Ministry of Urban Development

Government of India                            June 2015

Smart Cities

Mission Statement & Guidelines

Contents

1. The Challenge of Urbanization                                                                                                   5
2. What is a ‘smart city’                                                                                                                     5
3. Smart City Features                                                                                                                      7
4. Coverage and Duration                                                                                                               7
5. Strategy                                                                                                                                         8
6. Proposal Preparation                                                                                                                   9
7. Smart Cities Selection Process                                                                                                   10
8. How Many Smart Cities in Each State/UT?                                                                               11
9. The Process of Selection of Smart Cities                                                                                  11
10. Implementation by Special Purpose Vehicle (SPV)                                                                  12
11. Financing of Smart Cities                                                                                                          13
12. Funds Release                                                                                                                             14
13. Mission Monitoring                                                                                                                   15
14. Convergence with Other Government Schemes                                                                     17
15. Challenges                                                                                                                                  18

Annexures

Smart Cities Mission

1.                               The Challenge of Urbanization

1.1     Cities are engines of growth for the economy of every nation, including India. Nearly 31% of India’scurrentpopulationlivesinurbanareasandcontributes 63% of India’s GDP(Census 2011). With increasing urbanization, urban areas are expected to house 40% of India’s population and contribute 75% of India’s GDP by 2030. This requires comprehensive development of physical, institutional, social and economic infrastructure. All are important in improving the quality of life and attracting people and investments to the City, setting in motion a virtuous cycle of growth and development. Development of Smart Cities is a step in that direction.

2.                               What is a ‘smart city’

2.1     Thefirstquestioniswhatismeantbya‘smartcity’. Theansweris, thereisnouniversallyaccepted definition of a Smart City. It means different things to different people. The conceptualisation of Smart City, therefore, varies from city to city and country to country, depending on the level of development, willingness to change and reform, resources and aspirations of the city residents. A Smart City would have a different connotation in India than, say, Europe. Even in India, there is no one way of defining a Smart City.

2.2     Some definitional boundaries are required to guide cities in the Mission. In the imagination of any city dweller in India, the picture of a Smart City contains a wish list of infrastructure and services that describes his or her level of aspiration. To provide for the aspirations and needs of the citizens, urban planners ideally aim at developing the entire urban eco-system, which is represented by the four pillars of comprehensive development — institutional, physical, social and economic infrastructure. This can be a long term goal and cities can work towards developing such comprehensive infrastructure incrementally, adding on layers of ‘smartness’.

2.3     In the approach to the Smart Cities Mission, the objective is to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions. The focus is on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will act like a light house to other aspiring cities. The Smart Cities Mission of the Government is a bold, new initiative. It is meant to set examples that can be replicated both within and outside the Smart City, catalysing the creation of similar Smart Cities in various regions and parts of the country.

2.4     The core infrastructure elements in a Smart City would include:

1. adequate water supply,
2. assured electricity supply,
3. sanitation, including solid waste management,
4. efficient urban mobility and public transport,
5. affordable housing, especially for the poor,
6. robust IT connectivity and digitalization,
7. good governance, especially e-Governance and citizen participation,
8. sustainable environment,
9. safety and security of citizens, particularly women, children and the elderly, and
10. health and education.

2.5     As far as Smart Solutions are concerned, an illustrative list is given below. This is not, however, an exhaustive list, and cities are free to add more applications. 

2.6     Accordingly, the purpose of the Smart Cities Mission is to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to Smart outcomes. Area-based development will transform existing areas (retrofit and redevelop), including slums, into better planned ones, thereby improving liveability of the whole City. New areas (greenfield) will be developed around cities in order to accommodate the expanding population in urban areas. Application of Smart Solutions will enable cities to use technology, information and data to improve infrastructure and services. Comprehensive development in this way will improve quality of life, create employment and enhance incomes for all, especially the poor and the disadvantaged, leading to inclusive Cities.

3.                               Smart City Features

3.1     Some typical features of comprehensive development in Smart Cities are described below.

1. Promoting mixed land use in area-based developments — planning for ‘unplanned areas’ containing a range of compatible activities and land uses close to one another in order to make land use more efficient. The States will enable some flexibility in land use and building bye-laws to adapt to change;
2. Housing and inclusiveness — expand housing opportunities for all;
3. Creating  walkable  localities  —  reduce  congestion,  air  pollution  and resource depletion, boost local economy, promote interactions and ensure security. The road network is created or refurbished not only for vehicles and public transport, but also for pedestrians and cyclists, and necessary administrative services are offered within walking or cycling distance;

1. Preserving  and  developing  open  spaces  —  parks,  playgrounds,  and recreational spaces in order to enhance the quality of life of citizens, reduce the urban heat effects in Areas and generally promote eco-balance;

1. Promoting a variety of transport options — Transit Oriented Development (TOD), public transport and last mile para-transport connectivity;
2. Making governance citizen-friendly and cost effective — increasingly rely on online services to bring about accountability and transparency, especially using mobiles  to reduce cost of services and providing services without having to go to municipal offices; form e-groups to listen to people and obtain feedback and use online monitoring of programs and activities with the aid of cyber tour of worksites;
3. Giving an identity to the city — based on its main economic activity, such as local cuisine, health, education, arts and craft, culture, sports goods, furniture, hosiery, textile, dairy, etc;
4. Applying Smart Solutions to infrastructure and services in area-based development in order to make them better. For example, making Areas less vulnerable to disasters, using fewer resources, and providing cheaper services.

4.                               Coverage and Duration

4.1     The Mission will cover 100 cities and its duration will be five years (FY2015-16 to FY2019-  20). The Mission may be continued thereafter in the light of an evaluation to be done by the Ministry of Urban Development (MoUD) and incorporating the learnings into the Mission.

5.                               Strategy

5.1     The strategic components of Area-based development in the Smart Cities Mission are city improvement (retrofitting), city renewal (redevelopment) and city extension (greenfield development) plus a Pan-city initiative in which Smart Solutions are applied covering larger parts of the city. Below are given the descriptions of the three models of Area-based Smart City Development:

5.1.1     Retrofitting will introduce planning in an existing built-up area to achieve Smart City objectives, along with other objectives, to make the existing area more efficient and liveable. In retrofitting, an area consisting of more than 500 acres will be identified by the city in consultation with citizens. Depending on the existing level of infrastructure services in the identified area and the vision of the residents, the cities will prepare a strategy to become smart. Since existing structures are largely to remain intact in this model, it is expected that more intensive infrastructure service levels and a large number of smart applications will be packed into the retrofitted Smart City. This strategy may also be completed in a shorter time frame, leading to its replication in another part of the city.

5.1.2     Redevelopment will effect a replacement of the existing built-up environment and enable co-creation of a new layout with enhanced infrastructure using mixed land use and increased density. Redevelopment envisages an area of more than 50 acres, identified by Urban Local Bodies (ULBs) in consultation with citizens. For instance, a new layout plan of the identified area will be prepared with mixed land-use, higher FSI and high ground coverage. Two examples of the redevelopment model are the Saifee Burhani Upliftment Project in Mumbai (also called the Bhendi Bazaar Project) and the redevelopment of East Kidwai Nagar in New Delhi being undertaken by the National Building Construction Corporation.

5.1.3     Greenfield development will introduce most of the Smart Solutions in a previously vacant area (more than 250 acres) using innovative planning, plan financing and plan implementation tools (e.g. land pooling/ land reconstitution) with provision for affordable housing, especially for the poor. Greenfield developments are required around cities in order to address the needs of the expanding population. One well known example is the GIFT City in Gujarat. Unlike retrofitting and redevelopment, greenfield developments could be located either within the limits of the ULB or within the limits of the local Urban Development Authority (UDA).

5.1.4     Pan-city development envisages application of selected Smart Solutions to the existing city-wide infrastructure. Application of Smart Solutions will involve the use of technology, information and data to make infrastructure and services better. For example, applying Smart Solutions in the transport sector (intelligent traffic management system) and reducing average commute time or cost to citizens will have positive effects on productivity and quality of life of citizens. Another example can be waste water recycling and smart metering which can make a substantial contribution to better water management in the city.

5.2     The Smart City proposal of each shortlisted city is expected to encapsulate either a retrofitting or redevelopment or greenfield development model, or a mix thereof and a Pan-city feature with Smart Solution(s). It is important to note that pan-city is an additional feature to be provided. Since Smart City is taking a compact area approach, it is necessary that all the city residents feel there is something in it for them also. Therefore, the additional requirement of some (at least one) city-wide smart solution has been put in the scheme to make it inclusive.

5.3     For North Eastern and Himalayan States, the area proposed to be developed will be one-half of what is prescribed for any of the alternative models - retrofitting, redevelopment or greenfield development.

6.                               Proposal Preparation

6.1     The Government is not prescribing any particular model to be adopted by the Smart Cities. The approach is not ‘one-size-fits-all’; each city has to formulate its own concept, vision, mission and plan (proposal) for a Smart City that is appropriate to its local context, resources and levels of ambition. Accordingly, they have to choose their model of Smart City and answer the question: What kind of Smart City do they want? For this, cities will prepare their Smart City Proposal (SCP) containing the vision, plan for mobilisation of resources and intended outcomes in terms of infrastructure up-gradation and smart applications.

6.2     Essential features of SCP :  It may be noted that even though a particular model is not being prescribed, it is expected that the SCPs will include a large number of infrastructure services and smart solutions highlighted in paras 2.4 and 2.5. In particular, the elements   that must form part of a SCP are assured electricity supply with at least 10% of the Smart City’s energy requirement coming from solar, adequate water supply including waste water recycling and storm water reuse, sanitation including solid waste management, rain water harvesting, smart metering, robust IT connectivity and digitalization, pedestrian friendly pathways, encouragement to non-motorised transport (e.g. walking and cycling), intelligent traffic management, non-vehicle streets/zones, smart parking, energy efficient street lighting, innovative use of open spaces, visible improvement in the Area (e.g. replacing overhead electric wiring with underground wiring, encroachment-free public areas, and ensuring safety of citizens especially children, women and elderly). Cities will have to add more ‘smart’ applications to this list in order to improve their SCP. In the case of redevelopment and greenfield models of Smart Cities, in addition to the essential features mentioned above, at least 80% buildings should be energy efficient and green buildings. Additionally, of the total housing provided in greenfield development, there should be at least 15% in the affordable housing category. It must be emphasized that, since cities are competing with each other for selection under the Smart Cities Mission, the SCPs have to be prepared with great care and the proposed Smart City made ‘smart’ enough.

6.3     Cities will prepare SCPs using the principles of strategic planning process and the proposal will contain area-based development plans and Pan-city initiatives. The SCP is collaborative because the objectives and funds of all government departments, parastatals, private agencies and the citizens are dovetailed during the process of preparing the SCP. It is realized that the task of preparing the SCPs is quite challenging and States/ULBs will require assistance of experts. There are two ways of obtaining technical assistance support — by hiring consulting firms and engaging with handholding agencies

6.3.1.    Consulting Firms: The Ministry of Urban Development will technically qualify a panel of consulting firms and the States/UTs are at liberty to draw upon this panel. As considered necessary, the States/UTs may request financial proposals from these firms in the template RFP given in the Toolkit and do a selection based on applicable procurement rules and guidelines. The scope of work for the Smart City Consulting firms is given in Annexure 1. The States have the option of appointing a consulting firm outside the panel by following transparent and fair procedures as per State financial rules.

6.3.2.    Handholding Agencies: During the preparation of the Smart Cities Mission, a number of foreign Governments have offered to provide Technical Assistance (TA) support. Additionally, other external organizations, including bilateral and multilateral institutions, as well as domestic organizations have suggested to the Ministry of Urban Development that they can give technical assistance support. These include World Bank, ADB, JICA, USTDA, AFD, KfW,  DFID, UN Habitat, UNIDO, etc. Such organizations, which have experience in the field of Smart City development, can also extend support to the States/UTs as hand-holding agencies in preparing the SCPs.  The Ministry will assist in tying up the arrangements.

7            Smart Cities Selection Process

Different steps in the selection of Smart Cities are given below. 

8.                               How Many Smart Cities in Each State/UT?

8.1     The total number of 100 Smart Cities have been distributed among the States and UTs on the basis of an equitable criteria. The formula gives equal weightage (50:50) to urban population of the State/UT and the number of statutory towns in the State/UT. Based on this formula, each State/UT will, therefore, have a certain number of potential Smart Cities, with each State/ UT having at least one. This distribution is given in Annexure 2. The number of potential Smart Cities from each State/UT will be capped at the indicated number. (This distribution formula has also been used for allocation of funds under Atal Mission for Rejuvenation and Urban Transformation - AMRUT).

8.2     The distribution of Smart Cities will be reviewed after two years of the implementation of the Mission. Based on an assessment of the performance of States/ULBs in the Challenge, some re-allocation of the remaining potential Smart Cities among States may be required to be done by MoUD.

9.                               The Process of Selection of Smart Cities

9.1     Each aspiring city competes for selection as a Smart City in what is called a ‘City Challenge’. There are two stages in the selection process. After the number has been indicated to the respective Chief Secretaries, as outlined in para 8 above, the State/UT will undertake the following steps:-

9.1.1                Stage 1 of the competition: Shortlisting of cities by States

The State/UT begins with shortlisting the potential Smart Cities on the basis of conditions precedent and scoring criteria and in accordance with the total number allocated to it. The first stage of the competition will be intra-state, in which cities in the State will compete on the conditions precedent and the scoring criteria laid out. These conditions precedent have to be met by the potential cities to succeed in the first round of competition and the highest scoring potential Smart Cities will be shortlisted and recommended to participate in Stage 2 of the Challenge. The conditions precedent and the forms are given in the Annexure 3. The information sent by the ULBs in the forms has to be evaluated by the State Mission Director and the evaluation placed before the State-level High Powered Steering Committee (HPSC) for approval. The composition of the State HPSC is given in para 13.

The cities emerging successful in the first round of competition will be sent by the State/UT as the recommended shortlist of Smart Cities to MoUD by the stipulated date (to be indicated in the letter to Chief Secretaries). The State Government has to fill the form (given in Annexure 3) and send with the recommended list. The MoUD will thereafter announce the list of 100 Smart Cities.

9.1.2                Stage 2 of the competition: The Challenge round for selection

In the second stage of the competition, each of the potential 100 Smart Cities prepare their proposals for participation in the‘City Challenge’. This is a crucial stage as each city’s Smart City

Proposal is expected to contain the model chosen, whether retrofitting or redevelopment or greenfield development or a mix thereof, and additionally include a Pan-City dimension with Smart Solutions. The SCP will also outline the consultations held with the city residents and other stakeholders, how the aspirations are matched with the vision contained in the SCP and importantly, what is the proposal for financing of the Smart City plan including the revenue model to attract private participation. An evaluation criteria for the SCPs has been worked out by MoUD based on professional advice and this should act as guidance to the cities for preparing their proposal. The criteria and the documents to be sent with the application are given in Annexure-4.

9.1.3                     By a stipulated date, to be indicated by MoUD to the States/UTs, proposals will be submitted to MoUD for all these 100 cities. These will be evaluated by a Committee involving a panel  of national and international experts, organizations and institutions. The winners of the first round of Challenge will be announced by MoUD. Thereafter, while the winning cities start taking action on making their city smart, those who do not get selected will start work on improving their SCPs for consideration in the second round. Depending on the nature of the SCPs and outcomes of the first round of the Challenge, the MoUD may decide to provide handholding assistance to the potential Smart Cities to upgrade their proposals before starting the second round.

10.                       Implementation by Special Purpose Vehicle (SPV)

10.1    The implementation of the Mission at the City level will be done by a Special Purpose Vehicle (SPV) created for the purpose. The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the Smart City development projects. Each Smart City will have a SPV which will be headed by a full time CEO and have nominees of Central Government, State Government and ULB on its Board. The States/ULBs shall ensure that, (a) a dedicated and substantial revenue stream is made available to the SPV so as to make it self- sustainable and could evolve its own credit worthiness for raising additional resources from the market and (b) Government contribution for Smart City is used only to create infrastructure that has public benefit outcomes. The execution of projects may be done through joint ventures, subsidiaries, public-private partnership (PPP), turnkey contracts, etc. suitably dovetailed with revenue streams.

10.2    The SPVwillbealimitedcompanyincorporatedunderthe Companies Act, 2013 atthecity-level, in which the State/UT and the ULB will be the promoters having 50:50 equity shareholding. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the shareholding pattern of 50:50 of the State/UT and the ULB is maintained and the State/UT and the ULB together have majority shareholding and control of the SPV.

10.3    Funds provided by the Government of India in the Smart Cities Mission to the SPV will be in the form of tied grant and kept in a separate Grant Fund. These funds will be utilized only for the purposes for which the grants have been given and subject to the conditions laid down by the MoUD.

10.4    The State Government and the ULB will determine the paid up capital requirements of the SPV commensurate with the size of the project, commercial financing required and the financing modalities. To enable the building up of the equity base of the SPV and to enable ULBs to contribute their share of the equity capital, GoI grants will be permitted to be utilized as ULBs share of equity capital in the SPV, subject to the conditions given in Annexure 5. Initially, to ensure a minimum capital base for the SPV, the paid up capital of the SPV should be such that the ULB’s share is at least equal to Rs.100 crore with an option to increase it to the full amount of the first instalment of Funds provided by GoI (Rs.194 crore). With a matching equity contribution by State/ULB, the initial paid up capital of the SPV will thus be Rs. 200 crore (Rs. 100 crore of GoI contribution and Rs. 100 crore of State/UT share). Since the initial GoI contribution is Rs.194 crore, along with the matching contribution of the State Government, the initial paid up capital can go up to Rs.384 crore at the option of the SPV. The paid up capital may be enhanced in the subsequent years as per project requirements, with the provision mentioned above ensuring that ULB is enabled to match its shareholding in the SPV with that of the State/UT.

10.5    The structure and functions of the SPV are given in Annexure 5 and the Articles of Association will contain such provisions. A model Article of Association is given in the Toolkit.

10.6    After selection of the cities in Stage II of the Challenge, the process of implementation        will start with the setting up of the SPV. As already stated, it is proposed to give complete flexibility to the SPV to implement and manage the Smart City project and the State/ULB will undertake measures as detailed in Annexure 5 for this purpose. The SPV may appoint Project Management Consultants (PMC) for designing, developing, managing and implementing area-based projects. SPVs may take assistance from any of the empanelled consulting firms in the list prepared by MoUD and the handholding agencies. For procurement of goods and services, transparent and fair procedures as prescribed under the State/ULB financial rules may be followed. Model frameworks as developed by MoUD may also be used for Smart City projects.

11.                       Financing of Smart Cities

11.1    The Smart City Mission will be operated as a Centrally Sponsored Scheme (CSS) and the Central Government proposes to give  financial  support  to  the  Mission  to  the  extent  of Rs. 48,000 croresoverfiveyearsi.e. onanaverage Rs. 100 crorepercityperyear. Anequalamount, on a matching basis, will have to be contributed by the State/ULB; therefore, nearly Rupees one lakh crore of Government/ULB funds will be available for Smart Cities development.

11.2    The project cost of each Smart City proposal will vary depending upon the level of ambition, modelandcapacitytoexecuteandrepay. It isanticipatedthatsubstantialfundswillberequired to implement the Smart City proposal and towards this end, Government grants of both the Centre and State will be leveraged to attract funding from internal and external sources.   The success of this endeavour will depend upon the robustness of SPV’s revenue model and comfort provided to lenders and investors. A number of State Governments have successfully set  up  financial  intermediaries  (such  as Tamil  Nadu,  Gujarat,  Orissa,  Punjab, Maharashtra, Karnataka, Madhya Pradesh and Bihar) which can be tapped for support and other States may consider some similar set up in their respective States. Some form of guarantee by the State or such a financial intermediary could also be considered as instrument of comfort referred to above. It is expected that a number of schemes in the Smart City will be taken up on PPP basis and the SPVs have to accomplish this.

11.3    The GOI funds and the matching contribution by the States/ULB will meet only a part of the project cost. Balance funds are expected to be mobilized from:

1. States/ ULBs own resources from collection of user fees, beneficiary charges and impact fees, land monetization, debt, loans, etc.
2. Additional resources transferred due to acceptance of the recommendations of the Fourteenth Finance Commission (FFC).
3. Innovative finance mechanisms such as municipal bonds with credit rating of ULBs, Pooled Finance Mechanism, Tax Increment Financing (TIF).
4. Other Central Government schemes like Swachh Bharat Mission, AMRUT, National Heritage City Development and Augmentation Yojana (HRIDAY).
5. Leverage borrowings from financial institutions, including bilateral and multilateral institutions, both domestic and external sources.
6. States/UTs may also access the National Investment and Infrastructure Fund (NIIF), which was announced by the Finance Minister in his 2015 Budget Speech, and is likely to be set up this year.
7. Private sector through PPPs.

11.4    The distribution of funds under the Scheme will be as follows:

1. 93% project funds.
   1. 5% Administrative and Office Expenses (A&OE) funds for state/ULB (towards preparationof SCPsandfor PMCs, Pilotstudiesconnectedtoarea-baseddevelopments and deployment and generation of Smart Solutions, capacity building as approved in the Challenge and online services).
   2. 2% A&OE funds for MoUD (Mission Directorate and connected activities/structures, Research, Pilot studies, Capacity Building, and concurrent evaluation).

12.                       Funds Release

12.1    After the Stage 1 of the challenge, each potential Smart City will be given an advance of Rs. two crore for preparation of SCP which will come from the city’s share of the A&OE funds and will be adjusted in the share of the city.

12.2    In the first year, Government proposes to give Rs.200 crore to each selected Smart City to create a higher initial corpus. After deducting the Rs. two crore advance and A&OE share of the MoUD, each selected Smart City will be given Rs. 194 crore out of Rs. 200 crore in the first year followed by Rs. 98 crore out of Rs. 100 crore every year for the next three years.

12.3    The yearly instalment of funds will be released to SPVs after they meet the following conditions:

1. timely submission of the City Score Card every quarter to the MoUD,
   1. satisfactory physical and financial progress as shown in the Utilization Certificate (Annexure 6) and the annual City Score Card (Annexure 7),
   2. achievement of milestones given in the roadmap contained in SCP, and
      1. fully functioning SPV as set out in the Guidelines and the Articles of Association. A Board Resolution should certify that all these conditions have been met, including a certificate that all the conditions relating to establishment, structure, functions and operations of the SPV as given in para 10 and Annexure 5 are complied with.

13.                       Mission Monitoring

13.1    National Level

An Apex Committee (AC), headed by the Secretary, MoUD and comprising representatives of related Ministries and organisations will approve the Proposals for Smart Cities Mission, monitor their progress and release funds. This Committee will meet periodically, as considered necessary. The AC will consist of the following indicative members:

1. Secretary, Housing and Poverty Alleviation                                  Member
2. Secretary (Expenditure)                                                                   Member
3. Joint Secretary, Finance, MoUD                                                      Member
4. Director, NIUA                                                                                   Member
5. Chief Planner, Town and Country Planning                                  Member
6. Select Principal Secretaries of States                                              Member
7. Select CEOs of SPVs                                                                         Member
8. Mission Director                                                                               Member Secretary

13.1.1               The Representatives of stakeholders like UN Habitat, World Bank, TERI, Centre for Development of Advanced Computing (C-DAC), Centre for Smart Cities (CSC), Bangalore or other bilateral and multilateral agencies and urban planning experts may be invited with the approval of the Chair.

13.1.2               The AC will provide overall guidance and play an advisory role to the Mission and its key responsibilities are given below.

1. Review the list of the names of Cities sent by the State Governments after Stage 1.
2. Review the proposals evaluated by panel of experts after Stage 2.
3. Approve the release of funds based on progress in implementation.
   1. Recommend mid-course correction in the implementation tools as and when required. 

1. Undertake quarterly review of activities of the scheme including budget, implementation and co-ordination with other missions/ schemes and activities of various ministries.

13.1.3               There will be a National Mission Director, not below the rank of Joint Secretary to Government of India who will be the overall in-charge of all activities related to the Mission. A Mission Directorate will take support from subject matter experts and such staff as considered necessary. The key responsibilities of the Mission Directorate are given below.

1. Develop strategic blueprint and detailed implementation roadmap of the Smart Cities Mission, including the detailed design of the City Challenge.
2. Coordinate across Centre, States, ULBs and external stakeholders in order to ensure that external agencies are efficiently used for preparation of SCP, DPRs, sharing of best practices, developing Smart Solution, etc.
3. Oversee Capacity building and assisting in handholding of SPVs, State and ULBs. This includes developing and retaining a best practice repository (Model RFP documents, Draft DPRs, Financial models, land monetization ideas, best practices  in SPV formation, use of financial instruments and risk mitigation techniques) and mechanism for knowledge sharing across States and ULBs (through publications, workshops, seminars).

13.2    State Level

There shall be a State level High Powered Steering Committee (HPSC) chaired by the Chief Secretary, which would steer the Mission Programme in its entirety. The HPSC will have representatives of State Government departments. The Mayor and Municipal Commissioner of the ULB relating to the Smart City would be represented in the HPSC. There would also be a State Mission Director who will be an officer not below the rank of Secretary to the State Government, nominated by the State Government. The State Mission Director will function as the Member-Secretary of the State HPSC. The indicative composition of HPSC is given below:

1. Principal Secretary, Finance,
2. Principal Secretary, Planning,
   1. Principal Secretary/Director, Town & Country Planning Department, State/UT Governments,
   2. Representative of MoUD,
   3. Select CEO of SPV in the State,*
      1. Select Mayors and Municipal Commissioners /Chief Executive of the ULBs, and Heads of the concerned State Line Departments,
      2. Secretary/Engineer-in-Chief or equivalent, Public Health Engineering Department,
      3. Principal Secretary, Urban Development – Member Secretary.

*As and when it is formed.

The key responsibilities of the HPSC are given below.

1. Provide guidance to the Mission and provide State level platform for exchange of ideas pertaining to development of Smart Cities.

1. Oversee the process of first stage intra-State competition on the basis of Stage 1 criteria.

1. Review the SCPs and send to the MoUD for participation in the Challenge.

13.3    City Level

A Smart City Advisory Forum will be established at the city level for all 100 Smart Cities to advise and enable collaboration among various stakeholders and will include the District Collector, MP, MLA, Mayor, CEO of SPV, local youths, technical experts, and at least one member from the area who is a,

1. President / secretary representing registered Residents Welfare Association,
2. Member of registered Tax Payers Association / Rate Payers Association,
3. President / Secretary of slum level federation, and

1. Members of a Non-Governmental Organization (NGO) or Mahila Mandali / Chamber of Commerce / Youth Associations.

The CEO of the SPV will be the convener of the Smart City Advisory Forum.

14.                       Convergence with Other Government Schemes

14.1    Comprehensive development occurs in areas by integrating the physical, institutional, social and economic infrastructure. Many of the sectoral schemes of the Government converge in this goal, although the path is different. There is a strong complementarity between the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and Smart Cities Mission in achieving urban transformation. While AMRUT follows a project-based approach, the Smart Cities Mission follows an area-based strategy.

14.2    Similarly, great benefit can be derived by seeking convergence of other Central and State Government Programs/Schemes with the Smart Cities Mission.  At  the  planning  stage itself, cities must seek convergence in the SCP with AMRUT, Swachh Bharat Mission (SBM), National Heritage City Development and Augmentation Yojana (HRIDAY), Digital India, Skill development, Housing for All, construction of Museums funded by the Culture Department and other programs connected to social infrastructure such as Health, Education and Culture. (Annexure 1).

15.                       Challenges

15.1     This is the first time, a MoUD programme is using the ‘Challenge’ or competition method to select cities for funding and using a strategy of area-based development. This captures the spirit of ‘competitive and cooperative federalism’.

15.2     States and ULBs will play a key supportive role in the development of Smart Cities. Smart leadership and vision at this level and ability to act decisively will be important factors determining the success of the Mission.

15.3     Understanding the concepts of retrofitting, redevelopment and greenfield development by the policy makers, implementers and other stakeholders at different levels will require capacity assistance.

15.4     Major investments in time and resources will have to be made during the planning phase prior to participation in the Challenge. This is different from the conventional DPR-driven approach.

15.5     The Smart Cities Mission requires smart people who actively participate in governance and reforms. Citizen involvement is much more than a ceremonial participation in governance. Smart people involve themselves in the definition of the Smart City, decisions on deploying Smart Solutions, implementing reforms, doing more with less and oversight during implementing and designing post-project structures in order to make the Smart City developments sustainable. The participation of smart people will be enabled by the SPV through increasing use of ICT, especially mobile-based tools.

Annexures

Annexure 1: Scope of work for the Smart City Consulting Firm

The Consulting Firm will assist in preparing a Smart City Proposal under the supervision of the Urban Local Body and the State Government. The scope of work will include:-

1. Preparation of a City-wide concept Plan based on a review of previous plans, interventions and documents of all departments and agencies (e.g. old or revised City Development Plan, City Sanitation Plan, City Mobility Plan, Master Plan). The City-wide Concept Plan will include the Smart City Vision (how the city visualizes itself in 5 years), Mission and identification of key challenges, situation analysis (physical, economic, social, legal and institutional infrastructure)/ As-is description.

1. After detailed citizen consultations, an overall strategy will be prepared that will define the Smart City and clearly state the objectives based on the Mission document and Guidelines.

1. The Consulting Firm will prepare a Smart City Proposal (SCP) to participate in ‘Challenge’ (competition) according to the Smart City Mission Statement and Guidelines. The proposal will contain retrofitting or redevelopment or greenfield models and atleast one Pan-city initiative. The focus will be on transformative projects with the highest possible impact on (i) economic growth in the city (e.g. number of new jobs created, new firms attracted, increased productivity and business climate in the formal as well as informal sectors, recognition of and incorporating urban vendors), and (ii) improving the quality of life for all, especially the poor: (e.g. reduction in commuting time, support of non-motorized transport, improvement in air and water quality/increased coverage of water, solid waste management, street lighting, enhanced green public spaces, improved safety and security).

1. The SCP will consist of Strategic Action Plans for Area Developments based on the three typologies: (a) area improvement (retrofitting) (b) city renewal (redevelopment) and (c) city extension(greenfield) andatleastone City-wide(Pan-city) initiativethatapplies Smart Solutions to the physical, economic, social and institutional infrastructure. Application of Smart Solutions will involve the use of technology, information and data to make infrastructure and services better and using smart technologies for the development of the poor and marginalized will be an important part of the Proposal.

1. The Smart City Proposal will include financing plan for the complete life cycle of the Proposal. This financial plan will identify internal (taxes, rents, licenses and user charges) and external (grants, assigned revenues, loans and borrowings) sources of mobilizing funds for capital investments and operation and maintenance over the life cycle of the project. The financial plan will provide for sources for repayment of project cost over a period of 8-10 years or more, O&M cost and also include resource improvement action plan for financial sustainability of ULB.

1. Convergence of area plans with National and State level sectoral financial plans, for example the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Housing for All, Swachh Bharat and Digital India.
2. The Proposal development will  lead  to  creation  of  a  smart  citizenry.  The  proposal  will be citizen-driven from the beginning, achieved through citizen consultations, including active participation of groups of people, such as Residents Welfare Associations, Tax Payers Associations, Senior Citizens and Slum Dwellers Associations. During consultations, issues, needs and priorities of citizens and groups of people will be identified and citizen-driven solutions generated.

The Consulting Firms will develop the SCPs for participation in the Challenge.

Annexure 2: Number of cities allocated to States based on urban population and number of statutory towns

24

Annexure 3: Challenge Stage 1: Preconditions and Documents

to be submitted by each State

Conditions precedent

1. State undertaking to make the City Smart (Form 1, Part-3),
2. Inter-departmental Task Force consisting of parastatal bodies, Urban Local Body (ULB), Organizations and Urban Development Authorities (UDAs) will be constituted in order to make   the city Smart (Form 1, Part-4),
3. Elected City Council’s Resolution to make the city Smart (Form 2, Part-5), and
4. Consultations held with residents on city development priorities (Form 2, Part-6).

Scoring criteria

Below are given the scoring criteria to be used by the States/UTs to score the potential Smart Cities and send the names of cities with the highest scores to MoUD for their selection to participate in the Stage 2 of the Challenge.

1. Existing Service Levels
   1. Percentage of increase over Census 2011 or Swachh Bharat baseline on number of household sanitary latrines, whichever is less (Form 2, Part -1) – 10 points,
   2. Making operable Online Grievance Redressal System with response being sent back to complainant (Form 2, Part-2) – (Y/N) – 5 points,
   3. At-least first monthly e-newsletter published (Form 2, Part-3) – (Y/N) – 5 points, and
      1. Electronically place project-wise municipal budget expenditure information for the last two financial years on the website (Form 2, Part-4) – (Y/N) – 5 points.
      2. Institutional Systems/ Capacities
         1. Started to levy compensatory penalty for delays in service delivery (Form 2, Part 7) - (Y/N) – 5 points, and
         2. Has the total collection of internally generated revenue (e.g. taxes, fees, charges) shown an increasing trend during the last three FYs (2012-15) – (Form 2, Part 8) (Y/N)

–   10 points.

1. Self-financing
2. Payment of salaries by ULB up-to last month (Form 2, Part-9) – 5 points,
3. Audit of accounts up-to FY 12-13 (Form 2, Part-10) – 5 points,

1. Percentage contribution of tax revenue, fees and user charges, rents and other internal revenue sources to the ULB Budget (actuals in 2014-15) – (Form 2, Part 11) – 10 points, and
2. Percentage of operation and maintenance cost of water supply, which is met by collected user charges for supply of water during last FY (2014-15) – (Form 2, Part 12)

–   10 points.

1. Past track record and reforms
   1. Percentage of internal revenue sources (self-generated) budget funds used for capital works during FY (2014-15) – (Form 2, Part 13) – 10 points,
   2. Percentage of City-level JnNURM Reforms achieved (Form2, Part 14) – 10 points for six (6)ULB level Reforms, and
   3. Percentage of JnNURM projects completed, which were sanctioned during the original Mission period (upto 2012) (Form 2, Part 15) – 10 points.

Documents

The forms in which the States have to get proposals from the ULBs and in which they have to send to the MoUD are given below.

1. The list of cities shortlisted by each state (Form 1, Part-1).
2. Declaration of shortlisting criteria met by each shortlisted city (Form 1, Part-2). This form needs to be submitted for each shortlisted city.
3. Undertaking of the State Government to make the city smart (Form 1, Part-3)
4. Order of constitution of Inter-departmental Task Force (Form 1, Part-4)

Additional documents in support of Form 1, will be submitted by each shortlisted city under the signature of Municipal Commissioner/ Head of the ULB to the State Mission Director (Form 2).

FORM 1

(To be sent by State to MoUD)

Name of State : ..............................................................................................................................................

Number of cities allotted : .............................................................................................................................

Part 1: List of cities shortlisted by each State

Part 2: Details of score obtained by each shortlisted city*

Name of Shortlisted City :

*This form needs to be filled for each shortlisted city.

Part 3: Undertaking from the State Government

I hereby confirm that the State of........... (Name)....................................................................fully

commits the development of the city ........ (Name).............................................. as a Smart City.

Part 4: Order of constitution of Inter-departmental Task Force

A Government order for constituting an Inter-departmental Task Force consisting of parastatal bodies ULB, UDA to make the city Smart is attached.

I hereby confirm that I have verified the information and it is true and correct. Name of the City has been approved by HPSC in its meeting held on ………………

(Principal Secretary/ Secretary (UD)) State Government of …………..

Form 2- Score Card

(To be sent by ULBs to State)

Name of ULB : ..............................................................................................................................................

Name of State : ..............................................................................................................................................

Existing Service Levels

Part 1: Increase in sanitary latrines built under Swachh Bharat Mission

Part 2: Operable Online Grievance Redressal System

Part 3: Monthly e-newsletter

Part 4: Electronically place project-wise municipal budget expenditure information

Part 5 : Resolution of elected city council

A copy of the Resolution No.                     attached.

dated               

(English/Hindi/Other  version)  is

Part 6 : Table with dates, specific agenda and number of people in attendance in ward consultations held with residents of the city

Institutional Systems/ Capacities

Part 7: Levy of compensatory penalty for delays in service delivery

Part 8: Collection of internally generated revenue (e.g. taxes, fees, charges) during the last three FYs (2012-15).

Self-Financing  

Part 9: Payment of salaries

Part 10: Audit of accounts

Part 11: Percentage contribution of tax revenue, fees and user charges, rents and other internal revenue sources

Part 12: Percentage of operation and maintenance cost of water supply

Past track record and reforms

Part 13: Percentage contribution of internal revenue sources (self-generated) used for capital works during FY 2014-15

Part 14: City-level JnNURM Reforms

*As per cycle V records 31.3.2014

Part 15: Completion of Projects sanctioned upto March, 2012 under JnNURM

** As per the completion certificate received from State as on 31.3.2014

I hereby confirm that I have verified the information presented in this form which is true and correct to the best of my knowledge.

(Municipal Commissioner/ Head of the ULB, Parastatal)

Annexure 4: Challenge Stage 2: Criteria and Indicative Table of Contents

4.1  Criteria

Some of the criteria that may be used to evaluate the SCPs of the States/UTs are given below.

34

4.2  Indicative Table of Contents     

Detailed instructions on the application form and the format of the proposal will be issued separately. An indicative Table of Contents is given below.

1. Area and proposal identification – retrofitting, redevelopment and greenfield developments.
2. Proposal scope and objectives.
3. Proposal concept.
4. Proposal development.

Goal :

1. Implementation framework.
2. Proposed financing options and institutional framework.
3. Proposal phasing and timeframe.
4. Benefits and impact assessment.

For comparison of proposals the year-wise milestones and outcomes should be given in the following tabular form in the Proposal.

(Note : Above information to be provided for each project, every half year, till the completion of the project)

Annexure 5: Structure and Functions of SPV

1.                               Structure of the SPV

The City level SPV will be established as a Limited Company under the Companies Act,   2013 and will be promoted by the State/UT and the ULB jointly, both having 50:50 equity shareholding. This shareholding pattern has to be maintained at all times. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the State/UT and the ULB share are equal to each other, and the State/UT and ULB together have majority shareholding and control of the SPV (e.g. State/UT:ULB:Private sector shareholding can be in the ratio 40:40:20 or 30:30:40. Ratios such as 35:45:20 or 40:30:30 are not permitted since State/UT and ULB shares are not equal. Ratios such as 20:20:60 are also not permitted since the State/UT and the ULB together do not have majority shareholding). In addition to equity, the State/UT can provide its contribution to the Smart Cities Mission as grant to fulfil the State Government responsibility for ensuring availability of funds for the mission and for ensuring the financial sustainability of the SPV.

2.                               Raising and utilization of funds by the Company (SPV)

The funds given by the Central Government to the SPV will be in the shape of tied grants and kept in a separate Grant Fund. These funds will be utilized only for the purposes given in the Mission Statement and Guidelines and subject to the conditions laid down by the Central Government.The ULBsmay, throughthe State Government, request MoUDtopermitutilization of GoI grants as ULB’s equity contribution to the SPV, subject to the following conditions:

1. The State Government has made adequate contribution to the SPV out of their own funds.
2. The approval will be limited to the GoI grants that have already been released. Since future instalments of Smart City funds are subject to performance and are not guaranteed, the ULB will not be permitted to earmark future instalments to meet its equity contribution.
3. The utilization of GoI grants as equity contributions will not alter the relative shareholding of the State Government and the ULB, which will remain equal as per Mission guidelines.
4. It is clarified that the Government of India contribution to Smart Cities is strictly in the form of grant and the ULB is exercising its own discretion in utilizing these funds as its equity contribution to the SPV.

The SPV will also access funds from other sources such as debt, user charges, taxes, surcharges, etc.

3.                               Board of Directors

The Board of Directors will have representatives of Central Government, State Government, ULB and Independent Directors, in addition to the CEO and Functional Directors. Addition- al Directors (such as representative of parastatal) may be taken on the Board, as considered necessary. The Company and shareholders will voluntarily comply with the provision of the Companies Act 2013 with respect to induction of independent directors. Below, are given the broad terms of appointment and role of the SPV Board:-

3.1                             The Chairperson of the SPV will be the Divisional Commissioner/Collector/Municipal Commis- sioner/ Chief Executive of the Urban Development Authority as decided by the State Govern- ment.

3.2                             The representative of the Central Government will be a Director on the Board of the SPV and will be appointed by the MoUD.

3.3                             The CEO of the SPV will be appointed with the approval of the MoUD. The CEO will be ap- pointed for a fixed term of three years and will be removed only with the prior approval of MoUD. The functions of the CEO include:

1. Overseeing and managing the general conduct of the day-to-day operations of the SPV subject to the supervision and control of the Board.

1. Entering into contracts or arrangements for and on behalf of the Company in all mat- ters within the ordinary course of the Company’s business.

1. To formulate and submit to the Board of Directors for approval a Human Resource Policy that will lay down procedures for creation of staff positions, qualifications of staff, recruitment procedures, compensation and termination procedures.

1. Recruitment and removal of the senior management of the Company and the cre- ation of new positions in accordance with the Company’s approved budget and the recruitment or increase of employees in accordance with the Human Resource Policy laid down by the Board.

1. Supervising the work of all employees and managers of the Company and the deter- mination of their duties, responsibilities and authority;

3.4                             The Independent Directors will be selected from the data bank(s) maintained by the Ministry of Corporate Affairs and preference will be given to those who have served as independent directors in the Board of Companies fulfilling Clause 49 of the listing agreement of Securities and Exchange Board of India (SEBI).

4.                               Delegation of powers to the SPV

4.1                             One of the primary reasons for the creation of an SPV for the Smart City Mission is to ensure operational independence and autonomy in decision making and mission implementation. The Smart City Mission encourages the State Government and the ULB to adopt the following best practices to create empowered SPVs to the extent and as provided under the municipal act.

4.1.1    Delegating the rights and obligations of the municipal council with respect to the Smart City project to the SPV.

4.1.2    Delegating the decision making powers available to the ULB under the municipal act/ Gov- ernment rules to the Chief Executive Officer of the SPV.

4.1.3    Delegating the approval or decision making powers available to the Urban Development De- partment / Local Self Government department / Municipal Administration department to the Board of Directors of the SPV in which the State and ULB are represented.

4.1.4    Delegating the matters that require the approval of the State Government to the State Level High Powered Steering Committee (HPSC) for Smart Cities.

5.                               The key functions and responsibilities of the SPV are to:

1. Approve and sanction the projects including their technical appraisal.
2. Execute the Smart City Proposal with complete operational freedom.
   1. Take measures to comply with the requirements of MoUD with respect to the imple- mentation of the Smart Cities programme.
   2. Mobilize resources within timelines and take measures necessary for the mobilisation of resources.
   3. Approve and act upon the reports of a third party Review and Monitoring Agency.
   4. Overview Capacity Building activities.
   5. Develop and benefit from inter-linkages of academic institutions and organizations.
   6. Ensure timely completion of projects according to set timelines.
      1. Undertake review of activities of the Mission including budget, implementation of projects, and preparation of SCP and co-ordination with other missions / schemes and activities of various ministries.
      2. Monitor and review quality control related matters and act upon issues arising there- of.

1. Incorporate joint ventures and subsidiaries and enter into Public Private Partnerships as may be required for the implementation of the Smart Cities programme
2. Enter into contracts, partnerships and service delivery arrangements as may be re- quired for the implementation of the Smart Cities Mission.
3. Determine and collect user charges as authorised by the ULB
4. Collect taxes, surcharges etc. as authorised by the ULB

The above provisions will be included in the Articles of Association of the SPV.

Annexure 6: Utilization Certificate Format Form of Utilization Certificate

Certified that I have satisfied myself that the conditions on which the grants-in-aid was sanctioned have been duly fulfilled/are being fulfilled and that I have exercised the following checks to see that the money was actually utilized for the purpose for which it was sanctioned.

Kinds of checks exercised.

1.

2.

3.

(CEO of the SPV)

.                                                                                                      Date:                                          

Annexure 7: Score Card for Smart Cities Progress on Mission Objectives

Mission Outcomes

Resource mobilization

Implementation Status

Funds flow