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A major change of strategy in re-developing slum areas by the Urban Renewal Authority that will lead to the sale of sites worth up to $250 billion over the next 20 years was announced yesterday.

The authority has decided to limit its role to buying and clearing the sites, leaving construction of about 70,000 flats to private developers. It will continue to redevelop those sites which fail to interest private developers.

As a result of the change, the authority has decided to disband its construction arms and yesterday laid-off 24 senior executives.

The unexpected moves have drawn criticism that the Government is handing more power over housing supply to private developers.

Authority chairman Dr Lau Wah-sum defended the new policy, saying it would speed up the development of 200 sites due to come under its control over the next 20 years. An earlier report by the authority estimated the sale of the sites would generate about $250 billion.

Dr Lau said potentially profitable sites, once cleared by the authority, would be sold to developers, with the remainder developed jointly with the authority or by the authority alone. 'We need a very efficient and effective organisation structure to implement the strategy,' he said.

The authority yesterday scrapped its three construction and sales divisions - project management, commercial and corporate services -  and gave its laid-off executives $27 million in compensation. The employees were informed of the decision yesterday morning and told to be out of their offices by 5.45pm.

Property developers have previously expressed fears that the newly set up authority could be competing with the private sector.

Ho Hei-wah, director of the Society for Community Organisation, said the authority had bowed to pressure from developers. 'The pace of urban renewal will now be in the hands of property tycoons [and] whether they want to bid for the sites. Apparently, the Government is now using every means to push up property prices.'

Democratic Party legislator James To Kun-sun described the news as 'outrageous'. 'How can the authority make such a decision when they are still consulting the public on its strategy?' he asked. 'How can we trust the Government any more? They have repeatedly promised there would be no lay-offs.'

But an authority source said the changes would allow it to concentrate on the task of resuming the slum areas. 'We should not cross that line, and just focus on our work,' he said. 'If we just put a site up for sale, then we can get the cash back faster and use it for another project. The whole process of urban renewal would be speeded up and of course the quality of buildings developed by the private sector will be better.'

The package for the authority's laid-off executives includes $10 million in back pay and allowances and $17 million in severance payments. The severance packages were six times higher than the legal requirement.

The executives will receive one month's salary for every year of service and a minimum of three months' salary. The compensation packages ranged from $330,000 to $2.69 million. Those removed were three directors, two deputy directors, five senior assistant directors, five assistant directors and nine senior managers.

Dr Lau agreed that the compensation was 'very generous', but said it was in line with packages offered by other corporations such as Pacific Century CyberWorks, the Mass Transit Railway Corporation and the Housing Authority.

He said the authority had no immediate plans to further cut its 300 staff. However, he said no company could give guarantees against lay-offs in the future.

The authority said junior employees would be redeployed. Some would have their salaries cut to match market levels over a period of two years, beginning next April.

John Yeung Ma-ling, spokesman for the authority's staff association, said employees were shocked and angered by the changes. The group held a meeting last night to discuss whether to take any action.

The Urban Renewal Authority was created out of the Land Development Corporation in May.



Anger at decision by urban renewal body to auction 200 sites to private developers over 20 years