Scam in the making?

By Ahmad Rafay Alam

The Lahore Development Authority (LDA) has proudly unveiled what they tout is their new Commercialisation Policy, 2009. It is a list of roads that the LDA will allow "commercial activity" on, even though they were originally planned, plotted and lived in as residential areas.

"Commercialisation" is the word used in our urban management world to describe the following, and only the following, activity: the permission, by a competent authority, to allow non-residential activity on a property situated in an area zoned as residential. Too often it is mixed up with the notion of commercial activity, which it is not.

Commercial activity is the thriving trade of goods and services everyone can see on our city streets. But, to be sure, commercialisation does not mean commercial activity.

The act of allowing commercialisation presumes that the plot or area being commercialised was part of a planned scheme in which the original intention of the urban fathers was to allocate specific areas of the city for residential use, commercial activity and for the trade and industry that give cities their vitality. Such plans or schemes theoretically take into account how a city will grow and then literally plot out the shape our urban future will take.

The big question is: If such planning for a scheme took into account the future growth of the city, then how come the plan or scheme warrants the commercialisation granted years later? Surely, if someone wanted to engage in commercial activity, they would go to the nearby commercial area to see if there was space to rent or buy. Why, for instance, was commercial activity permitted way back along the residential promenade that was Davis Road? How come the companies and businesses that desperately needed office space did not think of investing within the walled city or along the Mall or Multan Road?

It's because commercialisation makes sense to a property owner who wants to make some quick money. Permission to use residentially classified land for commercial purposes increases its value, so the property owner will make a premium if permission is granted. The act of constructing a building, going by the construction technology currently employed, is not terribly technical. If the building constructed is successful – that is, if its office space is sold or leased out – the end result is a property owner who now has a means of income that will not only offset the cost of construction but also provide him a comfortable nest egg.

Commercialisation is nothing more than a modern twist on the old system of jagirdari. Anyone blessed with a large plot from the evacuee pool, a luxury residential plot in Gulberg or elsewhere or even a small plot along a wide road in any of the LDA's many approved schemes has the opportunity, if he gets commercialised, to opt out of the rat race and become, in that derogatory economics phrase, a rent-seeker. This shouldn't, but also does, make sense to the LDA.

Under the LDA Act 1975, it is an offence punishable with a fine of Rs500 a day and imprisonment of up to one year for a person to use his property for a purpose different than the one provided under a scheme unless he has the approval of the LDA. Let's be clear about this: the commercialisation of residential plots is illegal under the LDA. So why does it permit commercialisation and what, therefore, is the meaning of this new commercialisation policy that allows commercial activity in residential areas along the 31 various stretches of Lahore's roads?

The answer is simple: when you take away provincial government receipts and the dubious account entry of Rs500 million (as income for sale of land for a building, the ground-breaking of which hasn't even taken place yet), receipts from permitting commercialisation are one of LDA's main source of income. When the Government of Punjab froze its power to authorise commercialisation some two years ago, the LDA lost a major source of its revenue. So pathetic is its financial state that, the last time I checked, it had not passed a budget for this financial year – which is a legal requirement. One wonders who is paying the LDA salaries? Given this dismal situation, the income commercialisationwill bring will be a much needed shot in the arm for the LDA, even if this analogy resembles heroin use.

The LDA's Commercialisation Policy, 2009 is less of a policy than it is merely the decision to approve, on payment of fees of course, commercial activity on a number of residential plots in the city. Given the well-documented environmental havoc commercialisation brings in its wake (traffic, air pollution, solid waste, noise, the fall in property prices and the destruction of neighbourhood networks), the announcement of the policy is like dark clouds gathering over this city. Under the LDA Land Use (Classification, Reclassification and Redevelopment) Rules 2009, a District Planning and Design Committee is to approve a list of roads the LDA submits to it for permission to allow carte-blanche commercial activity. However, there is no indication that the permission granted to conduct commercial activity on the many residentially zoned roads in the policy was duly notified by such a committee. The Government of Punjab had constituted several committees, ostensibly on the finalisation of a commercialisation policy, but these are not the District Planning and Design Committee for the purposes of the law.

The new policy does come with a vision statement. There is much good in this statement, but before one can take it seriously, the fine print on the title page informs you that it is not part of any government notification and it is not a legal document. One can view it on the LDA's website but don't print it because, sadly, it isn't worth the paper it will be printed on. A lot of good work has been wasted by treating the vision statement and the spirit of the LDA's own laws in this manner.

The only purpose one can make of the statement is to equip the LDA with a defence to questions on why it will permit commercial activity on some city roads and not on others. This is necessary because Malik sahib will certainly cry discrimination when he can't commercialise his plot but Shah sahib on the other side of the road can. The ostensible answer given in the statement are that the LDA wants to encourage "central business districts" and that allowing commercial activity outside the limits of such districts will ruin the authority's plan to bring foreign investment in the property market. Anyone who buys this will probably also tell you that there is potential for a JW Marriott to open up on Lahore jail.

The other central flaw in the vision is the fact that the LDA treats Lahore as isolated from the commercial and residential developments taking place in the cantonment in the many phases of DHA. How can one take the reasoning of the LDA, as set out in the statement, seriously when it isn't even a coordinated attempt to plan for the future of the city? Once again, vested property interests have succeeded in convincing the government that it acting for the benefit of the people when, in fact, the only development the LDA is doing is for itself.