Designing Hong Kong E-Newsletter: Saturday, 26 July 2008

Experience the war zones

If you want to understand concerns over the future of Hong Kong's urban environment, spend some time walking (if you can) around the latest developments in Nam Cheong, Tai Kok Tsui, West Kowloon, Tseung Kwan O, Hung Hom, .. Note that these are brand new, built on reclaimed land, done on a white sheet of paper. They are the responsibility of the Planning, Lands and Transport Departments, cheered on by the Government appointed Town Planning Board.

Then remember that more of this is planned, including for the future Central Waterfront. Worse, the Urban Renewal Authority (URA) is introducing ever more of these 'integrated comprehensive large site developments' in our older areas.

Ready to leave town? There is a splinter of hope.

Build me up

Pick up a copy of HK Magazine this week to enjoy great pictures showing the beauty of urban regeneration by the private sector. Just imagine Hong Kong to look like this! Click here for the on-line version of HK Magazine. Or read how these efforts are translating into articles in international media, drawing visitors to spend their money in Hong Kong. Click here fore a 'Walk in the City' in the Wall Street Journal.

Bright minds warned in 1999 that the URA without an overall strategy would be a disaster

In 1999 the conservative Hong Kong General Chamber of Commerce promoted renewal and regeneration by the private sector. They called for a comprehensive urban renewal strategy to address urban upgrading and regeneration which the URA projects may not cover. To read what the General Chamber of Commerce said about the URA, click here.

One lonely voice in LegCo opposed the URA on 26 June 2000, calling it 'the wrong answer to the wrong question'

The speech below is an extract from the second reading of the Urban Renewal Authority Bill in the Legislative Council. 51 Members were present during the voting on 26 June 2000. 2 abstained, 47 voted in favour, one voted against - this is what she said:

Miss Christine Loh: I am sorry, Madam President, I rise to speak against the resumption of Second Reading of this Bill.

The reason for my opposition is that I do not believe that the Administration's urban renewal strategy is going to work.

Indeed, it remains unclear exactly what the strategy is. I am sure the Administration thinks that it has a strategy.

The Administration may say that clause 5 of the Bill spells out the "purposes" of the Urban Renewal Authority (URA), and that officials went into greater detail in a document on 4 May to the Bills Committee. Clause 5 and the document spell out a series of desired outcomes, such as improving the standard of housing, replacing old and dilapidated areas, utilizing land better, preventing decay, preserving sites with special interest, and preserving social networks.

With respect, none of that constitutes a policy.

There is no policy document that makes plain the planning and directing of urban renewal in future. Indeed, Members can see from the Report of the Bills Committee that the Administration's intention is to finalize the urban renewal strategy after consultation with the URA.

What that means is that the Administration wants to first build the hardware, and then discuss with the hardware how to develop the software to run it.

Madam President, I am not sure that this is the right approach.

If the Administration does not yet have a clear strategy, would the setting up of the URA in itself create the strategy? Obviously, not.

I think it safe to say that the URA is unlikely to be fundamentally different from the Land Development Corporation. The composition of the URA Board will be much like those of other public bodies. There will be a good smattering of civil servants. There will be a group of so-called community representatives. There will be a non-executive chair and a managing director. If it is like other typical boards, can we really expect the URA Board to be able to come up with a comprehensive strategy any time soon? I doubt it.

The strategy will come from the Administration, who up until this moment cannot articulate one.

Whilst I am hearten that there will be another round of public consultation, I see no rush in putting the cart before the horse by setting up the URA now.

So, what is the rush?

I see the rush as another typical reaction from the Administration to show the public that it is "doing something". Urban renewal has not been a success. There has been pressure for years to "do something".

The Administration's response is typical when it is under pressure.

It proposes to create hardware or add procedures, rather than standing back and trying to understand why things have not worked. If the Administration understands what it should be doing, we would have the strategy clearly stated today.

Let me try to state what I think are some of the underlying problems.

In a nutshell, the Bill is the wrong answer to the wrong question. The URA is being set up to solve the problem of poorly built and poorly maintained individual buildings. The URA is supposed to target buildings that are dropping bits of concrete on passers-by.

While it is supposed to achieve better utilization of land in dilapidated areas, there is no strategy on how to do that. Yes, it may be able to preserve historical and cultural sites, but that is far from facilitating urban renewal.

Having looked at the problem long and hard, the URA will be no more than a cosmetic attempt to patch up the physical manifestations of market failure. Just why have these buildings and areas never been regenerated? Why has Hong Kong not been able to recycle these buildings that have become economically obsolete? Why are other cities able to do so?

In my private discussions with officials responsible for taking this Bill through this Council, it is clear that they are not sure why urban renewal has not worked.

The excellent officials taking the URA Bill through this Council have not been asked to solve these problems, only to take the Bill through. So, they have directed their attention to technical issues rather than fundamental ones.

They do have the set answer for why urban renewal has failed in Hong Kong for so long. The tired answer trotted out is that ownership is fragmented.

If so, the Lands Resumption Ordinance should go a long way in solving the problem. Clause 24 of the Bill will strengthen compulsory land resumption further. Are they all that we need?

The enactment of the Bill may solve the immediate problem of demolishing some 200 buildings which are falling apart, but it will not make market failure right again.

I am now convinced that the Administration needs to first identify why the market has not worked. A government report published in 1993 by the Special Committee on Compensation and Betterment offered some insights.

It noted Hong Kong's contradictory system of planning control through zoning and restrictive covenants. It suggested the removal of restrictive development covenants in leases and lease modification payments.

That means the Administration has to think about how to tax the uplift in land value resulting from the grant of new planning permission.

However, no one in the Administration seems to have heeded the conclusions of that report. No one has taken a serious look at what to do. I really do not understand why that is so, since the conclusions of the report are quite clear.

I have spoken about this to the officers-in-charge but whilst they have read the report, they are not directed to do anything about it. It belongs to other officials, but I understand that there are no officials in the whole Government who are charged with thinking through the whole issue comprehensively.

So, Madam President, I would also like to suggest two other measures:

Firstly, a legal mechanism to facilitate redevelopment by existing owners even when all owners are not able to be traced or prove title. We are told repeatedly that this is one of the hurdles preventing urban regeneration.

My suggestion requires a review of the problem of lost and defective titles, which I believe have never been carried out in Hong Kong either.

Secondly, to ensure that property owners have full rights to their enjoyment of their interest in land, the security of tenure provisions in the Landlord and Tenant (Consolidation) Ordinance needs to be removed.

I know that some of my colleagues may disagree with me. Some may believe that security of tenure helps tenants. I ask them also to consider how this actually inhibits maintenance and redevelopment. Security of tenure is a disincentive to continuous investment in a property, and it makes it very hard to redevelop. The social dis-benefits outweigh the benefits. Since the Administration is going to require proper management of buildings, which up until now it has not, I think it only fair to lift the security of tenure provisions from the law.

I believe that these various measures will help free the market up.

If we still need a URA, then it will be one which will only play a facilitation role.

There should be little need to develop on its own or in association with private developers.

I foresee that once the market works better, a URA may only need to take over what I describe as "basket cases".

In any event, a public body has no role in being an equity risk partner in development. Why can it not just sell newly assembled land to the private sector? Why take equity risks?

I am told by the officials in charge that this is what this Council wants. So, what if the development loses money? It is not the job of public institutions to take market risks.

Madam President, I hope that I would leave behind a record of why I oppose the Urban Renewal Authority Bill.

I am sure that the Bill will go through today. I am sorry to have taken so much time, but I want the Administration to know exactly why I remain uncomfortable with the Bill. I have thought about supporting it and then continue to argue for policy change.

However, I fear that may be futile and I would rather leave behind a clear record of my concerns.

Let me just make a final summary.

I urge the Administration to adopt a market approach over a central planning approach.

I urge them to think before they leap.

I fear that the URA as conceived by them will turn out to be another unwieldy Housing Authority type of monster.

I urge them to formulate a clear policy before creating the hardware needed.

Whatever hardware they then need, its role should be to enable land assembly and facilitating the processing of planning permissions for redevelopment.

What I will do is that I would vote for those amendments that I think will make the Bill better. Even though I oppose the Second Reading of the Bill, I am sure that the Bill will go through, so it makes sense for me to improve the Bill as much as possible.

(After many other speakers and a lengthy debate, the Bill remained largely unchanged)

PRESIDENT (in Cantonese): Will Members please proceed to vote.

PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed.

Mr Kenneth TING, Mr James TIEN, Mr David CHU, Mr HO Sai-chu, Miss Cyd HO, Mr Edward HO, Mr Albert HO, Mr Michael HO, Dr Raymond HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Eric LI, Mr LEE Kai-ming, Mr Fred LI, Dr LUI Ming-wah, Mr NG Leung-sing, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr James TO, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Miss CHAN Yuen-han, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr Gary CHENG, Mr Andrew WONG, Dr Philip WONG, Mr WONG Yung-kan, Mr Jasper TSANG, Mr Howard YOUNG, Dr YEUNG Sum, Mr YEUNG Yiu-chung, Mr LAU Kong-wah, Mrs Miriam LAU, Mr Ambrose LAU, Miss Emily LAU, Miss CHOY So-yuk, Mr Andrew CHENG, Mr SZETO Wah, Mr Timothy FOK, Mr LAW Chi-kwong, Mr TAM Yiu-chung and Mr FUNG Chi-kin voted for the motion.

Miss Christine LOH voted against the motion.

Prof NG Ching-fai and Mr MA Fung-kwok abstained.

THE PRESIDENT, Mrs Rita FAN, did not cast any vote.

THE PRESIDENT announced that there were 51 Members present, 47 were in favour of the motion, one against it and two abstained. Since the question was agreed by a majority of the Members present, she therefore declared that the motion was carried. (Read: The URA Ordinance came into effect.)

Click here to down load the full proceedings on 26 June 2000.

If the mailing doesn't display correct, click here to read the online version


	Experience the war zones If you want to understand concerns over the future of Hong Kong's urban environment, spend some time walking (if you can) around the latest developments in Nam Cheong, Tai Kok Tsui, West Kowloon, Tseung Kwan O, Hung Hom, .. Note that these are brand new, built on reclaimed land, done on a white sheet of paper. They are the responsibility of the Planning, Lands and Transport Departments, cheered on by the Government appointed Town Planning Board. Then remember that more of this is planned, including for the future Central Waterfront. Worse, the Urban Renewal Authority (URA) is introducing ever more of these 'integrated comprehensive large site developments' in our older areas. Ready to leave town? There is a splinter of hope. Build me up Pick up a copy of HK Magazine this week to enjoy great pictures showing the beauty of urban regeneration by the private sector. Just imagine Hong Kong to look like this! Click here for the on-line version of HK Magazine. Or read how these efforts are translating into articles in international media, drawing visitors to spend their money in Hong Kong. Click here fore a 'Walk in the City' in the Wall Street Journal. Bright minds warned in 1999 that the URA without an overall strategy would be a disaster In 1999 the conservative Hong Kong General Chamber of Commerce promoted renewal and regeneration by the private sector. They called for a comprehensive urban renewal strategy to address urban upgrading and regeneration which the URA projects may not cover. To read what the General Chamber of Commerce said about the URA, click here. One lonely voice in LegCo opposed the URA on 26 June 2000, calling it 'the wrong answer to the wrong question' The speech below is an extract from the second reading of the Urban Renewal Authority Bill in the Legislative Council. 51 Members were present during the voting on 26 June 2000. 2 abstained, 47 voted in favour, one voted against - this is what she said: Miss Christine Loh: I am sorry, Madam President, I rise to speak against the resumption of Second Reading of this Bill. The reason for my opposition is that I do not believe that the Administration's urban renewal strategy is going to work. Indeed, it remains unclear exactly what the strategy is. I am sure the Administration thinks that it has a strategy. The Administration may say that clause 5 of the Bill spells out the "purposes" of the Urban Renewal Authority (URA), and that officials went into greater detail in a document on 4 May to the Bills Committee. Clause 5 and the document spell out a series of desired outcomes, such as improving the standard of housing, replacing old and dilapidated areas, utilizing land better, preventing decay, preserving sites with special interest, and preserving social networks. With respect, none of that constitutes a policy. There is no policy document that makes plain the planning and directing of urban renewal in future. Indeed, Members can see from the Report of the Bills Committee that the Administration's intention is to finalize the urban renewal strategy after consultation with the URA. What that means is that the Administration wants to first build the hardware, and then discuss with the hardware how to develop the software to run it. Madam President, I am not sure that this is the right approach. If the Administration does not yet have a clear strategy, would the setting up of the URA in itself create the strategy? Obviously, not. I think it safe to say that the URA is unlikely to be fundamentally different from the Land Development Corporation. The composition of the URA Board will be much like those of other public bodies. There will be a good smattering of civil servants. There will be a group of so-called community representatives. There will be a non-executive chair and a managing director. If it is like other typical boards, can we really expect the URA Board to be able to come up with a comprehensive strategy any time soon? I doubt it. The strategy will come from the Administration, who up until this moment cannot articulate one. Whilst I am hearten that there will be another round of public consultation, I see no rush in putting the cart before the horse by setting up the URA now. So, what is the rush? I see the rush as another typical reaction from the Administration to show the public that it is "doing something". Urban renewal has not been a success. There has been pressure for years to "do something". The Administration's response is typical when it is under pressure. It proposes to create hardware or add procedures, rather than standing back and trying to understand why things have not worked. If the Administration understands what it should be doing, we would have the strategy clearly stated today. Let me try to state what I think are some of the underlying problems. In a nutshell, the Bill is the wrong answer to the wrong question. The URA is being set up to solve the problem of poorly built and poorly maintained individual buildings. The URA is supposed to target buildings that are dropping bits of concrete on passers-by. While it is supposed to achieve better utilization of land in dilapidated areas, there is no strategy on how to do that. Yes, it may be able to preserve historical and cultural sites, but that is far from facilitating urban renewal. Having looked at the problem long and hard, the URA will be no more than a cosmetic attempt to patch up the physical manifestations of market failure. Just why have these buildings and areas never been regenerated? Why has Hong Kong not been able to recycle these buildings that have become economically obsolete? Why are other cities able to do so? In my private discussions with officials responsible for taking this Bill through this Council, it is clear that they are not sure why urban renewal has not worked. The excellent officials taking the URA Bill through this Council have not been asked to solve these problems, only to take the Bill through. So, they have directed their attention to technical issues rather than fundamental ones. They do have the set answer for why urban renewal has failed in Hong Kong for so long. The tired answer trotted out is that ownership is fragmented. If so, the Lands Resumption Ordinance should go a long way in solving the problem. Clause 24 of the Bill will strengthen compulsory land resumption further. Are they all that we need? The enactment of the Bill may solve the immediate problem of demolishing some 200 buildings which are falling apart, but it will not make market failure right again. I am now convinced that the Administration needs to first identify why the market has not worked. A government report published in 1993 by the Special Committee on Compensation and Betterment offered some insights. It noted Hong Kong's contradictory system of planning control through zoning and restrictive covenants. It suggested the removal of restrictive development covenants in leases and lease modification payments. That means the Administration has to think about how to tax the uplift in land value resulting from the grant of new planning permission. However, no one in the Administration seems to have heeded the conclusions of that report. No one has taken a serious look at what to do. I really do not understand why that is so, since the conclusions of the report are quite clear. I have spoken about this to the officers-in-charge but whilst they have read the report, they are not directed to do anything about it. It belongs to other officials, but I understand that there are no officials in the whole Government who are charged with thinking through the whole issue comprehensively. So, Madam President, I would also like to suggest two other measures: Firstly, a legal mechanism to facilitate redevelopment by existing owners even when all owners are not able to be traced or prove title. We are told repeatedly that this is one of the hurdles preventing urban regeneration. My suggestion requires a review of the problem of lost and defective titles, which I believe have never been carried out in Hong Kong either. Secondly, to ensure that property owners have full rights to their enjoyment of their interest in land, the security of tenure provisions in the Landlord and Tenant (Consolidation) Ordinance needs to be removed. I know that some of my colleagues may disagree with me. Some may believe that security of tenure helps tenants. I ask them also to consider how this actually inhibits maintenance and redevelopment. Security of tenure is a disincentive to continuous investment in a property, and it makes it very hard to redevelop. The social dis-benefits outweigh the benefits. Since the Administration is going to require proper management of buildings, which up until now it has not, I think it only fair to lift the security of tenure provisions from the law. I believe that these various measures will help free the market up. If we still need a URA, then it will be one which will only play a facilitation role. There should be little need to develop on its own or in association with private developers. I foresee that once the market works better, a URA may only need to take over what I describe as "basket cases". In any event, a public body has no role in being an equity risk partner in development. Why can it not just sell newly assembled land to the private sector? Why take equity risks? I am told by the officials in charge that this is what this Council wants. So, what if the development loses money? It is not the job of public institutions to take market risks. Madam President, I hope that I would leave behind a record of why I oppose the Urban Renewal Authority Bill. I am sure that the Bill will go through today. I am sorry to have taken so much time, but I want the Administration to know exactly why I remain uncomfortable with the Bill. I have thought about supporting it and then continue to argue for policy change. However, I fear that may be futile and I would rather leave behind a clear record of my concerns. Let me just make a final summary. I urge the Administration to adopt a market approach over a central planning approach. I urge them to think before they leap. I fear that the URA as conceived by them will turn out to be another unwieldy Housing Authority type of monster. I urge them to formulate a clear policy before creating the hardware needed. Whatever hardware they then need, its role should be to enable land assembly and facilitating the processing of planning permissions for redevelopment. What I will do is that I would vote for those amendments that I think will make the Bill better. Even though I oppose the Second Reading of the Bill, I am sure that the Bill will go through, so it makes sense for me to improve the Bill as much as possible. (After many other speakers and a lengthy debate, the Bill remained largely unchanged) PRESIDENT (in Cantonese): Will Members please proceed to vote. PRESIDENT (in Cantonese): Will Members please check their votes. If there are no queries, voting shall now stop and the result will be displayed. Mr Kenneth TING, Mr James TIEN, Mr David CHU, Mr HO Sai-chu, Miss Cyd HO, Mr Edward HO, Mr Albert HO, Mr Michael HO, Dr Raymond HO, Mr LEE Wing-tat, Mr LEE Cheuk-yan, Mr Martin LEE, Mr Eric LI, Mr LEE Kai-ming, Mr Fred LI, Dr LUI Ming-wah, Mr NG Leung-sing, Mrs Selina CHOW, Mr Ronald ARCULLI, Mr James TO, Mr CHEUNG Man-kwong, Mr HUI Cheung-ching, Mr CHAN Kwok-keung, Miss CHAN Yuen-han, Mr CHAN Wing-chan, Mr CHAN Kam-lam, Dr LEONG Che-hung, Mrs Sophie LEUNG, Mr Gary CHENG, Mr Andrew WONG, Dr Philip WONG, Mr WONG Yung-kan, Mr Jasper TSANG, Mr Howard YOUNG, Dr YEUNG Sum, Mr YEUNG Yiu-chung, Mr LAU Kong-wah, Mrs Miriam LAU, Mr Ambrose LAU, Miss Emily LAU, Miss CHOY So-yuk, Mr Andrew CHENG, Mr SZETO Wah, Mr Timothy FOK, Mr LAW Chi-kwong, Mr TAM Yiu-chung and Mr FUNG Chi-kin voted for the motion. Miss Christine LOH voted against the motion. Prof NG Ching-fai and Mr MA Fung-kwok abstained. THE PRESIDENT, Mrs Rita FAN, did not cast any vote. THE PRESIDENT announced that there were 51 Members present, 47 were in favour of the motion, one against it and two abstained. Since the question was agreed by a majority of the Members present, she therefore declared that the motion was carried. (Read: The URA Ordinance came into effect.) Click here to down load the full proceedings on 26 June 2000.