URA set to think big after rare deficit
Authority lost HK$2.3b for the last financial year - and sources say a focus on large-scale redevelopments may help it fight back
The Urban Renewal Authority is set to switch its focus to bigger, more profitable redevelopments after recording a HK$2.3 billion deficit - its first loss in five years - for the last financial year.
The URA said the deficit was mainly due to the delay in tendering for four projects amid resistance from property owners, and provisions for losses on five projects for which compensation offers were made.
But greater opposition to redevelopment schemes was only one factor putting the URA under a financial strain, chairman Victor So Hing-woh said after a board meeting yesterday. A declining property market and rising construction costs could also threaten the URA's long-term financial stability.
So said a steering committee had been created to come up with proposals that would allow the URA to conduct redevelopments in a "more efficient" way.
"For example, it is not necessary for the authority to adopt a 'slash and burn' approach in every project. Smaller sites can be renovated instead of being redeveloped. A refurbished building can stand for another 10 years or more," he said.
The URA had previously hinted at moving away from smaller developments under its "demand-led" scheme, which allows flat owners to approach the authority and ask for its help. But a source close to the URA board indicated it would move towards bigger schemes in general.
If the authority came up with a comprehensive redevelopment plan for a large site, the Planning Department might allow a higher plot ratio, increasing the development density. Large schemes could also allow for more community facilities, the source said.
But such schemes would need support from the government and the Town Planning Board, the source said, as they might involve government land or require roads to be realigned.
So said smaller projects could be handled under the authority's facilitator scheme, in which the URA does not compensate owners directly but collects ownership for auction. The scheme could also be expanded to industrial buildings, he added.
The steering committee is expected to put its proposals to the board by the end of the year.
Despite the gloomy short-term picture, So said the URA still had net assets of HK$23.9 billion and could afford the HK$33 billion it would cost to implement its business plan for the next five years. If money was short, it could issue bonds, he added.
Board member James To Kun-sun urged the government to offer more financial support.
"The government gains when a community is improved with buildings of higher value," the Democratic Party lawmaker said. "Higher rates and stamp duties … will eventually increase government revenue."
The URA last recorded a deficit, of HK$4.5 billion, as the global financial crisis struck in 2008/09.