Following is a question by the Hon Claudia Mo and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (May 18):
Question:
According to the information on the website of the Urban Renewal Authority (URA), the acquisition price which URA offers to an owner-occupier affected by its urban renewal project for purchase of his domestic property is calculated by adding a Home Purchase Allowance (HPA) on top of the market value (valued on vacant possession basis) of the property concerned. HPA is equivalent to the difference between the market value of the property being acquired and the value of a notional replacement flat, which is a seven-year-old flat of similar size and in similar locality to the property being acquired and located at the middle floor with average orientation (seven-year-old flat). In calculating the HPA rate, URA appoints, through open lot-drawing, seven surveyor firms to conduct valuations. The highest and the lowest figures of the seven valuations will then be disregarded and a simple arithmetic average of the remaining five valuations will be calculated to form the HPA rate for the seven-year-old flat (the calculation mechanism). On the other hand, URA initiated in March this year the statutory planning procedure of a renewal project at Eight "Wan" Streets in the Kowloon City District (Eight "Wan" Streets project). The affected owner-occupiers may choose, apart from the option of cash compensation, also the flat-for-flat arrangement under which they may use the cash compensation to buy a new flat in-situ in the new development or in the Kai Tak development. Some affected residents have relayed to me that URA has not provided them with the details of the renewal project, thus making it difficult for them to determine whether they should accept the compensation packages offered by URA in the future and support the renewal project. In this connection, will the Government inform this Council:
(1) whether it knows if URA has reviewed the effectiveness of and made improvements to the calculation mechanism since the mechanism came into operation;
(2) whether it knows if URA will, when undertaking major renewal projects, consider including more data on property valuations for use as reference, with a view to arriving at more accurate compensation amounts;
(3) whether it knows the residential development projects the flats of which have been reserved by URA for application for purchase under the flat-for-flat arrangement by residents affected by the Eight "Wan" Streets project, and the relevant details; and
(4) as it has been reported that URA will turn the redeveloped area covering the former Eight "Wan" Streets into a small community to enable former shop operators to return and operate in that district, whether it knows what measures, in addition to specifying in the tender document of the renewal project that URA has the control of the shops in the district concerned for nine years after redevelopment, URA has put in place to facilitate former shop operators to return to the same district to operate?
Reply:
President,
On March 4, 2016, the Urban Renewal Authority (URA) announced in a gazette notice in accordance with the Urban Renewal Authority Ordinance (the Ordinance) (Cap 563) the commencement of a redevelopment project in Bailey Street/Wing Kwong Street, To Kwa Wan, Kowloon City (the Project). Based on the URA's preliminary proposal, the Project will provide about 1 150 small to medium-sized residential units with commercial/retail facilities at the lower floors.
For redevelopment projects implemented under the Ordinance, the URA has formulated acquisition criteria for the properties affected and uploaded the relevant information onto the URA's website. The said acquisition criteria also apply to the Project.
My reply to the four-part question is as follows:
(1) and (2) According to the acquisition criteria, the acquisition price offered by the URA to an owner-occupier of a domestic property is the market value (valued on vacant possession basis) of the property plus an ex-gratia allowance (i.e. Home Purchase Allowance (HPA)). For the owner-occupier of a domestic unit, the assessment of HPA is based on the difference between the market value of the property being acquired and the value of a notional replacement flat, which is a seven-year-old flat of similar size and in similar locality to the property being acquired and located at the middle floor with average orientation (i.e. commonly known as the seven-year-old flat).
The URA will appoint seven valuation consultancies to provide independent advice regarding the valuation of the notional seven-year-old replacement flat as the basis for calculating the HPA of various residential properties. Regardless of the scale of the redevelopment project, the valuation consultancies will take into account the features of the project and acquire adequate transaction data of comparable properties to assess the market value of the notional replacement flat. These valuation consultancies are selected from among those on the URA's list of registered consultants by independent external parties through open lot-drawing. Any consultancy in the trade can apply for registration on the list.
After the seven valuation consultancies have individually and independently assessed the price per square foot of the notional seven-year-old replacement flat, the URA will disregard the highest and the lowest figures of the seven valuations and adopt a simple arithmetic average of the remaining five valuations to arrive at the price per square foot of the seven-year-old flat, which will then become the basis of HPA calculation (the calculation mechanism).
The calculation mechanism is an open, fair and impartial operation, which has been widely accepted and has all along been running effectively. The URA will continue to adopt the mechanism and review it from time to time to ensure its effectiveness.
(3) Pursuant to the Urban Renewal Strategy (URS) promulgated in 2011, the URA will offer under the Project a flat-for-flat (FFF) option, either in-situ or in URA's development De Novo in Kai Tak, as an alternative to cash compensation to eligible owner-occupiers of domestic units. The URA will provide eligible owner-occupiers of domestic units with details of the flats reserved under the FFF Scheme when the initial acquisition offer is made.
(4) According to the URS promulgated in 2011, the URA will help identify suitable premises in the district of the redevelopment projects to enable the affected shop operators to relocate and continue operation in the same district as far as practicable. The URA will also assist affected shop operators to lease and shop owners to purchase shop premises in the redeveloped projects upon completion. That said, most of the existing ground floor shops in the project area are operating as vehicle repair workshops. According to the relevant outline zoning plan, vehicle repair workshop is not a permitted use after redevelopment under the Project. Therefore, it is anticipated that the relevant use will not be allowed in the project area under the future land lease and deed of mutual covenant.
Ends/Wednesday, May 18, 2016
Issued at HKT 14:37
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