Time to rethink urban renewal strategy to put the people before developers
Albert Cheng says resignation of key URA official could be a blessing if changes were to lead to a merger with Housing Authority to create a better set-up
The surprise resignation of Iris Tam Siu-ying last month as managing director of the Urban Renewal Authority has provided some serious food for thought for those in charge of the land and housing portfolio.
Highly regarded by her colleagues, Tam, however, has failed to satisfy her chairman, Victor So Hing-woh, that the authority's long-term financial health is secure. This set her on a collision course with So over how much the URA should rely on private developers who have no moral obligation to the tenants affected.
In an internal email dated March 31, Tam said: "URA must always put its social mission before profit considerations in selecting sites for redevelopment, helping owners rehabilitate their buildings, and contributing towards heritage preservation and revitalisation.
"As URA is trusted with the use of public money and the power to apply for land resumption, it is imperative that we are accountable to the public in how we handle acquisition, rehousing and clearance. I find it totally unacceptable to position URA as a developer or a land assembly agent to supply land for developers."
So, who took over from Barry Cheung Chun-yuen in June 2013, is eager to reform the URA, especially on the financial front. He has entered talks for closer collaboration with the Richfield Group, a developer notorious for aggressive tactics with residents in buying old buildings.
Last year, alarm bells rang when the URA recorded for the first time in five years a deficit of HK$2.3 billion. To address the problem, So has engaged McKinsey for a value-for-money study. It projected that the URA's fiscal reserves would plunge from HK$24.2 billion to HK$9 billion in five years.
The firm recommended the sale of land parcels to developers to boost income. It also denounced the strategies of rehabilitation, revitalisation, reservation and redevelopment as defective in regenerating urban areas. The first three have cost HK$2.8 billion, while the fourth resulted in slow land repossession and high compensation costs. McKinsey further proposed handing over the URA's acquisition and rehabilitation work to outsiders.
The government's urban renewal strategy dates back to 1988 with the launch of the Land Development Corporation. It was empowered to acquire and redevelop dilapidated buildings but was not given substantial resources for compensation and the subsequent civil works. Abraham Shek Lai-him, who headed the corporation, had no other option but to cooperate with private developers.
The corporation was revamped into the current URA in May 2001 with an injection of HK$10 billion. The new statutory independent body introduced a "people first" approach for its initiatives in dilapidated urban areas.
Former chairman Cheung left a positive impression in leading the Kwun Tong Town Centre project. However, to balance the books, Cheung also joined with private developers to build luxury flats.
Both Tam and So have their points but both approaches would entail a transfer of interest to developers. It is only a matter of degree. The difference is Tam's emphasis on a "social mission" to provide greater safeguards for the people. In contrast, So makes no pretence of distancing the URA from private developers. In the public's eyes, the URA is now an instrument for them to squeeze every last drop of profit in the name of urban renewal.
The URA has perhaps outlived its historic mission. The latest saga could be a blessing in disguise; Tam's departure offers an opportunity for the government to rethink the authority's role and functions.
Chief Executive Leung Chun-ying has singled out land and housing as a top priority on his policy agenda. Little progress has been made. He has pointed to difficulties in identifying and providing suitable sites to meet his seven-year target of 480,000 flats, 60 per cent of which are meant to be public housing.
A new mindset is imperative. Urban renewal and the provision of public housing should no longer be regarded as two separate issues to be dealt with by different arms, independent of one another.
The first decisive step would be to merge the Housing Authority, Housing Society and URA into a single organisation. This new housing body would have almost HK$100 billion in cash at its disposal. Given the synergy in resources, there would also be significant savings in operating costs. This would make it much less dependent on private developers.
The new set-up should be tasked with building flats for rent and sale under the Home Ownership Scheme. The Housing Authority team could focus on public rental housing, while the others could specialise in public units for sale.
A clear delineation of role, a new division of labour, plus a stronger financial status for a more efficient bureaucracy could be the solution for our chronic housing problem.
Albert Cheng King-hon is a political commentator. email@example.com