Urban Renewal Authority in need of reform

Its current model of operation serves to enrich developers when it should be looking out for the public good

PUBLISHED : Tuesday, 24 July, 2018, 3:21am
UPDATED : Tuesday, 24 July, 2018, 6:52am

Rightly or wrongly, the Urban Renewal Authority is often seen as being in league with private developers. Instead of rehabilitating old buildings, its preferred model has been redevelopment.

Given its status as a statutory body with the power of compulsory land resumption, developers who partner with it effectively enjoy the forced sales of old buildings. That is certainly not the URA’s mandate; private-public partnership is not the only financing model, but it has been the most profitable.

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Or rather, it has a conflicting mandate. It is supposed to renew dilapidated buildings and old districts, which could mean repair and rehabilitation, or redevelopment. But since the URA needs to be self-financing, it has every incentive to pair up with private developers. This is especially so when many old buildings have not used up their “plot ratio”, or development potential.

In this context, it is interesting that URA managing director Wai Chi-sing said that instead of tearing down buildings, there should be “a good maintenance strategy in place… at an early stage”.

That makes perfect sense. But how does the URA plan on doing that?

Hong Kong is facing a rapidly ageing buildings stock. By 2046, more than 326,000 private flats will be over the age of 70.

Most are concentrated in old, urban areas such as Yau Tsim Mong, where about 60,000 units will be older than 70 years by that time. There is also environmental degradation from the amount of construction waste thus generated.

Wai’s suggestion deserves to be a policy priority, but there is no way to realise it given the URA’s current self-financing and bureaucratic models.

Reform is the only solution. Scrap its statutory status and integrate it into the Development Bureau. Funding for redevelopment or rehabilitation can come directly from the government’s massive land and infrastructure fund, which collects from public land sales amounting to about 20 per cent of revenue every year.

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In return, any sites or buildings it resumes will be returned to the government for later resale or redevelopment, rather than rebuilding them with developers.

The government should also revise the current 80 per cent threshold of owners who agree to a forced sale of their building to the original 90 per cent.

Many perfectly good but old buildings are being forced into sale under the low threshold. Clearly, where possible, rehabilitation is more desirable for the public good.