Page 75 - Urban Renewal Authority 2023-24 Annual Report

Looking Ahead: The Importance of Ensuring URA’s Financial Prudence Chairman’s Statement
Since its establishment, the URA has been backed by a HK$10 billion injection from the Government to fund its
operations. Under the long-term objective of achieving a self-financing urban renewal programme, the URA has
been channelling its revenues mainly from the upfront payments of tendered projects to support other
redevelopment projects and renewal works. This model allows the URA to carry out its mandate without relying
on government funding or taxpayers’ money, yet on the other hand, implying its cash flow is susceptible to
market fluctuations. To uphold the principle of self-financing and maintain a prudent financial position, the URA
has been exercising due care and diligence in the handling of its finance. Managing Director’s Statement
To ensure sufficient cash inflow and financial resources to cope with the acquisition expenses of redevelopment
projects, the URA flexibly adjusts the programme of its revenue tenders for the project sites, aligning it as much
as possible with the timing of project acquisition so that the upfront payment received can provide timely
financial support to the project acquisition and minimise any financial risk due to market fluctuation. In order to
attract participation from developers of different sizes in larger-scale projects such as Kwun Tong Town Centre
Project Development Areas 4 and 5, the URA is exploring feasible proposals to allow more flexibility for the
settlement of the upfront payment by developers.
In some cases, the URA may use the surplus generated from individual projects to subsidise projects that incur Operating Review
losses. URA will continue to leverage the District Studies to identify projects with higher development potentials
and planning benefits, and explore the opportunity of incorporating under-utilised government land and sub-
standard G/IC facilities in the projects for restructuring and replanning in districts such as Tsuen Wan, with a view
to generating substantial returns to subsidise projects in other urban areas with expected loss. Such an inter-
district financing model will enable the URA to continue to deliver the committed projects even if they may imply
financial losses. In the long run, the strategic district studies of Tsuen Wan and Sham Shui Po can help build up
more project reserves to realise the URA’s holistic “district-based” and “planning-led” approach to urban
renewal. Corporate Sustainability
To sustain the momentum of the urban renewal effort, the URA must strive to acquire resources from various
channels. With the continuous support from the Government including waiver of land premia for redevelopment
sites and the provision of under-utilised Government land and G/IC facilities for incorporation into
redevelopment projects, the land resource utilisation and hence the financial viability of projects can be greatly
enhanced. With the Government reiterating its commitment to building the Kau Yi Chau Artificial Island to
generate new land supply in the next decade, the URA will continue to explore with the Government the
decanting opportunities for households affected by urban renewal. This will help facilitate the implementation of
urban redevelopment projects without having to exhaust existing land resources for rehousing.

The staunch support from the Government also includes the approval from the Financial Secretary for uplifting
URA’s borrowing limit from HK$6 billion to HK$25 billion for the URA to cope with the anticipated additional
capital expenditure requirement arising from the implementation of several large redevelopment projects in Management Discussion and Analysis
coming years. URA intends to partially fund the larger capital expenditure through external financing. Its
Medium-Term Note Programme was updated in June 2024 to facilitate upcoming bond issuances. Concurrently,
alternative financing channel via syndicated or club loans will also be considered to support the operations and
liquidity of URA. The affirmation of URA’s rating at AA+ with “Stable” outlook, and an upgrade of URA’s
“Likelihood of Extraordinary Government Support” from “Extremely High” to “Almost Certain” by S&P Global
Ratings (S&P) in 2023/24 fortified URA’s credit positioning in implementing sound financial planning so that
urban renewal resources are channelled towards the long-term goal of self-financing.
Urban renewal is a complicated and resource-intensive process which cannot be done by the URA alone. It
requires the collective wisdom and efforts of all relevant parties, including the Government, property owners,
private developers, community groups, and professional institutes. In the coming years, the URA will continue to
work with the Government in exploring innovative solutions to motivate participation from the private sector Projects at a Glance
while fostering close collaborations with various stakeholders to sustain the momentum of urban renewal. The
ultimate objective of the URA is to create a more sustainable and liveable city for our present and future
generations.

URA ANNUAL REPORT 2023-24 73 Corporate Governance