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New package of enhancement policies for residents and business operators

The Urban Renewal Authority (URA) today announced a new package of enhancement policies for the benefit of residents and business operators affected by its redevelopment projects.

The Chairman of the URA, Mr Barry Cheung, outlined details of the enhancement policies in a media briefing today.

He said the new initiatives were designed under the existing policy framework, responding to aspirations and concerns of the affected residents and the community. They specifically have three important objectives, namely, to help retain the social network of residents as much as practicable, assist long-time business operators in re-establishing themselves in the locality and preserve retail trades that are considered a special character in a district.
The enhancement package comprises:
(1) expression of interest in purchasing arrangement (EIPA) for residential units;
(2) designation of space exclusively for the purpose of social enterprise for commenced projects;
(3) additional ex-gratia business allowance for business operators; and
(4) special local sports shop arrangement for the Sai Yee Street project.

The first enhancement policy, expression of interest in purchasing arrangement (EIPA), is intended for owner-occupiers of domestic flats in a redevelopment site so that they would have the opportunity of purchasing new units and moving back to the same area where they once lived. This will help enable them to retain their social network and lifestyle in the same neighbourhood. Whether they accept this arrangement or not, their entitlement to receiving Home Purchase Allowance based on the existing "seven-year flat rule" acquisition policy, i.e. the value of a notional seven-year-old flat, will remain unchanged.

With immediate effect, EIPA will apply to the Peel Street/Graham Street and Yu Lok Lane/Centre Street projects as a pilot scheme. Invitation will be issued to them for an expression of interest in purchasing these flats.

Under this arrangement, the URA will reserve a number of flats within a redevelopment project on completion for purchase at the then prevailing market price by the owner-occupiers participating in EIPA.  This arrangement applies to owner-occupiers who accept the URA's acquisition offers unconditionally within the usual 60-day offer period. Owner-occupiers who register their interest with the URA within this period will be given priority, subject to the number of available units, for selection from the reserved flats prior to commencement of pre-sale of the development concerned.  Balloting for the priority in selection of flats will be conducted to ensure fair opportunities among all registered owner-occupiers.

EIPA is, however, not applicable to owners of vacant or tenanted flats for the obvious reason that because they do not live in the redevelopment site, they would have no concern about "moving back to live there afterwards."

Mr. Barry Cheung said URA has been all along taking various measures in helping owner-occupiers find replacement flats in the same locality. These measures include an enhanced cash deposit payment, providing market information on available flats for purchase, extended period for flat handing-over, free temporary storage for furniture, removal assistance, and, in case of genuine need, help locate and purchase replacement flat etc. The URA also appointed social service teams to offer assistance to those residents in need during the process.

"Experience shows that the majority of owner-occupiers would be successful in finding preferred replacement flats in the vicinity. With the introduction of EIPA, they will have yet another new opportunity to move back to where they used to live," he said.

The second enhancement policy, designation of space for social enterprises, goes hand in hand with EIPA to help affected residents re-establish and strengthen their social network in the district. For all sizeable projects in which allocation of space is possible, URA will consider reserving floor space for non-government organizations (NGOs) to make bids for the purpose of operating social enterprises involving active participation of residents and shop operators of the projects concerned.

"Details of this policy are still being worked out but our intention is to try it out first in the Lee Tung Street and Peel Street/Graham Street projects. With experience thus gained, we may consider extending this policy to other suitable projects," Mr. Cheung said.

The third enhancement policy, in the form of an additional payment of ex-gratia business allowance, is designed to enhance compensation payable to owners and tenants of non-domestic properties within a redevelopment project area who run their own businesses in the properties (i.e. owner-operators and tenant-operators).   This new allowance is in addition to the existing compensation whereby owner-operators receive cash payment equivalent to the market value of their properties plus the higher of either 35% of the market value or 4 times the rateable value (RV) of their properties whereas tenant-operators receive cash payment of 3 times the RV.
A special feature of this additional allowance is awarding more to those with a longer history of business operation and therefore have "deeper roots" in the project site. Thus the amount of this additional allowance is directly proportionate to the number of years of operation of a business. The allowance will be paid at a rate of 0.1 times the RV per year for a maximum of 30 years so that a business with 30 years' history or more will enjoy a maximum of three times the RV. The maximum amount of allowance payable is capped at $500,000. To ensure that businesses with a not-so-long history would also benefit to some extent, the policy provides a minimum allowance of $70,000 to any eligible business operator. Operators occupying small units with low RVs will also benefit from this minimum amount.

For this new allowance to be applicable, business operators should accept the URA's compensation offers unconditionally within the usual periods of validity, i.e. 60 days for owner-operators and 28 days for tenant operators.  This new policy will apply to newly commenced projects including the Peel Street/Graham Street and Yu Lok Lane projects as well as all redevelopment projects for which URA has yet to issue acquisition offers.

The fourth enhancement policy aims at preserving the special local character created by a cluster of sports commodities retail trades in the to-be-commenced Sai Yee Street project of Mong Kok.

"URA shares the views expressed by members of the Legislative Council, the community and in particular the affected sports retailers that efforts should be made to preserve, and enhance if possible, this local character of the district," Mr. Cheung commented.

URA will therefore introduce a special Local Sports Shops Arrangement exclusively for the Sai Yee Street project, in conjunction with a "Sports Retail City" design which will further strengthen the sports goods trade as a local character.

Under the arrangement, all 19 sports shop operators in the project site will be offered priority to lease shop spaces on the ground and upper floors of the retail section of the new development, for periods up to three years, at the then prevailing market rental level.  Details of this arrangement are being worked out and will be announced upon formal commencement of the project before the end of this financial year.

"If this arrangement is welcomed by the sports retailers, we will consider adopting the same arrangement for other new projects in which the public considers that there is a cluster of a single trade that genuinely fulfills the role of a special local district character," Mr. Barry Cheung added.

Commenting on the new package of enhancement policies as a whole, Mr Cheung said: "URA has been listening to the views of the community and stakeholders, in particular those expressed by residents and shop operators affected by redevelopment projects since launching the first batch of redevelopment projects in 2002.  Many of these views are justified and deserving of our support, making our policies even more people-oriented and in line with the aspirations of the people directly affected."

"The enhancements we announced today have been devised in response to the community's changing needs and aspirations, taking into account existing practical and resources constraints.  We will continue to endeavor to do our best as far as practicable."

"Urban renewal as a social mission is an on-going evolution. At any point in time, public views in respect of urban renewal can be very diverse or even conflicting with each other. Recent examples are the argument over the Sai Yee Street project between the redevelopment and rehabilitation "camps", and the preservation of the hawker bazaar in the Graham Street project. We must continue to listen to various sectors of the community and address the diverse interests of different parties within our ambit in a balanced manner," he said.

In conclusion, Mr. Cheung stressed that these enhancement policies are introduced on the basis of the compensation policy for land resumption approved by the Legislative Council's Finance Committee in 2001. In this context, the 2001 policy, which has been tried and proven effective in many redevelopment projects in the past six years, must remain to be the URA's fundamental policy.  The URA would continue to refine and enhance its policies and procedures in light of experience and changing environment.