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1. Green policy oversight gives Henderson space worth $800m

1. Green policy oversight gives Henderson space worth $800m
CHLOE LAI and QUINTON CHAN , SCMP 13 March 2006

Henderson Land , which reaped a $3.2 billion windfall from its controversial Grand Promenade development due to a government blunder, also gained more than 12,000 square metres of extra floor space for the project - worth almost $800 million - free.

The developer paid no land premium for the space allotted to so-called "green features" - most of which are usually charged a concessionary premium - because planning officials failed to state a maximum gross floor area in the project's land lease.

At the present average market price of $6,000 per square foot, the extra 12,143 square metres - equal to 9.27 per cent of the project's original floor area of 130,981 square metres - would be worth more than $783 million.

Henderson said it had done nothing underhand or illegal in connection with the Sai Wan Ho project. "What we get is what the law permits," a spokeswoman said.

But the revelation has brought calls from legislators for a fresh audit of the government's handling of the project - which has already been lashed by the Audit Commission.

Investigations by the South China Morning Post have shown that developers of three other popular residential developments with "green features" have gained floor space worth more than 100 times the premiums paid. This is just a fraction of the 288 residential projects that the Buildings Department says have taken advantage of the incentive policy since it was introduced six years ago.

Under the policy, the land premium is reduced for space used for balconies, utility platforms and non-structural prefabricated walls. Space for other features, such as sunshades, wider corridors, lift lobbies, sky gardens and mail delivery rooms, is free.

The new revelations come as a top-level inquiry is still trying to establish how Henderson came to be granted additional space - in return for providing a public transport interchange - that enabled it to almost double the number of flats it built at Grand Promenade.

Chief Executive Donald Tsang Yam-kuen ordered the probe after an Audit Commission report harshly criticised former buildings director Leung Chin-man's handling of the project.

The report said Mr Leung's decision to grant the extra space cost the government an estimated $125 million, while the developer earned an extra $3.23 billion.

Mr Leung was buildings director at the time the "green features" policy was introduced.

"Green features" at Grand Promenade include 4,225 square metres of balconies, 2,781 square metres of non-structural prefabricated walls and 1,851 square metres of utility platforms.

A Lands Department spokesman declined to say how much the premium would have been if the floor-area limit had been set in the land lease.

Lawmakers said another audit check was needed and the government's land-management process needed to be more transparent. "There is an apparent loss in government revenue and the auditor should look at it," Democratic Party chairman Lee Wing-tat said. "The policy is intended to improve our living environment, not to allow developers to reap huge profits."

Mr Lee said the policy on "green features" should be reviewed. He would raise the issue with Secretary for Housing, Planning and Lands Michael Suen Ming-yeung later this week.

A Lands Department spokesman said the Planning Department had formulated the plot ratio and population density of the site. A spokesman for the Planning Department declined to comment, saying the loss in premium should be explained by lands officials.

The Audit Commission confirmed the "green features" issue was not covered in its last audit report on Grand Promenade.

The Henderson spokeswoman stressed the company had followed all rules and regulations.

"The land lease did not put a cap on the gross floor area so that Henderson did not have to pay a premium for `green features'. So it is not our fault. We didn't do anything wrong or anything illegal to get extra floor area."