Surplus raises questions on self-financing at the URA
The disclosure of the financial results at individual redevelopments yesterday has raised questions as to whether the financial model of the Urban Renewal Authority should continue to be self-financed in the future.
Redevelopments would seem to be a lucrative business, judging from the balance sheets of eight completed projects released by the authority yesterday. The surpluses ranged from HK$56 million to HK$560 million. At Queen's Terrace, the most profitable, the authority gained a surplus of HK$563.5 million, 42 times its redevelopment cost.
'We are self-financing at the moment and we don't have plans to ask for more from the government,' the authority's chairman, Barry Cheung Chun-yuen, said. 'The government has exempted us from the land premiums involved in our redevelopment projects, which gives us a huge amount of resources.'
Managing director Quinn Law Yee-kwan sees challenges ahead. 'Whether we can still make it will depend on our future role in redevelopment, maintenance and conservation. Our costs are expected to rise as we introduce a flat-for-flat option in the new renewal model.'
Deputy secretary for development Tommy Yuen Man-chung was less positive. He said the public held differing views on whether the authority should become more active in conserving heritage but most people agreed the authority should devote more resources to helping owners renovate their old buildings.
'The authority will lose out on such renovation projects,' Yuen said.
Public demand for lower development density in urban areas will also reduce their profitability.
Despite a likely increase in financial burdens, asking taxpayers for more money may be hard, an academic and a planning concern group say.
Raymond So Wai-man, associate professor in finance with the Chinese University, said the self-sustainable financial model should stay.
'If the authority incurs a loss on its projects, it will have to turn to taxpayers each time when subsidising property owners affected by redevelopment,' So said.
'If the community generally agrees that the authority pays better compensation than private developers, you can't expect it to earn a pittance to sustain operations.'
Icarus Wong Ho-yin, of activist group People Planning in Action, said the authority should focus on building repair and redevelopment instead of heritage preservation when repositioning for the future.
Wong said that because conservation work had been added to the authority's remit, it had turned to marketing flats as luxuries to build cash. This forced out the original residents because they could not afford to buy into the redevelopment, he said.
'The Development Bureau should review the overall heritage policy and let itself and the Antiquities and Monuments Office do the job,' Wong said.