LCQ20: URA aims to be self-financing





Following is a question by the Hon Fred Li Wah-ming and a written reply by the Secretary for Planning and Lands, Mr John C Tsang, in the Legislative Council today (January 9):




The Urban Renewal Authority Ordinance (Chapter 563) requires the Urban Renewal Authority ("URA") to follow the Urban Renewal Strategy set out by the Secretary for Planning and Lands when preparing its corporate plan. The Planning Parameters and Financial Guidelines of the Strategy stipulate that the URA has to operate on commercial principles. However, it has been reported that most of the redevelopment projects in the first five-year development plan of the URA, especially the 25 uncompleted projects of the Land Development Corporation, are anticipated to incur financial losses. In this connection, will the Government inform this Council:


(a) whether the aforesaid commercial principles require the URA to make profits from redevelopment projects; if so, in view of the projected financial loss of a number of redevelopment projects, how the URA can meet the requirement to operate on commercial principles; and


(b) how the URA can achieve the aims of heritage preservation and retention of the historical characteristics of different districts set out in the Strategy on the premise of operating on commercial principles?




Madam President,


The Annex on Planning Parameters and Financial Guidelines to the Urban Renewal Strategy states that the URA should operate according to commercial principles in implementing individual redevelopment projects. It states that the URA should seek the approval of the Financial Secretary before the commencement of a project that is not considered to be financially-viable. This procedure aims to ensure that the URA has adequate financial resources for individual projects and that it does not take undue business risks.


The requirement for the URA to operate in accordance with commercial principles does not mean that the URA cannot undertake projects which are unlikely to be profitable. It means that the URA should exercise due care and diligence in the handling of its finances. It is not our intention that the URA should be profit-making, but it should aim to be self-financing in the long run.


The Urban Renewal Strategy states that the URA should preserve heritage buildings if such preservation forms part of its urban renewal projects. Operating under commercial principles, the URA can use the redevelopment part of a project to cross-subsidize the preservation part.


The Government is considering a proposal to introduce a transfer of development rights scheme for the preservation of historical buildings and heritage areas. If the scheme is implemented, the URA should be able to transfer unused development rights of its preservation projects to its other redevelopment projects which are of the same land use category in the area covered by the same or a contiguous Outline Zoning Plan.


End/Wednesday, January 9, 2002