work involving delivery of public services can be done in an efficient manner through a PPP model as the Vendor could be held accountable for quality of Service and the Government Department can execute its core regulatory responsibility.5.4 The Bhoomi Project of Karnataka had also established that when property records are easily accessible, the demand for both the property record and recording of property transactions by citizens increases. Thus revenue streams from such projects may be substantial leading to viability of such projects to be executed in a PPP manner. Page 6 of 10
  • 7. 5.5 Service delivery projects such as Urban Property record projects need an upfront investment but provide revenue streams from delivery of public services to Citizens on a continuous basis. Thus support in creation of public service delivery infrastructure and obtaining a share of the user charges would be a viable business opportunity for the private sector.5.6 Further the project outcomes and deliverables of the outsourced partners were easy to define. Execution of such projects on PPP model provides some flexibility to the Vendor to choose methodologies, leverage prior competencies etc and RFPs for selection of vendors need to specify mainly outcomes and do not need to prescribe very detailed specifications.6 Urban Property Records project – Implementation modalities6.1 As mentioned earlier in paragraph 3.5, the UPR project involved three separate activities for Vendors 1. Support the Department in creation of the base urban property records data. This work is normally executed by Survey companies 2. Create the IT Infrastructure including the Software solution for management of the property records. This work is normally done by Software solution companies 3. Create and manage Citizen Service Centres and Create back offices for processing of requests of Citizens regarding property records. This work is mainly done by IT service companies6.2 There could be many ways of tendering out the above work for e.g. the entire work could be given to only one entity or it could be parceled in three parts. Generally Survey companies that would undertake spatial survey prefer to obtain payments for work immediately and it was thought that they would not like to invest in a PPP project. However it has been seen that IT companies had become comfortable with PPP projects. Given this background, works under s no. 1 and S No.3 were clubbed as one parcel. Another learning from the pilot was that manpower needed Page 7 of 10
  • 8. for survey was in short supply , hence it was decided to not to have only one firm for the entire work of Survey and have at least 3 companies executing the work in the five towns. Given the disparate nature of the work package for works described in s no. 1 & 3 in para 6.1, consortium comprised of firms with capabilities in Survey work and IT services were allowed to bid for this work package.6.3 It was decide to recover user charges from Citizens for a variety of Property record related services like issue of property records, and various property record related transactions. The user charges would be based on the type and value of properties, though some concessions were given to property owners belonging to economically weaker sections of the society.6.4 It was decided to select the Vendors through a two stage tendering process. Firms would be first shortlisted based on eligibility conditions of technical capability, prior experience of related works and financial strength. Thereafter their technical bids would be evaluated and firms shortlisted for the financial evaluation. In the financial bid these firms would submit their expectation of the revenue share of the various property related user charges. Such rates submitted by the bidders would be harmonized to a single number to select the most competent bidder for the various types of works.6.5 An innovation in the financial bid submission process was to prescribe minimum caps for revenue share of the bidders to prevent freak rates.6.6 The Department also provided the funding available with it as viability gap funding to both the types of Vendors.7 Other preparatory efforts of the Department7.1 In addition to initiating a pilot project as mentioned in Section 5, the Department invested substantially in manpower development to enable it to discharge its responsibilities and support the execution of the project by the Vendors. Page 8 of 10
  • 9. 7.2 A Project Monitoring Unit comprising of 4 competent and motivated 2nd level officials of the department (Deputy Director of Land Records) was created within the department both for formulation of the Project and for eventual execution of the Project.7.3 About 137 Surveyors of the Department were identified for execution of the Project. The Department had previously bolstered the departmental training institute in Mysore and these 137 surveyors were provided intensive training of one month on modern survey techniques and title enquiry process. This team of 137 surveyors also executed the entire responsibility of creation of property records for 4000 property records of Mysore to understand all aspects of the activity to be executed under the project.8 Current Status of UPOR project8.1 The Vendor selection for the project was completed by November 2010 and the various tasks envisaged under the project like survey of properties and creation of the IT infrastructure has commenced.8.2 The project underwent a setback for a period of one year as the Project champion was transferred however with the re-instatement of the champion in January 2011, the project is back on track9 BENEFITS FROM UPOR PROJECT9.1 The UPOR project is expected to yield substantial benefits to all stakeholders 1. The Property owners holding genuine titles to property will be assured of their ownership 2. Prospective buyers of properties will be assured of the genuineness of the property offered for sale and all encumbrances are systematically recorded 3. Banks will be sure of lending money against property. Consultation held by Department with Banks & RBI showed that Banks were enthusiastic about the Project Page 9 of 10
  • 10. 4. The Urban local bodies will have a comprehensive database of all properties in their cities, which will aid their tax collection. 5. A project of this nature would also safeguard government land and urban amenities like gardens, parks etc.10 Learnings of the Project10.1 The UPOR project demonstrated that execution of a project on a PPP mode is not outsourcing of responsibility and the Department needs to discharge its core regulatory responsibilities. Further it needs to augment its capacity to support the execution of the project by vendors.10.2 Creation and management of property records is thought as a sovereign function of the Government but parts of such responsibility can be outsourced innovatively in form of PPP projects.10.3 PPP projects can thus augment the capabilities of the department and also provide it with financial resources to execute projects10.4 Outsourcing of such projects on PPP model needs to be done creatively regarding allocation of works to various types of vendors and creation of the business model for such vendors.10.5 Leadership continues to remain important in execution of such innovative projects. Page 10 of 10