Who should pay for heritage conservation?

Carine Lai says the government must rethink its approach to compensation and adopt creative solutions to help preserve the city's historic buildings

PUBLISHED : Thursday, 07 August, 2014, 1:12pm
UPDATED : Friday, 08 August, 2014, 1:44am

Everyone agrees with heritage conservation in principle, but no one wants to pay for it. The government's public consultation document says, "The objective is to implement a heritage conservation policy that gives due regard to development needs in the public interest, respect for private property rights, budgetary considerations, cross-sector collaboration and active engagement of stakeholders and the general public."

Translation: "We are looking for a pain-free solution that does not upset anyone nor burdens the public purse." Unfortunately, protecting Hong Kong's historic buildings will take both money and political will.

Fortunately, we have no shortage of cash. The government pulled in a budget surplus of HK$12 billion last year, and HK$60 billion the year before. We do not have to choose between heritage and paying for schools and hospitals.

Which leads us to the problem of political will. In capitalist Hong Kong, any regulation of private property rights is bound to face strong opposition. If graded historical buildings (which can be demolished with impunity) received legal protection, there would be howls of protest. But private property rights are not unlimited; otherwise people would be allowed to ignore building safety and environmental regulations that cut into their profits.

The courts have long established that while owners are entitled to compensation if their property is taken away for a public purpose such as building a road, they are not entitled to compensation if a regulatory or zoning decision reduces the value of their property.

This is not to say that private owners should be left high and dry. Taking good care of old structures is expensive, and if the public has decided that heritage is a common good, it should assume some of the financial responsibility. Subsidies for maintenance and repairs are perfectly justifiable. Additionally, planning and land use regulations should allow owners to make a reasonable return on their investment, for example, by turning a mansion into a hotel. Finally, as a matter of political pragmatism, the government may decide to offer financial incentives.

One idea is to implement a system of transferable development rights such as New York's. In return for agreeing to place a restrictive deed on a building, an owner can sell the rights to the unused plot ratio above their land. A developer buys the extra plot ratio and applies it to a new building elsewhere; the owner gets enough money to pay for the historic building's long-term upkeep and still make a profit.

Since the Leung administration is already planning to increase development density by 20 per cent in many parts of Hong Kong, this could be done through transferable development rights. Bigger blocks of flats in the new towns seem like a fair trade-off for better-preserved historic buildings.

The crux of the matter is that the government needs the courage to actively dispel the belief that owners have a right to full compensation for any drop in their property values. It also needs the boldness to embrace creative solutions instead of inching forward with piecemeal programmes. Finally, it needs to act quickly, before our few remaining historic buildings are lost for good.

Carine Lai is project manager at Civic Exchange