Treating the Symptoms - A Critical Review of ... - Civic Exchange

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How The URA WorksThe Cycle ofResumption and Profit20The URA Ordinance lays out the procedures for carryingout projects. Every year, the URA is required to submita five-year corporate plan to the Financial Secretary,containing a list of the projects it plans to implement inthe next five years, when it expects to commence them, aswell as its projected income and expenditure. At the sametime, it must submit a business plan which contains thesame information for URA activities taking place withinthe next year. The Financial Secretary then approves theplans.Neither the corporate plan nor the business plan is madepublic. The government justifies this secrecy by saying thatallowing the public to know where future projects will bewould fuel property speculation or encourage squatters tomove into buildings that are about to be demolished inthe hopes of securing compensation. With the exceptionof the 25 projects previously announced but not begun bythe LDC, the general public does not find out about URAprojects until they are officially gazetted and commenced.Upon commencement, a freezing survey takes place wherebythe URA conducts a census of all those living within theproject area for the purpose of calculating compensation.The gazetting also sets in motion the planning and publicobjections process. Legally, the URA may proceed by wayof a “development project” or a “development scheme”.The distinction is that “development projects” are smallerand simpler, and do not require rezoning permission fromthe Town Planning Board (TPB). The planning processtherefore remains internal to the URA (which has theauthority to draw up statutory plans within the projectboundaries), and so does the mechanism for lodging publicobjections. “Development schemes” are larger and morecomplex, and require TPB approval. The planning andpublic consultation process is then conducted by the TPBunder the Town Planning Ordinance, and is the same forany other private development requiring TPB approval.When the planning process is finished, and is givenfinal approval by either the Secretary for Development(formerly the Secretary for Planning and Lands) or theChief Executive for development projects and developmentschemes respectively, the URA can begin land resumption.Initially the URA will negotiate with owners to sell theirproperties voluntarily, but the URA Ordinance states thatwithin one year after receiving final planning approval, itmust apply to the government to mandatorily resume theremaining properties.The URA needs to earn profits because it is very expensiveto acquire properties and relocate people. In 2002, it wasprojected that of the HK$38.3 billion the URA wouldspend between 2002 and 2007, HK$21.1 billion wouldbe for acquisition and relocation, while HK$16.8 billionwould go towards construction. 46 Because the URAhas extensive powers of mandatory resumption, ownersresiding in project areas have no choice but to move out.As a sweetener, the URA offers higher than market ratecompensation. Domestic property owners are offeredcompensation equivalent to a same-sized average sevenyear-old flat in the same district. Since the properties beingacquired are much older than seven years, this representsa significant increase over the market value. Owners ofcommercial premises are offered market rate plus 10%, ormarket value plus 35% if the premises are owner-occupied.47In addition to compensating owners, the URA mustalso offer compensation or rehousing to domestic andcommercial tenants. 48Finally, because the URA often needs to borrow to coverits acquisition costs, interest payments can reach high levelsdepending on prevailing interest rates. While the URA nowhas a time limit of 1 year on the acquisition process beforeit must apply for mandatory resumption, under the formerLDC, acquisition negotiations could drag on for years. Thelonger the acquisition period, the more interest must bepaid. During the implementation of the Langham Placeproject (which was begun under the LDC and completedby the URA), there was a period in the 1990s when interestcosts ran to HK$1 million per day.
Is the URAjust another developer?Having acquired the site, the URA can then proceed withredevelopment in one of three ways:(a) It can redevelop the site on its own(b) It can enter into a joint venture contract with aprivate developer.(c) It can sell the land to a private developer.Joint ventures are the most commonly used modelof redevelopment. Under this arrangement, the URAtenders out for a private joint venture partner to sharethe construction costs and profits. However, the URAstill unilaterally shoulders the costs of acquisition andrelocation.All of these factors combine to explain why the URA stillfaces strong commercial pressures even though it is exemptfrom taxes and land premium. They also explain whythe URA’s activities lean heavily towards redevelopment.The profits earned from redevelopment do subsidizethe other three “Rs” of rehabilitation, revitalization,and preservation, but in reality the vast majority of thefunds go towards new redevelopment projects. The URAdoes not release figures on income and expenditures forindividual projects, but some of its published documentsindicate the heavy financial emphasis on redevelopment.In 2002, the Planning and Lands Bureau estimated thatthe URA’s total cost for 42 projects over the next fiveyears would be HK$38.3 billion, of which only HK$0.4billion was earmarked for rehabilitation, revitalization, andpreservation. 49 Its 2007-08 annual report indicates that theURA made outlays of HK$2.3 billion in direct costs, ofwhich just HK$47 million was for building rehabilitationgrants and loans. (It was not mentioned how much wasspent on preservation or revitalization). 50 In its 2008/09progress report to LegCo, the URA also stated that a totalof just HK$150 million had been spent on rehabilitationsince it first began its rehabilitation programmes in 2004.In a July 2009 presentation to the Royal Institute ofChartered Surveyors, Secretary for Development CarrieLam acknowledged that the URA is often perceived as “justanother developer”. 51 Critics allege that its commerciallydrivenmodel produces results no better than what anyprivate developer would do.This is not an entirely fair assessment. As explained inPart III of this report, the URA has done more thanprivate developers to adopt green building practices andconform to voluntary ventilation assessment guidelines. Itadditionally fields a team of social workers to conduct socialimpact assessments before projects and to assist families inrelocation. It is also required by law to hold some form ofpublic consultation, either through its own mechanisms,in the case of small development projects, or through theTPB’s mechanism in the case of large development schemes.While the URA’s consultation mechanisms fall far short ofbottom-up planning, private development projects whichdo not contradict statutory Outline Zoning Plans do notrequire any form of public consultation.Nevertheless, its commercially-oriented acquire-sellbuildmodel has failed to produce a high quality urbanenvironment. As we shall see in Part III, it builds bulky,homogenous developments with large amounts of inactivefrontage. They overshadow neighbourhoods, frequentlyrely on car-oriented transport planning, and worsenair ventilation conditions. While it has created somesuccessful public spaces and pedestrian precincts, most areunremarkable and a few are poorly designed and managed.URA projects severely disrupt the local economies whichform the character of much of inner urban Hong Kong,and at best preserve heritage buildings in a piecemeal andsuperficial manner. This is far from the holistic processdescribed in the Urban Renewal Strategy. Despite being apublic body with special powers and subsidies granted to itby the government (mostly exemption from land premium,but also a direct capital injection of HK$10 billion 52 ) it hasfailed to adequately fulfil public aspirations.The URA is ultimately a tool devised to paper over thephysical results of inadequate enforcement of regulationsand market failure caused by a high land price policy. In PartII, we will look at how the URA fits into its political andeconomic context, and how it may inadvertently be creatingperverse incentives which exacerbate the very problems itwas intended to solve.21
Page 7: The Local Context:Evolving Communit
Page 10 and 11: Hong Kong Urban Design ConcernsHong
Page 12 and 13: 12In 1998, the Planning Department
Page 14 and 15: Part I:14The URA —A Redevelopment
Page 16 and 17: Version 2:The Urban RenewalAuthorit
Page 18 and 19: URA Ordinance vs.Urban Renewal Stra
Page 22 and 23: PART II:22The PoliticalEconomyof th
Page 24 and 25: The Institutional ContextNationaliz
Page 26 and 27: 26traditionally given the Lands Dep
Page 28 and 29: 28maximum allowable plot ratio —
Page 31 and 32: Left: Multi-ownership with inadequa
Page 33 and 34: Weak building maintenanceregulation
Page 35 and 36: Lack of FinancingOne significant pr
Page 37 and 38: Left: Graham Streetrequirement. 137
Page 39 and 40: Left: Graham Streetthe 1970s to ind
Page 41 and 42: From the point of view of private d
Page 43 and 44: The Built EnvironmentPart I discuss
Page 45 and 46: Left: The K11 shopping mall, hotel,
Page 48 and 49: Box 4Calculating Plot RatioPlot rat
Page 50 and 51: 50Standardized ArchitectureStandard
Page 53 and 54: Left: Langham Place, blank facade o
Page 56 and 57: 56Figure-ground diagram of Langham
Page 58 and 59: 58This page: Footbridge network ove
Page 61: Left: Wo Tik Street - the only acti
Page 65 and 66: Public Open Spaces and Pedestrian P
Page 67 and 68: The MertonThe Merton in Kennedy Tow
Page 69 and 70: Left: The widened pavement along Sh
Page 71 and 72:
Langham PlaceThere are often paveme
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Recreational Public Open SpacesQuan
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Hanoi Road K11 Open SpaceSize: 1,20
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78Clockwise from left: The ground f
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The MertonTotal size (sites A and B
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General ObservationsLandscapingGene
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The URA also announced that it had
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Box 6The Counterproductive Pursuito
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Opposite, clockwise from top right:
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Social ImpactSocially sustainable d
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Left: Western Market has become pri
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98This spread from left: This anony
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Top: A naturally gentrified street
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102Comprehensive redevelopment disp
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104Luxury shopping at the K11 mall
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106A building rehabilitated by the
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According to town planner Ian Brown
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110
Page 112 and 113:
112Wan Chai Market. Built in 1937,
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114
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116
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118Conclusion
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120
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Appendix 1Name of projectAddress/lo
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Name of projectAddress/locationArea
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126Endnotes1 HKSAR Planning Departm
Page 128 and 129:
128110 Chan, B. W. (2002), “The h
Page 130:
Room 701, Hoseinee House,69 Wyndham
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