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Speech by Secretary for Housing, Planning and Lands on Legco motion on Review of the Urban Renewal Strategy

The following is a translation of the speech made by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in response to the motion moved by the Honourable Alan Leong on "Review of the Urban Renewal Strategy" in the Legislative Council today (May 17):

President,

The heated discussion of the Hon Alan Leong and other Members over the motion and amendments to the motion has demonstrated that urban renewal does not only concern the affected residents in old districts, but is also a subject of great public interest. The fact that Members have raised amendments to the motions from different perspectives has illustrated the complexity of urban renewal.

In 2001, the Government set up the Urban Renewal Authority (URA) to replace the former Land Development Corporation (LDC) to further advance the work of urban renewal. The Urban Renewal Authority Ordinance (URAO) was passed after thorough and in-depth discussions by the Legislative Council and society. It provides the URA with greater flexibility to implement a more comprehensive urban renewal programme. After extensive public consultation we have also formulated a "people-oriented" Urban Renewal Strategy (URS) which provides broad directions to guide the URA's work. Under the framework of the URAO and the URS, the Board of the URA, comprising independent members from different sectors, is tasked to carry out the urban renewal programme, to monitor the effectiveness of the work of the URA and to closely work with stakeholders in furthering its important mission of rejuvenating older districts.

Since urban renewal is a complex matter involving the interests of different stakeholders, coupled with rising public aspirations and expectations over urban renewal, the URA may not be able to fully satisfy the demand of every stakeholder and there may be room for further improvement. That said, under the guidance of the URA Board, the URA has been doing its best to discharge its statutory duties.

The Hon Alan Leong has pointed out that two guidelines stipulated in the URS, including paragraphs 21 and 35 of the URS, have seriously constrained the work of the URA. I must first respond to this point. In 2002, when the Government sought approval of the Legco Finance Committee over the capital injection of $10 billion to the URA, we already explained clearly to Legco Members about URA's long-term objective of being self-financing. During the public consultation on the draft URS, we have also clearly conveyed such policy direction to the public.

As a matter of fact, apart from the capital injection of $10 billion to the URA, the Government has agreed to grant urban redevelopment sites to the URA at nominal premium. Taking the Kwun Tong Town Centre project as an example, the premium foregone of that project site will amount to thousands of millions of dollars. The opportunity costs of the Government's $10 billion injection should not be disregarded. All this financial assistance to the URA has demonstrated that the Government and society as a whole have already put huge resources into the work of urban renewal. It is also totally unfounded to allege that the Government has required the URA to achieve financial balance for each of its projects. Many of the URA's 30 projects already commenced are financially non-viable but beneficial to the community at large.

Given that the URA is operating on public coffers, and that it has been given a significant capital injection and free land for redevelopment, we believe that the community accepts that the URA be required to exercise financial discipline to achieve self-financing in the long run in order to ensure the sustainability of its urban renewal programme. It is also a discipline that the URA, being a statutory body, should abide by. We appreciate that it would be difficult to anticipate all the eventualities. As such, if for some reasons the URA is unable to achieve self-financing in the long run in future, the Government will be prepared to consider, in the light of the actual circumstances, the URA's financial arrangements.

As regards paragraph 21 of the URS, the original motion suggested that the URA could consider adopting the private sector's redevelopment practice, i.e. acquiring properties first and then working out the design and planning options afterwards. We consider this approach inappropriate. As a public organisation, the URA should be fair, open and transparent when handling acquisitions, to safeguard the rights and interests of the residents affected by redevelopment. The URA currently carries out property acquisition upon completion of all statutory planning procedures. This is to ensure that the community generally agrees that commencement of a project is in line with public interest before it is further taken forward. I think this is an important understanding.

In fact, the focus of paragraph 21 is to require the URA to adopt a "people-oriented" approach to acquire properties through negotiation with owners concerned before seeking the Government's approval over land resumption. This arrangement allows room for the URA to provide various types of assistance to owners in need, and to minimise the social impact arising from redevelopment projects.

Regarding the proposal that the URA should act as a facilitator in urban renewal. I would like to point out that the modus operandi of the URA, as stipulated under the URAO, was endorsed by the Legislative Council after thorough discussion. While the feasibility of the Hon Alan Leong's proposal is subject to discussion, the fundamental concept of ultimately relying on private developers to carry out urban renewal appears to be contradictory to his proposed direction that urban renewal should focus on financially non-viable but socially desirable projects. It is impracticable to expect private sector participation in non-profit making projects. As a result, people living in dilapidated areas, with living conditions that warrant immediate improvement, cannot benefit from the proposal, and the pace of urban renewal cannot be expedited.

The motion mentions various issues that the Government should pay attention to when carrying out the review of the URS. Most of these issues are already part of URA's on-going policy direction. Over the past few years, the URA has also achieved some results. I would like to highlight the salient points.

A number of Members have stressed that a comprehensive approach to urban renewal, instead of redevelopment dominant, should be adopted. It is exactly for this reason the URA has adopted a holistic "4R" approach which covers not only redevelopment, but also rehabilitation, preservation of buildings of historical value, and revitalisation. We strongly agree with the Hon Cheung Hok-ming's proposal that the "4R" strategy should be fully implemented.

Let me give some examples to illustrate the experience and achievements of URA's work in these four aspects:

(1) rehabilitation - since the URA in 2003 started promoting building rehabilitation to encourage building owners to properly upkeep their buildings, various rehabilitation schemes have been put in place, including the provision of financial and technical assistance to owners. Owners assisted by the URA have in general indicated that apart from the improvement to building conditions, the rehabilitation efforts have helped to increase the value of their properties and secure more favourable mortgage terms with the banks. The schemes have been well-received by the public and have so far provided assistance to some 17,000 property owners;

(2) preservation - by way of consulting the Antiquities Advisory Board, the URA will propose to preserve buildings of historical value within its urban renewal projects. The URA has so far preserved more than 20 historic buildings. The tenement buildings in Mallory Street, Wan Chai, are one example. Regarding tree protection as raised by the Hon Cheung Hok-ming in his amendment, the URA will take fully into account the need to protect old and valuable trees when implementing its projects. The Government also supports the preservation of local communities with unique cultural characteristics as proposed by the Hon Chan Yuen-han;

(3) revitalisation - to enhance the vibrancy of local community, the URA will carry out tailor-made improvement works to the local environment, for example, repaving roads and greening. The URA will also organise street activities jointly with District Councils (DCs) and other organisations to strengthen the local economic vitality. The Sheung Wan Fong revitalisation project is one of the successful examples;

(4) redevelopment - URA has already commenced 30 redevelopment projects. Out of the 25 ex-LDC projects, 21 have been started. As regards the Hon Fung Kin-kee's concern about the remaining ex-LDC projects, the URA has indicated that it will commence these projects as soon as possible, taking into account the local community's aspirations and other pertinent factors. The 30 redevelopment projects commenced so far will provide about 7,000 square metres open space and about 17,000 square metres of community facilities upon completion.

I understand that the URA has from time to time explained its work to the Legco Members and listened to their views.

A number of Members have considered that the URA should enhance its consultation with the stakeholders of urban renewal, particularly the professionals. I fully agree with this point. In recent years there has been a growing community demand to take part in city planning. The DCs, as the representatives of the local community, are indispensable partners of the URA. The URA has been actively collecting views of the public and different stakeholders through various channels. Taking the Hon Fung Kin-kee's Sham Shui Po District as an example, the URA has already consulted the Sham Shui Po DC or its committees three times on the Kweilin Street project. The URA also carries out community aspiration surveys, gauging the concerns and expectations of the local community affected by redevelopment projects and its neighbourhood. The URA has also set up in various districts District Advisory Committees (DACs) comprising local personalities from different sectors. The DACs advise the URA on urban renewal work in the respective districts.

Take the preparation work for commencement of the Kwun Tong Town Centre project as an example. The URA has worked out a consultation plan at the outset, adopting a bottom-up approach and engaging the community in its project planning process. Apart from the community aspirations survey conducted in the Kwun Tong Town Centre and its neighbourhood, the URA has invited residents, professionals, academics, Legco Members, etc to attend workshops to gauge the views of different parties on the future development of Kwun Tong. The URA will consult the public on the development concepts of Kwun Tong Town Centre. I firmly believe that in order to work out a project that is practicable and in line with the public interest, the URA will consider all the views received in the consultation, and balance different interests when assessing various options.

Concerning the Sai Yee Street (the so-called Trainers Street) project in Mong Kok, the local community has diverse views on whether redevelopment should be pursued or rehabilitation should be carried out. The URA needs to widely consult local residents and shop owners on their preferred approach. It is appropriate for the URA to now conduct an opinion survey. In any case, the URA's determination to preserve the local characteristics and the existing vibrant economic activities in that community remains unchanged.

To make our urban renewal efforts successful, we cannot perceive urban renewal as different separate entities. A holistic planning and consistency within and outside a district is very important, as show-cased by the URA's integrated approach to rejuvenate old districts. The Wan Chai Master Thinking is a case in point. It is in line with what the Hon Alan Leong has proposed, "not adopting a separatist attitude when devising updated blueprints and formulating reform strategies for local communities, but rather promoting co-ordination among the communities and making concerted efforts together with neighbouring communities in pursuing overall developments, to achieve the best synergy".

On the co-operation between the Government and the URA, as I have pointed out earlier, the URA Board has its own statutory role and authority. It will be against the legislative intent of the URAO if the Government is also tasked to undertake the planning and decision-making for urban renewal. On this point, the amendment proposed by the Hon Cheung Hok-ming is more practical and realistic. Government departments will continue to closely liaise with URA to support its work.

The Hon Alan Leong has requested the strengthening of social impact assessments. The URS has already required the URA to conduct comprehensive social impact assessments and the URA has complied. Reports of the social impact assessments on individual projects are also available for public inspection.

Moreover, the Government will review from time to time the implementation of various ordinances, including those relating to buildings, town planning, land resumption and antiquities and monuments. One of the considerations of the review is how to complement the work of urban renewal. The amended Town Planning Ordinance has made the town planning process more comprehensive and open, which is also applicable to URA's development schemes. The Government will also review from time to time the statutory land-use plans in order to meet the community aspirations and the needs of urban renewal. The Buildings Department will also adopt a performance-based approach to handle those rehabilitated or preserved buildings which cannot fully meet the requirements of the Buildings Ordinance.

Members have suggested that the URA should roll out more flexible financial and loan options to assist residents and shop operators. At present, the URA has been providing residents with various kinds of support to undertake building rehabilitation. Apart from providing loans and subsidies to owners, the URA has reached agreement with a number of banks to provide preferential mortgage or longer repayment period to residential units that have been rehabilitated under URA's schemes.

Regarding members' concerns on the compensation for redevelopment projects, the relevant compensation policy and implementation details are formulated by the URA Board. URA's existing ex-gratia payment policy is based on the Government ex-gratia compensation package as approved by the Legco Finance Committee, with appropriate top-ups. The then Finance Committee of Legco approved the compensation arrangement having considered that the arrangement was reasonable and could balance the interests of the community. Such an ex-gratia arrangement should not be mixed up with the URA's principle of achieving self-financing in the long run. The URA will adopt a flexible approach to offering ex-gratia compensation having regard to the actual situation and the needs of individual residents. In response to residents' request for greater transparency in the valuation for the Home Purchase Allowance, the URA, through open lot-drawing, engages independent surveying firms to undertake property valuation. Other than providing financial assistance, the URA has also engaged social worker teams to help residents affected by redevelopment to resolve rehousing, relocation and individual problems.

Nonetheless, the URA must exercise due care and diligence in handling its finance in accordance with the URAO. While trying to meet the needs of residents as far as practicable, the URA must be prudent in ensuring public funds are used properly. The URA should also have a comprehensive master of its financial position and commitments so that it can sustain its urban renewal work. I believe Members agree to this point.

I would like to take this opportunity to clarify some misconceptions about the URA. Given its mission and social responsibilities, the URA is entirely different from private developers. While financial return is the sole performance indicator for private developers, the URA is not for profit making. As I have mentioned earlier, the URA has undertaken projects which could bring benefits to the community but have no financial return, including the launching of some financially non-viable redevelopment projects as well as undertaking building rehabilitation and revitalisation of old districts. It is unfair to allege that the URA has become a "statutory developer".

Finally, I would like to speak on the review of the URS. In view of the request of Legco and the community, the URA has accorded priority to launching the remaining ex-LDC projects. As a result, the URA has only launched redevelopment projects under the new legal framework of the URAO in the past one to two years. As redevelopment projects involve complex procedures, including an interactive planning consultation process, property acquisition, rehousing and land resumption etc., it normally takes several years to complete the whole process. Besides, the URA's rehabilitation and revitalisation programmes have been launched only for a relatively short period. We therefore consider that more time is needed for the URA to accumulate adequate operational experience. Urban renewal is a very complex subject. Not only does it involve a need to balance the interests of the affected residents and shop operators with that of the overall community, it also involves social, economic, planning, land use, environmental and even resource management issues which are closely interrelated. There is a need to review the URS so that we can learn from experience and seek improvements. This will allow us to achieve the objectives of urban renewal, to provide a comfortable living environment for the community and to facilitate the continual development of Hong Kong.

I look forward to working hand in hand with the URA, Members and the public in striving for urban renewal.

Thank you, President.

End/Wednesday, May 17, 2006

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