Urban Renewal Authority (URA) managing director Iris Tam’s resignation late last month continues to fuel speculation as to the reasons behind her sudden move.
While Tam has indicated that her departure was due to differences with the agency’s chairman over URA’s role and direction, a media report now suggests that her decision had something to do with a consultant’s report on a review of URA’s corporate structure and strategy.
Ming Pao Daily reported Wednesday that it acquired the draft of a report submitted in March by consultancy giant McKinsey & Co., which suggested that URA must put profit above all else.
On top of consideration of social factors, priorities should be made based on commercial interests, McKinsey said in its report titled “Value For Money”, according to the paper.
Among other things, the consultant is said to have advised that outright sale of land parcels to developers is a good way to boost the URA’s income.
In the draft that recommended 19 measures for reducing the URA’s deficit, the consultant is said to have criticized the agency’s 4R strategies — Rehabilitation, Revitalization, Reservation and Redevelopment — to regenerate urban areas, saying that the strategies have been defective.
The first three not only have not been able to create profits but have also cost HK$2.8 billion (US$361.15 million), while the last one entailed slow land repossession and high potential cost of compensation, McKinsey said.
It is not surprising that Tam didn’t like the suggestions. She told staff in an email following her resignation that she believes the URA “must always put its social mission before profit considerations in selecting sites for redevelopment, helping owners rehabilitate their buildings, and contributing towards heritage preservation and revitalization”.
With McKinsey still preparing the official version of the report, a source from the URA board was quoted as saying that the board members will definitely not accept the suggestions without questioning, when they meet to discuss the report next week.
The source said some senior executives in URA have been questioning the report, arguing that the some of the suggested measures are clearly against the Urban Renewal Authority Ordinance and the urban redevelopment strategies.
Secretary for Development Paul Chan has said URA must operate under its Ordinance.
Meanwhile, although McKinsey claimed that URA has not been profitable, a source in URA was quoted as saying that the agency actually turned in a profit of HK$2 billion in the last fiscal year ended March, from a loss of HK$2.3 billion the previous year.
URA’s reserves will top HK$10 billion by 2020 and it will not face any financial crisis, the person was quoted as saying.
–Contact us at [email protected]