Quality Living in a Quality Environment

Quality Living in a Quality Environment

Maximizing the Use of Public Housing Resources Despite the many incentives towards increasing home ownership in the past year, Public Rental Housing (PRH) continues to form the

backbone of our housing portfolio.

In 1999/2000, a total of 46 411 rental flats were allocated, 22 510 of which were taken up by General Waiting List (GWL) applicants.

To meet the Chief Executive掇 pledge to reduce waiting time for Public Rental Housing to three years by 2005, we are tasked with rehousing no less than 20 000 GWL applicants every year. As a result of the increasing allocations, greater mobility and the speeding up of the allocation process, the waiting list has decreased from over 140 000 in 1998 to 108 000 at the end of March 2000. Average waiting time has also come down from six and a half years in 1997 to the present five years and two months and is continuing to shrink. Another 1 137 GWL applicants benefited from the Buy or Rent Option (BRO) to purchase their own homes.

Improved Financial Performance

Since the economic downturn in 1997, Hong Kong has been undergoing a period of prolonged recovery. Despite signs of improvement, the financial outlook for the Rental Business is still adversely affected by the extended effects of the prolonged recession, relief measures implemented and growing interest costs. The Housing Ordinance has two provisions which impose an iron discipline on the Housing Authority, as we seek to fulfil our social responsibility to provide affordable accommodation to the needy in Hong Kong. On the one hand, the Ordinance requires the Housing Authority to ensure that the estates breakeven financially. On the other, it limits the median rent-to-income ratio for PRH tenants, as a whole to 10% and allows no increase for PRH rent within three years of any previous adjustment. Notwithstanding the fact that the Rental Business has long suffered from a deficit financial position, rental relief measures were once again granted to affected tenants this year in view of the prolonged effects of the recession.

In 1999/2000, to cope with this situation, a series of prudent financial measures were adopted. Every attempt was made to ensure that rents collected would be in line with the Budget target, resulting in an income of $9.4 billion, reaching 99% of the Revised Budget target. In parallel, a series of cost initiatives and productivity measures, as well as a clear demarcation of costs among business units, brought expenditure levels down to $10.8 billion against the budget of $11.4 billion. The 1999/2000 budget deficit has therefore been reduced from $1.9 billion to $1.4 billion, representing a saving of $552 million.

After two years of intensive effort, management has also succeeded in stabilizing most of the major cost drivers. Together with ongoing financial controls, we are committed to achieving the breakeven of PRH costs in the next few years.

Reducing Vacancy Rates

To reduce vacancy rates in PRH estates, we implemented new arrangements for the disposal of unpopular PRH flats in September 1997. Under this initiative, GWL applicants are invited to apply for vacancies in these flats based on their registration order. By the end of March 2000, 2 240 GWL applicants had shown an interest in 470 flats of which 210 have been rented. As this initiative has greatly helped to speed up the allocation of less popular flats, we will be continuing with this policy.

Overcrowding Relief

A household is considered to be overcrowded if the living density is lower than the minimum allocation standard of 5.5 square metres per person. By the end of March 2000, 7 589 overcrowded households were living in improved conditions due to the allocation of larger flats, the purchase of HOS or PSPS flats, redevelopment activities and the reduction of family members within the household. In view of these efforts, the number of overcrowded households have fallen by 3 317 (13%) in comparison to the previous year. In March 2000, there were 22 067 overcrowded households, accounting for 3.69% of all PRH households. Efforts to ease the situation are being concentrated on the 6 583 households with a living density of below 4.5 square metres per person.

Biennial Declaration of Family Particulars

To strengthen tenancy controls, an honest system was introduced in 1998. Under this system, domestic PRH tenants have to declare their occupancy position, which is verified by estate staff, on a biennial basis. Under the Housing Ordinance, anyone who refuses or neglects to provide information to the Housing Authority, or who makes a false statement, could be prosecuted. The tenancy may also be terminated irrespective of whether the tenant is convicted of the offence or not.

Comprehensive Means Test for Admission

To ensure that housing resources are allocated as fairly as possible, the policy for Safeguarding the Rational Allocation of Housing Resources was introduced in 1996. Under this policy, tenants with income and net assets exceeding prescribed ceilings and those who choose not to declare their assets, pay full market rentals. In September 1998, for the sake of consistency and fairness, this asset test was extended to all prospective public housing tenants on the Waiting List, Temporary Housing and Interim Housing (IH) residents as well as clearees displaced by Government clearance operations. This comprehensive means test was also extended to cover all prospective Interim Housing licensees in April 1999. Those who fail to satisfy criteria established by the test, are only allowed to stay in IH for a year and are required to pay licence fees at market levels.

Expediting Flat Recovery

A revised time-frame for the recovery of flats was introduced in March 2000. Under the new policy, tenants are required to tender Notice-to-quit (NTQ), to terminate their original tenancies within 60 days upon acquisition any other form of subsidized housing. Any extended stay after the expiry of the NTQ is limited to 30 days and any application for further extension will not be considered unless there are exceptionally strong compassionate grounds. Anyone occupying the premises for any extended period will be charged an occupation fee equivalent to triple the normal rent plus rates. For market rent payers, the occupation fee will be equivalent to the market rent or triple the normal rent plus rates, whichever is the higher. The maximum time frame for surrendering PRH flats is essentially limited to 90 days. During the year, 53% of flats were recovered within one month after HOS and Home Purchase Loan Scheme buyers received their new homes.

Redevelopment and Clearance To improve the standard of living for residents in older estates and to ensure that facilities and benefits do not lag too far behind the newer estates, Housing Authority has been carrying out a Comprehensive Redevelopment Programme.

566 blocks built before 1973 are being demolished for redevelopment by 2005.

Comprehensive Redevelopment Programme

During the year, around 5 300 households and 160 commercial tenants were moved to make way for the redevelopment of 17 blocks in 6 estates. Redevelopment work is also being carried out in another 104 blocks in 20 estates affecting a further 36 200 households and approximately 1 480 commercial tenants. To ensure minimum disruption to tenants, every attempt is made to rehouse residents within the same district. They are also given priority to buy their own homes through the Home Ownership or our other home purchase schemes. Removal allowances assist with removal costs while commercial tenants are granted an ex-gratia allowance upon surrendering their tenancies. They also receive the opportunity to tender for alternative commercial premises at public housing estates.

Under the Long Term Housing Strategy, older estates not covered by the Comprehensive Redevelopment Programme are considered for redevelopment based on their individual merits. The redevelopment of North Point Estate, announced in March 2000, is the first of these estates. The existing development consists of 7 domestic blocks, 1 956 flats and around 1 750 households.

Temporary Housing and Clearance Operations

Interim Housing (IH) * In meeting our objectives to provide housing for everyone in need, temporary accommodation in the form of Interim Housing is available to people who lose their homes through clearances, fire and natural disasters but are not eligible for permanent public housing. Interim Housing currently consists of low-rise timber structures, multi-storey blocks converted from older estates and prefabricated IH blocks. The older pre-1984 IH areas have all been cleared and the remaining old-style housing is due for clearance by the end of 2000. Meeting the demand for housing in this direction, a number of permanent high-rise IH blocks in Tuen Mun will be completed in mid-2000.

In addition to Interim Housing, the Authority also operates three transit centres with a capacity for 510 people. These centres provide free emergency shelter for the homeless and victims of fire and natural disasters, pending assessment of their eligibility for permanent or Interim Housing.

Clearance Operations * As the Government’s clearance agent, the Housing Department undertakes clearance operations freeing land for development and other uses. During the year, we completed 162 clearance operations, affecting around 5 600 people including 700 victims of natural disasters. Of this number, 2 100 were rehoused in rental housing while a further

3 200 received interim housing. The remaining 300 either acquired subsidized home ownership or opted for loans/allowances in lieu of rehousing. Apart from domestic clearees, 159 commercial, industrial or agricultural concerns were also affected receiving $31.7 million in ex-gratia payments. In line with our policy to ensure equitable distribution of housing resources, all clearees must undertake the comprehensive means test to ensure that they are eligible for public housing.

In line with the Government’s commitment to clear all Temporary Housing Areas (THAs) by the end of 2000, four THAs were cleared during the year. All the 5 600 people affected have been rehoused in permanent or Interim Housing. The remaining eight THAs, with 4 000 residents, are due to be cleared by the end of the year. The five cottage areas in the territory, with an estimated population of 2 600 people are also due to be cleared by the end of 2001. Clearances in Tung Tau and Fo Tan are currently moving ahead and arrangements are being made for the clearance of the remaining three areas.

Squatter Control * To curb illegal squatting on Government land, Squatter Control staff maintain daily patrols and regular checks in existing squatter areas. As a result, 1 400 illegal structures were demolished during the year. Illegal squatting activities in Hong Kong continue to decline.

Public Housing Management and Maintenance Services

To meet the growing expectations of our customers and to ensure standards of quality

consistent with our own drive for service excellence, every effort is made to ensure the quality management and maintenance of public housing estates.

As the largest landlord in Hong Kong, we have taken a leading role in promoting maintenance quality and in shaping service standards for the industry.

Effective Maintenance

Effective maintenance reduces building deterioration and service breakdowns, ensuring that residents have a safe and comfortable home. With customer service as the driving force in developing quality maintenance, we have integrated the expectations of all stakeholders * contractors, customers and our own views to distinguish criteria for a “Total quality service”for our customers.

Currently, the maintenance industry works on a multi-layered sub-contracting system often with end workers who are not qualified for the trade. In mapping out reforms to address these problems, our 烢artnering for change* strategy forms the key for the way forward. We will work with contractors, who are committed to quality, to create an environment conducive to change and partnership. We will establish a list of Quality Maintenance Contractors, reduce the size of term contracts, develop lists of specialist contractors and discourage the degree of sub-contracting for better control. At the same time, we will establish a register for maintenance operatives and sub-contractors who are engaged in Housing Authority maintenance and improvement works.

Internally we are revamping the works procurement system to ensure that unrealistically low

tenders are identified at source. A system is also being developed to reward the better performing contractors. We also expect service quality to be enhanced by improvements to our performance assessment system and the introduction of a performance verification system.

We expect everyone involved to benefit from this partnering process. Customers will enjoy more guarantees and better services, we will deliver quality maintenance services more effectively and the maintenance industry will benefit from a more healthy, competitive and quality framework in which to conduct their business.

Greater Private Sector Involvement

Over the years, there has been an increasing need for private sector involvement in the areas of Estate Management and Maintenance (EMM), providing residents with a greater choice and an increasing voice in the care and management of their estates. On 27 January 2000, the Housing Authority endorsed the Task Force’s recommendations to transfer a comprehensive range of EMM services, for no less than 75 000 existing public rental housing units in addition to all new production, to the private sector over a two-year initial phased transfer programme to Property Services Companies (PSCs).

To ensure the selection of qualified and suitable PSCs, a list of PSCs was drawn up in March 2000. After pre-qualification and careful selection, 20 companies out of 73 applications have been successfully admitted to the list. To maintain the quality of their services, each company on the list is only allowed to undertake contracts for a portfolio of rental housing within the List Capping Limit, currently set at 60 000 domestic units. Four contracts involving 12 700 existing domestic units and 20 400 new residential units were tendered in April 2000. The PSCs will take over the management and maintenance of these estates in October 2000.

Property Management Agents (PMAs)

At the end of March 2000, a total of 18 PRH estates, 13 Small Household Developments and a Vertical Interim Housing development are being managed by PMAs. Taking on greater responsibilities, PMAs are now required to provide competent maintenance technicians and on-site staff to carry out minor building and services repair works throughout the contract period.

Enhanced Maintenance Contracts

To provide one-stop services to customers, minimize inconvenience and speed up repairs, maintenance contracts for air-conditioning installations, electrical services, water supply and fire services have been re-grouped to minimize their numbers. This new arrangement will also help to reinforce a single source of responsibility and enhance

efficiencies in the administration and management of the contracts.

Improved Strategies for the CARE Programme

The CARE (Condition, Appraisal, Repair, Examination) Programme was first introduced in 1993 to provide a comprehensive maintenance and improvement programme in public housing. The objective is to carry out maintenance works systematically so that residents can enjoy longer periods free from the disturbance of major repair activities. The first CARE cycle is now nearing completion and a comprehensive review is currently being conducted in preparation for the commencement of the second cycle. The second cycle will adopt revised strategies with a strong emphasis on customer service enhancements such as repair-on-demand services and more frequent inspections of common and external areas. Improved supply contracts and more environmentally friendly maintenance solutions will also help to raise customer satisfaction levels.

Upgrading Security Systems

System B-standard security systems in 611 blocks are being upgraded to System A standards. The programme commenced in 1999 and is scheduled for completion in 2002. The work involves the installation of security door entrances, telephone entry doorphone systems and CCTV. At the end of May 2000, the upgrade had been completed in 80 blocks, while work is proceeding in a further 119 buildings.

Electrical Rewiring and Reinforcement (ERR) Programme

During the year, ERR works were completed in 158 blocks as scheduled. As it is more efficient and effective for the same contractor to carry out both electrical and building support works for a project, a new all-inclusive contract has been developed and tenders under these new arrangements will be issued in 2000/2001.

Keeping pace with developing electrical standards, domestic flats will be supplied with larger consumer units comprising of 8 to 10 circuits. Equipotential bonding is also being provided in flats so that extraneous conductive parts are held at the same potential to enhance safety.

Standby Fire Extinguishers

Enhancing general safety, from January 1999, portable fire extinguishers are provided on standby when the fire services system has to be suspended or shut down for inspection, maintenance and repairs. Four portable extinguishers are placed at strategic locations such as the main guard counter, ground and top floor lift lobbies as a precaution against any emergencies during the fire system’s temporary shut down.