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SCMP Reporter

The new Urban Renewal Authority (URA) should abandon its development role and instead assemble and sell sites to private-sector developers, according to a study group.

 The University of Hong Kong's Centre for Real Estate and Urban Economics recommends that the Government reshape the Land Development Corp (LDC) into a URA that can become a leading player in comprehensive urban renewal and an important facilitator of private redevelopment.

 The URA's key role would be to assemble, clear and dispose of sites, with associated planning controls, it says.

 Since its establishment in 1987, the LDC has undertaken large urban redevelopment projects, mainly through market-funded joint ventures with developers. Over time, redevelopment of more profitable sites has been completed and land assembly has become increasingly difficult.

 Problems arise when projects which may be socially desirable prove less financially attractive and less likely to excite private-sector participation, the study group says.

 The Government's proposed 'linked site' concept, which offers the LDC extra profitable sites to compensate for undertaking non-viable projects, is designed to overcome this problem.

 'This initiative has now placed the LDC in direct competition with the private-sector developers since in the case of the profitable linked sites the LDC will become responsible for the entire redevelopment process and will not be able to utilise private-sector financial resources,' the study group said.

 'The issue of whether private-sector money can be accessed in the case of the less viable sites or even how it might be attracted has not yet been clarified.'  The LDC has begun preliminary works on two linked-site pilot projects in Tsuen Wan and Kennedy Town. The group said the two projects were only at the site-acquisition stage and the outcome would be watched with interest.

 However, it said: 'The difficulty of placing either the LDC, or the restructured URA, in direct competition with the private developers could be avoided, even for non-viable sites, through the authority merely using an acquisition and sale of cleared-sites programme.

 'Private-sector involvement could be enhanced by tendering affected sites, with specific financial provisions for compensating the non-viable aspects of the project.'  It suggested that the URA also move out of redevelopment of non-viable sites unless the private sector refused to participate.

 If the intention was to continue to utilise private-sector resources and expertise in urban renewal, the Government should find ways to minimise site-acquisition costs while maximising development gains to attract developers, it said.

 The group said incentives could range from allowing 'up zoning' or bonus plot ratios to linked-site development options. Other incentives could include a discount in the lease-modification premium or a government loan at lower interest rates to cover the costs involved.

 'A more indirect approach might allow the payment of the modification premium to be deferred until the completion of the development, or to allow the premium to be paid in instalments or even to be adjusted to reflect market conditions at the time of completion.'  In a series of recommendations, the group said the URA would have to be considerably more powerful than the present LDC. The new body should be able to dispense with layers of bureaucracy and approach the Town Planning Board and the Executive Council directly. It should have access to private compulsory acquisition powers and government resumption procedures.

 Resumption should be made easier, by lowering the threshold to 80 per cent of ownership of a site from the 90 per cent proposed by the Land (Compulsory Sale for Redevelopment) Bill.

 The URA should be made financially stronger by allowing it to issue bonds guaranteed by the Government. A direct infusion of government funds also should be considered.

 The group said the Planning, Environment and Lands Bureau should set up a team to monitor key renewal projects. The team should broaden its focus and review all urban outline zoning plans for rezoning opportunities, specifically targeting under-used industrial sites.

 The group also expressed concerns about the adverse effects of the proposed Town Planning Bill, which it said would complicate and delay urban renewal. It said the bill should be abandoned and replaced by minor amendments to existing legislation.

 'The existing Town Planning Ordinance has 26 sections; the Town Planning Bill has twice as many, indicating a desire to increase public-sector intervention in the development process,' it said.

 'Overall, the added sections confirm the suspicion that the Planning Department seeks considerable, additional discretion. This discretion in the planning process runs counter to the SAR Government's intention to streamline development procedures, without providing any additional community gain.' 



URA urged to abandon role as developer