The Urban Renewal Authority should continue to be self-financing in the future even though some planned renewal projects may not be profitable, the government's advisers say.
Instead of injecting more public money into the authority, the advisers suggest setting up a heritage trust to deal with conservation projects as a way to reduce part of the authority's financial burden.
Professor Stephen Cheung Yan-leung, a member of the government's steering committee on urban renewal strategy, said yesterday that there would be more flexibility in the authority's financial operations as it was expected to adopt a district-based approach in the future.
'The authority doesn't have to gain a profit in every project in a district. It can lose in one while gaining in another,' Cheung said. 'I don't see an immediate need to inject more money.'
The authority is supposed to be self-financing under the Urban Renewal Authority Ordinance. The government injected HK$10 billion into the authority when it was set up in 2001 and the authority does not have to pay land premiums for its redevelopment projects.
But the self-financing principle is seen as putting limitations on the authority. Some critics say redevelopment quality may be compromised and the authority has sold luxury apartments to prevent losses.
The authority's financial operations, along with other measures, are being reviewed by the Development Bureau, which will come up with a new strategy by the end of this year.
Secretary for Development Carrie Lam Cheng Yuet-ngor, who chaired the steering committee, said earlier she had an open mind on the authority's future financial model.
But Cheung said yesterday the committee did not recommend a change to the existing model.
'We agreed that preservation projects are costly. One idea worth considering is that a trust could be set up separately to support those projects,' Cheung said, adding this could reduce the authority's financial burden.
Cheung said the committee had not decided who would give the trust money and how much money was needed. But he said the authority would not suffer a loss easily because the city's property market was prospering and renewal projects could be quickly implemented.
He said the committee's recommendations released in May were meant to rebuild trust between the authority and communities affected by redevelopments.
Recommendations include giving people an extra flat-for-flat compensation option, giving independent status to social workers who offer help to affected owners, and setting up a local consultative body comprising owners' representatives and professionals to recommend the scope of renewal for districts.
Responding to criticism over the authority selling luxury apartments that were unaffordable for residents, Cheung said the authority had started to provide smaller flats in its redevelopment projects.
The panel also agreed that the authority should, wherever possible, provide instant housing near redevelopment sites for affected residents to buy.
'Instead of waiting for a redeveloped flat, some residents may want to move into a readily available flat,' Cheung said.
Professor Law Chi-kwong, studying renewal issues at the University of Hong Kong, said it was inevitable the government would inject more money into the authority in the long run.
He said there was a chance of the property market slowing down and a lower development density considered by the government in recent years also reduced the development potential of old buildings.
'The community has increasingly high expectations. They want more open space and community facilities. These factors will eventually increase the authority's financial burden,' Law said. However, he admitted it was difficult to predict the loss and gain of renewal projects.
He suggested the authority limit conservation projects in order to save money and provide flats which were more affordable. 'Small units do not mean they are always affordable,' he said.