Speech on transfer of development rights (English only)

The following is a speech delivered by the Secretary for Planning and Lands, Mr John C Tsang, at the annual general meeting of the Hong Kong Institute of Architects today (December 18):

Transfer of Development Rights for the

Preservation of Historical Buildings in Hong Kong

Mr President, Ladies and Gentlemen,

It is a great honour for a failed student of architecture to have the opportunity to speak at the annual general meeting of the Hong Kong Institute of Architects. The topic that I have chosen this afternoon is the transfer of development rights, or TDR, for the preservation of historical buildings.

Historical buildings of architectural and heritage value are quickly disappearing in Hong Kong. We need to do something fast to save remaining historical structures in sound conditions so that our young people and future generations would still be able to admire them up close in future instead of just seeing them in photographs. There is a great deal of urgency but we cannot rush into this subject emotionally and indiscriminately. We must be pragmatic and rational.

It would, indeed, be impractical for us to preserve every single structure in our community just because they are old. That is too simplistic. We have the responsibility to devise a way to help us choose the buildings of value at an affordable cost to the community. In the process we need to assess not only the historical and artistic values of these building, but also the social and economic costs to society in preserving these buildings. We must weigh carefully the costs and benefits before we make a rational decision to choose which ones to preserve, and the community must know at what cost.

My colleagues in the Home Affairs Bureau are currently doing precisely that, conducting a review on heritage preservation policy in Hong Kong. I shall leave it to them to come up with the proper solutions. In anticipation, we are giving preliminary thoughts to identifying viable means from the policy perspective of the Planning and Lands Bureau to make the new preservation policy workable.

The success of Hong Kong is couched in the operation of market forces. We cannot expect the developers to turn away from their objective to maximize profits and to volunteer to preserve historical buildings in the community without any return. They just don't behave like that. Nor can we expect Government to acquire all the historical buildings in the open market or to resume them under the Lands Resumption Ordinance. That is not the best use of public revenue and is, any way, just too expensive. It would be better if we can employ market forces to pay for the preservation of these historical buildings. Providing an incentive for property owners to encourage them to preserve these historical buildings is one way and TDR could be such an incentive.

The purpose of a TDR scheme is to create a "win-win" solution. With TDR, the owners of historical buildings of value will be able to keep their existing buildings, and use or sell the unused development rights as they see fit. The community would also benefit from the preservation of these buildings without having to buy or resume the properties.

TDR is nothing new. Many overseas cities and communities, such as New York City and Vancouver, operate such schemes. The question is: can TDR work in Hong Kong?

The existing framework of density control under the Buildings Ordinance and the statutory town plans does not allow any TDR to apply across sites that are not contiguous. At present, "transfer" of development rights or permissible gross floor area (GFA) is only allowed between different parts of the same development site. This method should actually be more accurately referred to as clustering of GFA, rather than transfer of GFA.

The idea of a TDR Scheme is to enable property owners to "deed-restrict" their properties that are of historical value against future development, and to transfer the unused development rights to other sites of the same land use category in the same statutory town plan area, ie, the area covered by an Outline Zoning Plan. In exceptional cases, the unused development rights could also be transferred to a contiguous Outline Zoning Plan.

The basic principle behind this idea is relatively simple. Under such a TDR scheme, historical buildings may be declared as monuments, and become eligible "sending sites". The owners of such properties could apply to modify their land leases against future redevelopment and obtain a right or entitlement to the unused development rights in exchange for the deed restriction or lease modification. The entitlement would be calculated by deducting the existing GFA of a historical building from the maximum GFA permitted under the land lease, the Outline Zoning Plan or the Buildings Ordinance, whichever is the least. The unused GFA permissible could then be transferred to other "receiving sites". A certificate of entitlement specifying the amount of transferable GFA, or GFA credits to be more precise, would be issued to the owner. These GFA credits could then be used in approved receiving sites or sold to other owners or developers.

By obtaining or buying such GFA credits, owners or developers could apply to a designated authority to use such rights to build at a higher density ratio, or plot ratio, than the development controls would normally permit for a building development on the receiving site.

The size of the building development should be commensurate with the size of the site in order to prevent excessive building bulk and should not overload infrastructural facilities. Under the proposed scheme, receiving sites would not be allowed to receive too much GFA credits. The total GFA of a building development on a receiving site should not exceed 20 per cent of the maximum GFA normally permitted.

Besides historical buildings, Hong Kong's older neighbourhoods are also fast disappearing as a result of redevelopment. Some of these older neighbourhoods are an important part of our history. They include some parts of Kowloon City, Wan Chai and Yau Ma Tei. We are thinking also about preserving these neighbourhoods by the proposed TDR scheme.

Similarly, the vistas of landmark historical buildings could also be protected by TDR. Some important historical buildings are now towered over by neighbouring high-rise buildings. A good example is the Western Market. The proposed TDR scheme could help to avoid redevelopment on neighbouring sites in order to protect the vistas of these buildings.

If we were to implement the TDR scheme, the existing legislation on density control would have to be amended. The Government would need new legislative powers:-

* to designate heritage areas instead of just individual historical buildings;

* to transfer GFA credits from a sending site to a receiving site that are not contiguous; and

* to relax the maximum plot ratio and site coverage permissible under the Building (Planning) Regulations and the statutory town plans.

Heritage preservation is an issue that is very close to my heart. I know that it is also a matter very close to the heart of every architect. We are considering these proposals now in the context of our review on the preservation policy. We will be consulting the public in the near future on the entire scheme. I look forward to receiving your input in due course on the feasibility of this proposal.

Thank you.

End/Tuesday, December 18, 2001