Re-development of old condos

A serious concern wherever there are aging residential condos, especially ones that are inhabited mainly by low-income residents, is what happens when the buildings become so decrepit that it is uneconomical to renovate them.

A 10.5 acre condo development in a desirable location in Colombo, Sri Lanka is facing that problem now and the government has a solution.

Foreign developers will purchase the land, build a 40 story modern condo tower to house the current residents and then develop the remaining ten acres.

Some owners are opposed to this plan while the government states that 80% of the owners are in favour.

Which side is right? Who can tell.

However, the government states that the main issue is that the existing buildings are unsafe and that the condo corporations who were responsible for repairs and replacements did not raise sufficent monies over the years to fulfill their responsibilities.

Revolt in Bamba Flats over new giant condo plan
The Sunday Times
24 July 2016
By Chamal Weerakkody

Dismayed residents of Bambalapitiya Flats are up in arms against the proposed redevelopment of the precinct, panicking over the proposed demolition of their homes and their removal to new quarters.

Individuals have sent letters rejecting the proposed redevelopment project and demanded that the Condominium Management Authority (CMA) abandon the proposal within the next week.

The proposed government plan would see most of the 10.5 acres of land currently occupied by the apartment blocks redeveloped with one acre set apart for a 54-storied condominium to which the residents would be relocated.

The President of the Bambalapitiya Flats Welfare Association (BFWA), N. Ragunanthan, expressed his frustration over the CMA’s strategy to forcibly acquire their property. Mr. Ragunanthan said residents had received a letter on June 26 and a brochure with a floorplan of the proposed condominium, and been given 14 days to respond.

He said the CMA had approached residents on three occasions, in 2012, 2014 and 2016, requesting consent to initiate a redevelopment project. In 2014, the residents had been presented with a proposal to refurbish the existing apartments. Seventeen residents’ representatives had attended the meeting and had requested renovations to the water tank and drainage system, Mr. Ragunanthan said.

“However, the signatures of the attended representatives were manipulated to draft a paper for the redevelopment proposal,” Mr. Ragunanthan alleged. “The CMA returned on April 1, 2016 with a brochure containing an allocation of one acre for 10 shop-owners and 300 families and rest of the nine- and-a-half acres for a foreign developer.”

Although the residents are frustrated by the CMA’s attitude they are still open to discussion on the redevelopment proposal and want amendments on majority terms and for transactions to occur in fair and transparent manner, Mr. Ragunanthan said.

The Bambalapitiya Flats consists of 17 blocks, 300 apartments, 10 retail outlets and common areas spreading across 10.5 acres. The flats were built in 1956, provided through a rental scheme for government and mercantile executives. In 1977, some of the residents received the deeds to their apartments and the rest were given deeds to their units in 1984. Common areas come under the National Housing Authority.

Most of the original deeds have been transferred by the early residents to their children born and bred at the “Bamba Flats” over the past 60 years. Mithila Malambe, a resident and former president of the BFWA, said the CMA was ignoring the needs of elderly residents with increasing mobility problems in proposing a 54-storey condominium. As well, she said, residents were worried about whether they could afford condominium fees when they were aged and their financial circumstances had changed.

A condominium manager who wished to stay anonymous said the residents would have to bear higher municipality tax and utilities charges, human resources expenses, fire insurance, sinking fund fees, maintenance fees such as pest control, solid waste management, maintenance and replacement of cabling, wiring or plumbing and upkeep of the property including any outdoor areas – all of which would amount to about Rs. 3 million a month for 300 families and 10 shops.

The CMA says the proposed condominium would have two, three and four-bedroom apartments with eight apartments on each floor, parking spaces, a stand-by generator, five passenger lifts, one service lift, a gymnasium, community centre, swimming pool and many additional features. It says Rs. 100 million would be set aside as a management fund and Rs. 50 million as a sinking fund controlled by the authority.

A CMA brochure states the “developer consortium is led by UTL Group, a Singapore- based consortium with backing from Engineering Projects India Ltd, a Govt. of India company”. Mr. Baratha Mendis, also a former BFWA president, said the CMA should have dealt with residents in a professional manner as most of them had served the country to the utmost in their respective fields.

Mr. Mendis is head of the Steering Committee set up to advise residents over the proposed condominium. BFWA Vice President Shihab Shaideen, 42, gave a brief history of the Welfare Association, saying it had been established in 1958 with a constitution and a committee elected every year through an Annual General Meeting. Income generated by the community centre was used to pay allowances for six cleaners and to light up common areas. The BFWA paid an annual municipality tax of Rs. 86,000 for the community centre and Rs. 19,000 for the playground.

He dismissed the existence of management corporations from which the CMA claimed to have obtained 17 signatures for redevelopment, saying there was no evidence for the existence of such entities – no AGMs, or minutes or bank accounts or records of meetings held since the establishment of the flats.

Management corporations, according to the Condominium Act, are responsible for the wellbeing of residents and the property. They should collect a maintenance charge from residents and have a fire insurance policy. As there are 17 blocks in the Bambalapitiya Flats there should have been a corporation for each block.

The Sunday Times was told, however, that there have not been any management corporations since the establishment of the flats (and there is no fire insurance policy). The residents had formed a common Welfare Association instead of separate committees.

Mr. Shaideen says that there are no 17 management corporations in existence and that therefore the 17 signatures obtained from people claiming to represent corporations are not valid.

He also claims that as the CMA had been formed many years after the flats were built the Condominiums Law has no authority over the flats. Resident Arul Rajasingham, 68, said in any event, according to the Condominiums Act, representatives of any such management corporations could only represent residents by proxy and would not have any authority to take decisions.
Other residents also expressed deep disquiet.

Prosper Rajanayagam, 72, said the CMA’s objective was to take over the land for a foreign developer, with no guarantee whether residents would be given apartments, and the new apartments could be of substandard construction. M. Sudaharan, 69, feared the CMA or the developer would demand that residents quit the property as soon as the deeds were transferred to them.

He said the authority had neglected to provide a management plan or any other information regarding the proposed condominium.

The CMA Chairman, C.A. Wijayaweera, dismissed these claims, insisting residents would benefit from the proposed project and see their living standards improved.

He said the Flats buildings, in their current condition, required immediate refurbishment according to the residents but the government could not bear this expense and since the owners had been given the deeds to their flats they should have undertaken the necessary renovations.

Given the lack of funds and the need to develop the area the CMA had decided to negotiate with a foreign investor as the better option for the benefit of the occupants of the flats, Mr. Wijayaweera said. He pointed out that the Land Acquisition Act permitted authorities to take over land if necessary for development.

The Act stipulates that the government can take or acquire private property for “a public purpose” on payment of compensation: the requirement must be for a public purpose. The CMA Chairman said that following the signing of a Memorandum of Understanding with the National Housing Development Authority, residents would receive legal documents of ownership of the new apartments.

He claimed that a fraction of the flats community was creating a ruckus over the situation and that most residents were willing to consent to redevelopment.

He said the CMA would negotiate only with 17 working corporations regarding the proposal but not with the Welfare Association in accordance with the Condominiums Act which, he said, specified that management corporations were the only authorised body to manage the flats.

Two options will be provided to the residents, Mr. Wijayaweera said: whether to accept the proposed free apartment or accept he monetary value of their current accommodation as determined by a property valuer.

Live in vertical slums or opt for a modern lifestyle—owners have to decide
The Sunday Times
20 November 2016

The 10.5 acres of land on which the Bambalapitiya Flats stands on was once owned by the Catholic Church (in the 1940s). It was acquired by the government of that time (soon after independence) with plans by the Ministry of Justice to build a law complex.

That was shelved and the site was handed over to the National Housing Development Authority which built the residential flats in 1956.

It comprises 17 blocks, 300 apartments, 10 retail outlets and common areas. According to the Condominium Management Authority (CMA) which is driving the re-development project, more than 80 per cent of the owners back the government’s plans for re-development.

To get more details of this development the Business Times spoke to CMA chairman C.A. Wijeyeweere:

Can you elaborate on the  re-development plans?
Under the CMA Law we have the authority to acquire condominiums that are over 40 years for the purpose of re-development to provide the people in these apartments a better lifestyle.

The Government has taken a Cabinet decision to give high priority for the re-development project. The flat owners will be provided with luxury apartments in the same premises without any cost to them. The valuable site has been earmarked as a high-yield urban block and will play a crucial role in the planning and development of the city.

These old flats are 60 years old and to remain without re-development will turn out to be vertical slums in Bambalapitiya and the heart of the city. These flats are beyond economic repair. Some of them facing the sea are in a poor state. The reinforcement of concrete slabs is corroded and roofs decayed. Some occupants run a great risk with most of the buildings not conducive for human habitations.

In terms of the law, the management corporations have failed to insure the flats against any forms of disaster.

What will happen to  the people living there?
There are 298 flat owners and 10 shop owners. They have two options. Firstly each flat owner is offered a luxury flat at no cost to them in the same premises with all modern facilities.

The second option is for the flatters who are interested in selling their flats or the apartments can get the value of the unit they own as per the determination of the government chief valuer and vacate the premises he owns. All parties will have to vacate the premises after signing an agreement with the NHDA  and  after obtaining a shifting allowance.

Where will they be relocated during the re-development?
All those flatters willing to accept a flat will be provided with a decent rent allowance until the completion of the relocation tower within the premises.

They can find alternative accommodation during the construction period. This rent will be more than the prevailing market rental rates. Two years of the agreed rent will be provided upfront, no sooner the agreement is signed.

How many towers will be built and what is the time frame for the re-development?
Around 2,000 people will be accommodated in seven towers (including one only for current owners). According to the developer, the time frame will be between 36 to 42 months. UTI Global Projects Singapore and Engineering Projects India, a company of the government of India, are the investors and developers. Their credentials have been verified by the Board of Investment.

What will be the cost of re-development and who will bear the cost?
The cost of re-development will be around US$100 million I believe. The developers will bear the cost.

Are the residents keen on the re-development?
Of course. Out of 308 owners, 80 per cent are in favour. However a small number with vested interests are against it. Most of those who oppose are tenants and unauthorized occupants, not owners. Some of these people have built unauthorised walls and acquired common areas and amenities owned by the flat dwellers. Simply speaking they are violators of the law and harassing the majority of the legal owners. Some of the unauthorised occupants, by the use of force are holding office in the Welfare Society and pressurise the elderly owners to go against re-development.

Where does the project stand right now?
The latest is very encouraging. The developer under the directions of the CMA has agreed to include proposals received from the owners to the proposed plan.

This is mainly with regard to apartment sizes, revision of the rent allowance and other facilities to be provided. On the owners’ request, the developer has also agreed to reduce the height of the relocation tower to about 30 floors above the parking area.

We will call members of each management corporation and present the revised proposal to them so that they can accept or reject it. The majority decision will be implemented and owners will have to sign a MOU and agreement with the NHDA.

The developer has also agreed to deposit Rs.100 million for a maintenance fund and a further sum of Rs.50 million for the sinking fund. In addition an income earning project will be worked out to reduce the burden of maintenance by the management corporation.

At present almost 80 per cent of the owners are looking forward to a modern apartment.

top  contents  chapter  previous  next