URA Trials Development Facilitation Services in Shantung Street/Thistle Street Project to Promote Successful Bidding for Redevelopment Projects
In its ongoing processes of urban renewal, the Urban Renewal Authority (URA) needs to address the distinctive issues of older districts, including, among others, inadequate community facilities and traffic congestion. A notable example is Kowloon City, where the Kai Tak Road/Sa Po Road Development Scheme (Sa Po Road Project) presents multiple challenges. The project requires the retention of newer buildings at the site, the establishment of a Child Care Centre, the construction of a multi-level sunken plaza and an underground public car park, and necessary adjustments to the road layout. All these increase the complexity and cost of the project. As such, prior to the tender, the URA had already anticipated that developers might not have keen interest in it, which would necessitate the URA to consider the self-initiated approach as an alternative.
In anticipation of the factors mentioned above, the URA had proactively refined its selection criteria for qualified developers and consortia, and revised tender terms to enhance the appeal of projects. Despite these efforts, only one tender was received, which was ultimately not awarded. The fluctuating economy and high inventory of new properties have led many developers to remain cautious in tendering. Under such circumstances, the URA has adopted a dynamic management approach, adjusting its tender process to better align with market conditions. To boost the rate of successful bidding, it has launched a new initiative to allow developers to understand project details, thereby providing them with more time to consider and evaluate opportunities. This flexible strategy aims to ensure that urban renewal will go on smoothly, improving the environment of older districts while fostering peripheral developments.
Leveraging Experience to Promote Successful Bids
Generally speaking, the URA's tendering process comprises two main stages:
1. Expression of Interest (EOI): Developers and consortia are invited to submit EOI.
2. Tender Submission: Qualified developers and consortia are subsequently invited to submit tenders.
Both stages involve a one-way flow of information and the timeline is quite aggressive. During the EOI stage, the URA presents an overview of the project along with location maps, allowing interested developers two to three weeks to submit their EOI, including financial information and past development experience. This information is used to shortlist qualified developers and consortia for tender participation. It is only at the tender stage that detailed terms, project designs, and technical requirements are provided, giving tenderers one to two months to submit their proposals.
Leveraging previous tender experiences, the URA has identified three key insights:
1. Providing detailed tender terms and project information only at the tender stage may leave developers insufficient time to fully understand the projects, in particular the complex technical aspects, to make informed decisions about the project. This can ultimately impact the quality of the tenders.
2. When developers find out the project's complexity after receiving the tender documents, they may wish to form consortia to submit tenders. However, there may not be adequate time for them to organise such collaborations.
3. If a developer proposes amendments to the tender terms that are worth considering but require extra approvals, the URA may need to go through re-tendering to ensure fairness, which would affect the progress of the project. In contrast, if the URA can gather developers’ feedback earlier, it may be able to adjust the terms before the tender process begins, thereby enhancing developers’ bidding interest and increasing the likelihood of successful tenders.
In light of the above and considering developers' desire for earlier access to project details, the URA will launch a new initiative - Development Facilitation Services (DFS) - in January 2025.
DFS for Enhancing Information Transparency and Communication
DFS is designed to enhance information transparency and foster two-way communication with developers before the tender process begins, allowing them more time to prepare their tenders and ultimately improving the chances of a successful bid. Independent of the tender process, this service will be available only in the lead-up to the formal tender process and will stop once the tender process begins.
As a trial, the URA will implement DFS in the Shantung Street/Thistle Street Development Scheme (Shantung Street Project). The DFS include a designated online platform for participating developers to download Project information, fill out questionnaire and provide comments/views on the Project, a designated hotline and a designated email for collecting developers’ comments. In addition, individual meetings can be arranged upon request to answer questions in relation to the Project. This deeper level of understanding and communication aims to boost developer confidence in submitting tenders, creating a "win-win" situation for both the URA and the developers.
Invites to participate in the DFS have been sent to a number of selected developers by the URA in mid-December 2024. Registered participants will be able to use the service between January and February this year. The URA will analyse the feedback collected through DFS, which may be considered for refining the project details and tender terms. The success of this trial service will serve as a reference for the URA to implement DFS in larger projects, particularly those that involve more public facilities and spaces.
A Flexible Approach to Urban Renewal
Urban renewal requires tremendous resources, and the URA cannot solely rely on market financing or take up all the work. In the current market environment, the URA must stay attuned to the focus and concerns of developers while balancing the needs of various stakeholders. By seeking flexible and “multi-win” solutions, the URA aims to promote sustainable urban renewal in an orderly manner under different economic environments.