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Affordable Rental Housing Complexes (ARHCs) for Urban Migrants/ Poor

Affordable Rental Housing Complexes (ARHCs) for Urban Migrants/ Poor
Affordable-Rental-Housing-Complexes-ARHC

SCHEME CONTEXT
1.1 COVID-19 pandemic has resulted in reverse migration of workers/ poor in the country. Urban migrants/ poor consisting of workers in manufacturing industries, domestic/ commercial establishments, health sector, service providers, hospitality industry, construction or other such sectors play an important role in urban economy. They come from rural areas or small towns for seeking better employment opportunities in urban areas. In order to maximize savings, they often compromise with living conditions to send remittances to families left behind at their native places. Usually, they live in slums, informal/ unauthorized colonies or peri-urban areas to save on high rental charges. They spend lot of time on roads by walking/ cycling to workplaces, risking their lives to cut on expenses. It also causes drudgery/ anxiety/ psychological breakdown and health problems because they compromise on rest, recuperation and hygiene conditions. Provision of rental housing options closer to workplace will improve their productivity. Therefore, providing ease of living through access to dignified affordable housing close to their workplace is an imperative.
1.2 Housing being one of the basic necessities of life and the same is also espoused in Directive Principles of State Policy enshrined in Constitution of India. A large proportion of urban migrants/ poor from all categories may already have a house or own a piece of land in their respective place of domicile. They may not be interested in ownership housing in urban areas and generally look for affordable rental accommodation to save on expenses. The affordable rental housing will promote inclusive urban development and prevent growth of slums.
1.3 Government of India aims to promote economic activities through the vision of “AatmaNirbhar Bharat”. In line with the vision of Self-reliant India, Ministry of Housing and Urban Affairs (MoHUA) after consultation with concerned Central Ministries/Departments, States/UTs and other stakeholders from Private/Public Sector has launched ARHCs scheme for urban migrants/ poor as a subscheme under PMAY (U). This will promote Private/ Public Entities to Construct, Operate and Maintain rental housing complexes for urban migrants/ poor.

2. BACKGROUND
2.1 Jawaharlal Nehru National Urban Renewal Mission (JnNURM) and Rajiv Awas Yojana (RAY) were implemented from 2005- 2014 to provide pucca houses to slum dwellers on ownership basis. In these schemes, a total of 13.83 lakh houses were sanctioned, of which 12.24 lakh have been completed till date. After all efforts to allot remaining houses to eligible beneficiaries, around 1.08 lakh houses under JnNURM/ RAY are still vacant in 159 cities which are potentially available for affordable rental houses for urban migrants/ poor presently. 

2.2 A large portion of available vacant land is lying unutilized with Industries, Trade Associations, Manufacturing Companies, Educational/ Health Institutions, Development Authorities, Housing Boards, Central/ State Public Sector Undertakings (PSUs) and other such Entities. While finding suitable land in the city near centres where migrants work/ study is a challenge, Entities who own huge lands have an opportunity for construction of ARHCs. However, certain restrictions posed under local planning and Development Control Regulations (DCR) do not permit them to utilize available vacant land for offering affordable housing facilities to migrants/ poor. There is a need to create an ecosystem with appropriate policy initiatives by Government of India (GoI), States/UTs/Urban Local Bodies (ULBs)/Parastatals through enabling suitable provisions and incentives to utilize available potential.

3. PRINCIPLES AND OBJECTIVES
i. To address the vision of ‘AatmaNirbhar Bharat Abhiyan’ significantly by creating a sustainable ecosystem of affordable rental housing solutions for urban migrants/ poor.
ii. To achieve overall objective of “Housing for All” encompassing the need of affordable rental housing for urban migrants/ poor. ARHCs will provide them dignified living with necessary civic amenities near their place of work.
iii. To create a conducive environment by incentivizing Public/ Private Entities to leverage investment for creating affordable rental housing stock to take care of their own requirements for workforce and also cater to neighboring areas, if they have available vacant land.

4. COVERAGE AND DURATION
i. ARHCs will be implemented in all Statutory Towns as per Census 2011 and Towns notified subsequently, Notified Planning Areas and areas of Development/ Special Area Development/ Industrial Development Authorities. States/UTs may consider any project as ARHCs in any other areas after due notification.
ii. Projects under ARHCs will be applicable for consideration and funding till PMAY (U) Mission period i.e. March 2022.
iii. Projects approved during the Mission period will continue for another 18 months to enable fund release and completion of projects.

5. TARGET BENEFICIARIES
i. Beneficiaries for ARHCs will be from Economically Weaker Section (EWS)/Low Income Group (LIG) who are urban migrants/poor. They include labour, urban poor (street vendors, rickshaw pullers, other service providers etc.), industrial workers, and migrants working with market / trade associations, educational / health institutions, hospitality sector, long term tourists /visitors, students or any other persons of such category.
ii. Preference under the Scheme shall be given to persons belonging to Scheduled Castes/Scheduled Tribes/Other Backward Classes, Widows and working Women, Divyang, Minorities, subject to beneficiaries being from EWS/LIG segments as provisioned by the Government.

6. STRATEGY AND APPROACH
This scheme shall follow a 3-E Strategy for implementation of ARHCs by adopting effective and efficient mechanisms as illustrated below: 
Affordable-Rental-Housing-Complexes-ARHC-1
A. Model -1: Converting existing Government funded vacant houses in cities into ARHCs through Concession Agreement for 25 years.
i. Government funded houses constructed under JnNURM and RAY for slum dwellers are on ownership basis; however, some of them are lying still vacant and unutilized. To make them livable for rental purposes for migrants/poor, further repair/retrofitting along with necessary civic infrastructure facilities may be required.
ii. Concessionaire will Repair/Retrofit, Develop, Operate and Transfer (RDOT) ARHCs to ULBs after completion of contract period.
iii. Concessionaire will Repair/Retrofit buildings and ensure that all civic infrastructure gaps like water, sewer/ septage, sanitation, internal road etc. are addressed to make it livable. Thereafter, these will be Developed as ARHCs and Operated for concession period of 25 years and Transfer these complexes in livable condition to ULBs after completion of contract period.
iv. Necessary Social Infrastructure (e.g. health centres, anganwadi, creche, community centres etc.) and Neighbourhood Commercial facilities (e.g. shops, grocery store, medical shops, milk booths, ATM etc.) within the campus may also be developed by Concessionaire as per the requirement of States/UTs/ULBs.
v. Project design may include innovative systems for rainwater harvesting, waste management including waste water treatment, renewable resources with special focus on solar energy.
vi. Initial affordable rent of ARHCs will be fixed by the local authority based on a local survey prior to the issuance of Request for Proposal (RFP) by ULBs.
Subsequently, rent will be enhanced biennially by 8%, subject to maximum increase of 20% in aggregate, over a period of 5 years, effective from the date of signing the contract. Same mechanism shall be followed over the entire concession period i.e. 25 years.
vii. Concessionaire and Tenants (including institutions) will sign a rent agreement abiding to applicable rules and regulations. Tenants will abide by the contract terms and vacate premises without any dispute. In the event that Tenant is found indulging in any unlawful activities & fails to abide to terms and conditions of rent agreement, Concessionaire will have eviction rights during the contract period and his decision will be considered as final.
viii. Concessionaire will be selected through a transparent process by ULBs. While bidding, affordable rental amount and period of concession shall be considered as fixed parameters and selection of Concessionaire will be made on the basis of bidder offering maximum positive premium to ULBs. In case of negative premium, bidder requiring lowest negative premium will be selected and will be eligible for Viability Gap Funding (VGF).
ix. In case, Concessionaire offers positive premium, it will be shared with the ULBs as per the terms & conditions of RFP by respective ULB/State/UT. 
x. Consortium will be permissible through partnering with other agencies for participating in the tender process, project financing, management, implementation and operation of ARHCs.
xi. In case of VGF, States/UTs/ ULBs may utilize funds already released as Central Assistance under JnNURM and RAY along with corresponding State/UT share. If additional funds are required for VGF, it may be borne by States/UTs/ULBs from their own resources.
xii. Concessionaire may tie up with Aggregator(s) to rent out houses.
xiii. After completion of contract period i.e. 25 years, Concessionaire will hand over ARHCs to ULB. Thereafter, ULB may restart next cycle of concession agreement like earlier or operate complexes on their own.
xiv. In order to encourage proactive participation from public/private Entities, following incentives have been proposed for Concessionaire through Government of India:
a. Exemption of Income Tax on any profits and gains derived from operation of ARHCs on similar lines as that of ‘Affordable Housing’ under section 80-IBA of Income Tax Act, 1961.
b. Exemption of GST on any profits and gains derived from operation of ARHCs, at par with rental services of residential premises, vide Notification number 12 of 2017- Central Tax (Rate) dated 28th June 2017.
c. Project finance/loan at lower interest rate through concessional window under Affordable Housing Fund (AHF) by Housing Finance Companies (HFCs) and Priority Sector Lending (PSL) by Commercials Banks, upon inclusion of ARHCs in Harmonized Master List (HML) on the same lines of ‘Affordable Housing’.
xv. Additionally, following benefits to Concessionaire have been proposed through States/UTs/ULBs/Parastatals:
a. States/UTs/ULBs/Parastatals shall follow single window system for approval of design/ drawings and other statutory approvals within 30 days, after which proposed project will be considered as deemed approved for construction.
b. Necessary trunk infrastructure facilities like road, sanitation services, water, sewerage/septage, drainage, electricity etc. up to project site will be provided by States/UTs/Parastatals without any additional cost to Concessionaire.
c. Municipal services such as water supply, electricity, house/ property tax, sewerage/ septage charge etc. for operation of ARHCs will be levied at par with residential projects.
xvi. States / UTs/ ULBs/ Parastatals which utilise their vacant EWS/ LIG housing complexes developed from own funds by converting them into ARHCs under PPP mode through Concessionaire or by public agencies, will be eligible for similar incentives/ benefits on the same lines as of Model-1.

B. Model-2: Construct, Operate and Maintain ARHCs by Private Entities (Industries, Industrial Estates, Institutions, and Associations)/ Public Agencies on their own available vacant land.
i. ARHCs will be constructed, operated and maintained by Entities on their own vacant land for 25 years by themselves.
ii. Entity can Partner or associate with other Entities for land arrangement, project financing, implementation and operation & maintenance.
iii. ARHCs constructed through this model will consist of a mix of Dwelling Unit (DU) (upto 30 /60 sqm carpet area each) and Dormitory of 4/6 beds (upto 10 sqm carpet area per bed) including all common facilities. Minimum size of dwelling units (single/double bedroom) and dormitories shall conform to the requirement of National Building Code (NBC) and State/ Local Authority norms.
iv. A single project of ARHCs shall have at least 40 DU (double bedroom/ single bedroom) or equivalent dormitory beds (1 single bedroom unit of upto 30 sqm carpet area is considered equivalent to 3 Dormitory beds). There will be complete flexibility to Private/Public Entities to have any mix of single/double bedroom and dormitories (4/6 units). However, to ensure that such complexes are used
for urban migrant/poor of EWS/LIG category and not misused for any other purposes, a ceiling of maximum 1/3 dwelling units (33%) in double bedroom form in any project of ARHCs has been provisioned. For example, if total number of units in one project is 120, the Entity may have any combination of single bedroom /double bedroom /dormitory bed, but number of double bed rooms cannot be more than 40. The prospective Agencies/Entities may propose DUs/Dormitories as follows:
Affordable-Rental-Housing-Complexes-ARHC-2

v. DUs and Dormitories under ARHCs shall be designed and constructed as per the requirement of structural safety against earthquake, flood, cyclone, landslides etc. conforming to NBC and other relevant Indian Standards including local byelaws.
vi. ARHCs projects should have basic civic infrastructure facilities like water, sanitation, sewerage/septage, drainage, road, electricity etc. including necessary social/commercial infrastructure. Project design may include innovative system of rainwater harvesting, waste management including waste water treatment, renewable resources with special focus on solar energy.
vii. Initial, affordable rent of ARHCs will be fixed by Entity as per local survey. Subsequently, Entity can increase rent biennially at 8%, subject to maximum increase of 20% in aggregate, over a period of 5 years, effective from the date of signing contract. Same mechanism shall be followed over the entire concession period i.e. 25 years.
viii. Entity may use ARHCs to provide accommodation to their own workers/ labours as well as serve the requirement of neighboring Entities.
ix. For sustained occupancy and continued revenue, Entity may tie up with other Entities/Organizations or get migrant labour/ urban poor through Aggregators. Rent may be remitted by such agencies deducting directly from the salary/ fee/any kind of remuneration etc. of tenants.
x. Entity themselves or through associated Institutions/Organizations may organize suitable point-to-point transport, if needed. Expenditure for the same may be recovered from tenants at affordable rate.
xi. All projects under ARHCs shall be exclusively used for rental housing purposes for aforesaid target groups for a minimum period of 25 years.
xii. In order to safeguard the interest of stakeholders and avoid conflict/complication, ARHCs will be kept outside the purview of existing State Rental Laws by States/UTs. ARHCs shall be governed by Model Tenancy Act (MTA) or modification of their existing laws in the line of MTA for speedy resolution.
xiii. In order to encourage Public/Private Entities to operationalise ARHCs, following incentives have been proposed by Government of India:
a. Entity will be eligible to get exemption of Income Tax on any profits and gains derived from operation of ARHCs on similar lines as that of ‘Affordable Housing’ under section 80-IBA of Income Tax Act, 1961.
b. Entity will also be entitled to get exemption of GST on any profits and gains derived from operation of ARHCs at par with rental services of residential premises, vide Notification number 12 of 2017- Central Tax (Rate) dated 28th June 2017.
c. Entity shall receive project finance/loan at lower interest rate through concessional window under Affordable Housing Fund (AHF) by Housing Finance Companies (HFCs) and Priority Sector Lending (PSL) by Commercials Banks, upon inclusion of ARHCs in Harmonized Master List (HML) on the same lines of ‘Affordable Housing’.
d. Entity should preferably use innovative emerging construction systems which help in faster construction, better structural and functional performance. Application of innovative construction technologies at limited scale has cost implications. To offset this impact and absorb cost implication and other related factors, Technology Innovation Grant (TIG) has been provisioned. TIG will be a financial grant under PMAY (U) through Technology Sub-Mission (TSM). 
xiv. In addition to the above incentives, it is proposed that Entity will also get the following benefits through States/UTs/ULBs/Parastatals:
a. Concerned State/UT will provide “Use Permission” changes for houses on vacant land, if needed.
b. State/UT may also provide 50% additional Floor Area Ratio (FAR)/ Floor Space Index (FSI) free of cost through necessary changes in local planning and Development Control Regulations (DCR).
c. States/UTs/ULBs/Parastatals shall follow single window system for approval of design/ drawings and other statutory approvals within 30 days, after which proposed project will be considered as deemed approved for construction.
d. Necessary trunk infrastructure facilities like road, sanitation services, water, sewerage/septage, drainage, electricity etc. up to the project site will be provided by States/UTs/Parastatals without any additional cost to Entity.
e. Municipal services such as water supply, electricity, house/ property tax, sewerage/ septage charge etc. for operation of ARHCs will be levied at par with residential projects.
f. Entity can rent or sell permissible commercial built up area as per local regulations.

7. IMPLEMENTATION METHODOLOGY
a) States/UTs will sign the Memorandum of Agreement (MoA) with MoHUA for implementation of ARHCs and extend incentives as mentioned in para 6 of ARHCs Operational Guidelines. 
b) ARHCs will be implemented only in those States/UTs which have signed MoA with MoHUA.
c) States/UTs after signing of MoA with MoHUA, may issue necessary directions to concerned departments for all required incentives/benefits to be extended to Entity/Concessionaire for smooth implementation of ARHCs.
d) For participating in this scheme, any Agency fulfilling the requirement of the scheme will be eligible and may apply through ULB or ARHCs website.
e) Concessionaire/ Entity may tie up with local industry/ manufacturers/ service providers/ educational/ health institutions/ market associations/ others employing urban migrants/ poor to provide accommodation in-block and remit rental by deducting directly from their salary/ fees/ any kind of remuneration, as feasible. Existing vacant houses of scattered nature shall not be considered as ARHCs.
f) These rental housing complexes may also be run through partnership with Aggregators.
g) ARHCs shall be given on rent to urban migrants/ poor of EWS/LIG categories as detailed in para 5 of ARHCs operational guidelines.
h) Suitable grievance redressal system should be set up at both State/UT and City level to address the grievances in implementing this scheme from various stakeholders.
i) Allotment of houses on rent to urban migrants/poor (beneficiaries) is the responsibility of States/UTs/State Parastatals through PPP partners (private/public). Use of Aadhaar or any other Govt. approved identification document will be made mandatory.
j) ARHCs will include on-site infrastructure development such as internal roads, pathways, green area & open spaces, boundary wall, water supply, sewerage/septage, drainage, external electrification etc. to make it livable. DUs shall essentially include water supply, electricity, kitchen and toilet; Dormitories with separate bed/side table, shelves, lockers, common facilities of kitchen and toilet.
k) All projects under ARHCs shall be exclusively used for rental housing for aforesaid target groups for a minimum period of 25 years. In case, ARHCs are found being used for any other purposes than rental under this scheme, appropriate action will be taken against the Agency , as per applicable laws by the competent authority. Moreover, all incentives/benefits availed by Agency will be recovered with applicable interest.
l) For Model-1 following process will be followed:
i. A model RFP will be prepared and circulated by MoHUA to State/UTs. Concerned ULBs may customize and publish the RFP as per their requirements for selection of Concessionaire through State/UT e-Procurement Portal/ Govt. of India e-procurement portal. Compliances to all necessary modalities as per General Financial Rules (GFRs)-2017/State Financial Rules shall be complied by States/UTs.
ii. States/UTs will sort out all issues in a transparent manner before issuance of RFP pertaining to beneficiaries as per sanctioned DPR, construction related matters with existing contractors/developers (if any) or any other issues as deemed fit. Resolution of any conflict, issues with respect to availability of vacant houses will be the responsibility of concerned States/UTs/ULBs/Parastatals.
iii. States/UTs after obtaining approval from State Level Sanctioning and Monitoring Committee (hereinafter referred as SLSMC) constituted under PMAY (U) will appraise Central Sanctioning and Monitoring Committee (hereinafter referred as CSMC) about ARHCs for information and records.
iv. All projects under this scheme will be required to be listed as ‘ARHCs Projects’ by States/UTs. Details of ARHCs projects (for both models) shall be forwarded to SLNA for approval by SLSMC and the same will be uploaded by concerned ULBs on ARHCs website.
v. Listing of ARHCs projects will enable Entity to claim relaxations and incentives/ benefits provided by Central Government and State/UT Governments as mentioned in para 6.
vi. States/UTs/ULBs/Parastatals after signing of contract shall handover the existing vacant houses/buildings to Concessionaire for repair/retrofit, development and operation of ARHCs for a period of 25 years.
vii. The flowchart showing steps for implementation of ARHCs through Model-1 is as under: 
Affordable-Rental-Housing-Complexes-ARHC-3
m) For Model-2, the following process will be adopted:
i. Initially, MoHUA will issue an Expression of Interest (EoI) where Entities would submit their application with necessary documents on dedicated website of ARHCs. The applications will be downloaded by concerned States/UTs/ULBs for shortlisting the Entities, based on eligibility criteria defined in EoI document.
ii. Shortlisted Entities shall submit Detailed Project Report (DPR) to the respective ULBs for further processing and upload a copy of DPR on ARHCs website.
iii. States/UTs shall submit Listed project with basic details to MoHUA as per attached format i.e. Annex-2.
iv. After review and ascertaining all documentary requirements, ULB may forward recommendations to SLNA for approval of SLSMC and Listing as ARHCs.
v. Entity will submit the application for approval of layout/building plan with necessary supporting documents as per requirement of respective approving authorities. ULBs shall provide statutory approvals within a time bound period i.e. 30 days from the date of receipt of application through online or physical submission. An indicative design of Dwelling Unit and Dormitory is placed at Annex-3.
vi. After approval of SLSMC and other statutory approvals, the project will be ‘Listed’ by the State as an ARHCs project. Following which, Housing/Urban Development Department of State/UT may issue necessary directions to concerned ULBs to provide required incentives/ benefits intertwined with the scheme. 
vii. In case of adoption of innovative technology and corresponding TIG requirement, the DPR will be forwarded by the State/UT to MoHUA for consideration after approval by SLSMC. The DPR will be further appraised by BMTPC and presented before CSMC for approval for TIG. Composition of CSMC/ SLSMC is at Annex-4.
viii. TIG will be applicable only for the use of new technology for construction of a new building under ARHCs. However, no grant under TIG will be given to any Public/Private Entities for enhancement of existing buildings.
ix. The flowchart showing steps for implementation of ARHCs through Model-2
is as under: 
Affordable-Rental-Housing-Complexes-ARHC-4

8. ROLES AND RESPONSIBILITIES
Implementation of ARHCs will be done by MoHUA, States/UTs/ ULBs/Parastatals and Entity/Concessionaire and their roles and responsibilities are detailed below:

For Model-1
Government of India
a) MoHUA will disseminate Operational Guidelines of ARHCs for smooth implementation of the scheme.
b) MoHUA will prepare model RFP and circulate to all States/UTs for further suitable customization and issuance by ULBs for selection of Concessionaire for Repair/Retrofit, Develop, Operate and Transfer (RDOT) ARHCs.
c) Project Monitoring through CSMC.
States/UTs/ULBs/Parastatals
a) Prepare project inventory of houses available for converting as ARHCs.
b) Project wise estimation of retrofit and repair cost shall be prepared for feasibility before issuance of RFP.
c) Initial affordable rent shall be fixed by ULBs based on local survey prior to issuance of RFP.
d) Concessionaire should be selected through RFP after following online bidding process for a period of 25 years.
e) Handover the existing vacant houses/buildings to Concessionaire for repair/retrofit, development and operation of ARHCs.
f) Facilitate tie up between Entity and Public/Private bodies for migrants in factories, industries/ institutions requiring rental accommodation for ensuring occupation and continued revenue.
g) Provide necessary trunk infrastructure facilities like road, sanitation services, water, sewerage/septage, drainage etc. up to project site without any additional cost.
h) Quality assurance of repair/retrofitting, infrastructure development of existing vacant houses.
i) Project Monitoring through SLSMC.
Concessionaire
a) Repair/retrofit/develop ARHCs along with infrastructure to make it livable.
b) Agreement with local factories/ institutions /association etc. for occupancy should be made by Concessionaire.
c) ARHCs should be Operated & Maintained for 25 years.
d) Handover the project to States/ULBs post contract period. 

For Model-2
Government of India
a) MoHUA will disseminate Operational Guidelines of ARHCs for smooth implementation of scheme.
b) MoHUA will develop ARHC website for documentation, knowledge sharing and management of ARHC projects.
c) Issuance of Expression of Interest (EoI) for shortlisting of Entities through concerned States/UTs/ULBs.
d) Project approval by CSMC, if ARHCs are being proposed using identified innovative technologies.
e) Technical assistance and Third Party Inspection & Monitoring through BMTPC for projects using TIG.
f) Project Monitoring through CSMC.
States/UTs/ULBs/Parastatals
a) Identify and invite Public/Private Entities having vacant land available.
b) Provision for ‘Use Permission’ changes for housing, if needed.
c) Approval of 50% additional FAR/FSI over and above existing, free of cost.
d) Fixation of affordable rent based on local survey.
e) Provide necessary trunk infrastructure facilities like road, sanitation services, water, sewerage/septage, drainage etc. up to project site without any additional cost to Entity.
f) Approval of design/drawing (30 days single window)
g) Listing of the projects as ARHCs.
h) Project Monitoring through SLSMC.
Entity
a) Construct ARHCs on their own available vacant land.
b) Engage with agencies employing migrants, institutions needing accommodation for students or Aggregators catering to medium to long term stay needs of urban migrants/ poor.
c) Operation & Maintenance of ARHCs for 25 years.

For detailed information and above mentioned Annex Documents, please visit the official website.
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