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LCQ10: Acquisition of premises for redevelopment by
URA 2.
LCQ20 : Policy on construction quality control testing 3.
KCRC boss to apologise for Siemens row 4.
Doubts cast on merit of mixed housing plan
1. LCQ10: Acquisition of premises for redevelopment by URA Following
is a question by the Hon Frederick Fung and a written reply by the Acting Secretary
for Planning and Lands, Mr Thomas Tso, in the Legislative Council today (May 15):
Question: It has been reported that the "Five-year Corporate Plan"
of the Urban Renewal Authority ("URA") has been approved by the Financial
Secretary, and URA will continue to acquire dilapidated premises for redevelopment
projects. In this connection, will the Government inform this Council whether:
(a) it will submit the "Five-year Corporate Plan" to this Council for
consideration; if so, when; if not, of the reasons for that; (b) it knows the
detailed procedures that URA needs to undergo in acquiring dilapidated premises
for redevelopment projects; and (c) the owners concerned can accept the original
purchase offers proposed by URA before the issuance of the order for resumption,
i.e. when URA is applying under the Lands Resumption Ordinance (Cap.124) for the
resumption of premises for which no purchase agreements can be reached between
URA and the owners? Reply: Madam President, (a) The Financial Secretary
is empowered under the Urban Renewal Authority Ordinance (URAO) (Cap. 563) to
consider and approve the draft corporate plans and draft business plans submitted
by the Urban Renewal Authority (URA) annually. In accordance with the URAO, the
Financial Secretary approved on 28 March 2002 the first corporate plan and business
plan of the URA covering the periods 1 April 2002 to 31 March 2007 and 1 April
2002 to 31 March 2003 respectively. We will not make public the corporate plan
which contains commercially sensitive information and the details of individual
projects, including their location and implementation timetable. It will not be
in the public interest to do so. To implement the urban renewal programme, the
Government will seek approval from the Finance Committee for a capital injection
of $10 billion into the URA. (b) The URA is an independent statutory body. Its
acquisition policy is determined by the URA Board from time to time. The Government
is generally aware of the acquisition process. After the announcement of a redevelopment
project, the URA will - (i) carry out an occupancy survey. The data will be used
to, among other things, determine the eligibility of owners to the URA's Home
Purchase Allowance (HPA). The HPA is the difference in the values between a seven-year-old
flat in the same general locality and the open market value of the flat in question;
(ii) arrange for valuation to be conducted regarding the open market value and
the HPA of a flat which will form the basis of the URA's purchase offers; (iii)
issue offer letters on the open market value of the property, the HPA as well
as applicable allowances to eligible owners to purchase their properties by private
agreement within a specified time frame; (iv) organise briefing sessions for and
provide information to affected owners on the acquisition offers; (v) negotiate
with the owners or their representatives; and (vi) where there is mutual agreement,
conclude the transaction. (c) The purchase of properties within the project area
during the acquisition stage is by private agreement between the URA and the affected
owners. It is for the URA and the owners to negotiate the terms with a view to
reaching mutual agreement. After the URA has submitted a request for land resumption
under the URAO, the acquisition process may continue prior to the reversion of
the land to the Government, which is usually three months after the resumption
notice has been published in the Gazette following an approval by the Chief Executive
in Council on the resumption. If an owner were to ask the URA to re-open the negotiation
regarding the original purchase offer after the offer has lapsed but before the
reversion date, it is entirely up to the URA to consider the request on a case-by-case
and discretionary basis having regard to circumstances at the time. [Source:
Hong Kong Government, 15 May 2002] 2.
LCQ20 : Policy on construction quality control testing
Following is a question by the Dr Hon HO Chung-tai and a written reply by the
Secretary for Works, Mr Lee Shing-see, at the Legislative Council meeting today
(May 15) : Question: Under current practice, the main contractors of government
construction works are responsible for both construction material testing and
works acceptance tests. This may create a conflict of interest situation where
the material supplier and the testing agent have a close business relationship
and result in unsatisfactory quality control of the construction works. In this
connection, will the Government inform this Council whether: (a) it will review
the current practice; if so, of the timetable for the review; if not, the reasons
for that; (b) this practice will apply to the infrastructure projects which are
to be implemented in the next 15 years as mentioned in the Chief Executive's 2001
Policy Address; and (c) it will consider implementing the Independent Commission
Against Corruption ("ICAC")'s recommendation of employing independent
testing laboratories for material testing and works acceptance tests, as set out
in the ICAC report on Construction Quality Control Testing published in December
1999; if so, of the implementation timetable; if not, the reasons for that? Reply:
Madam President, (a) In 2000 Works Bureau had completed a review on the usage
of public works laboratories aiming at better construction quality control testing
in terms of service utilization of the public works laboratories; testing independence;
and sampling, storage and transportation. Particular reference was made to the
independence of the testing laboratories to avoid the potential conflict of interest.
We have implemented a series of measures as follows: - (i) In June 2000 Works
Bureau has issued a Technical Circular (WBTC 14/2000) setting out the policy to
tighten up the control on construction materials and works acceptance testing
for all public works projects to avoid potential conflict of interest. It requires
the works departments undertaking public works to use the Public Works Laboratories
or their term contract laboratories to carry out such acceptance testing. Should
there be any need for practical reasons to employ other laboratories, a stringent
set of requirements on sample selection, transportation, test supervision and
audits are imposed to avoid potential conflict of interest. These include the
condition that the laboratory so employed must have no affiliation as a legal
entity to the contractor and its sub-contractors. Test results must be sent directly
to the project engineer/architect in sealed envelope, without routing through
the contractor. (ii) In 2001 the General Specification for Civil Engineering Works
(GS) was revised to implement the policy promulgated in the above circular. The
General Specification for Building has also been reviewed and similar revision
will be made in its new 2002 edition. A particular specification for building
works to incorporate the necessary requirements has been issued in May 2002. (b)
Having incorporated the above measures, the new system has made improvement and
is working very well. As part of the continuous improvement, Works Bureau will
review the system from time to time to achieve a high standard of quality control
testing. The improved system will continue to apply to the upcoming infrastructure
projects. (c) The use of independent laboratories for material testing and works
acceptance tests as set out in the recommendations in the ICAC report on Construction
Quality Control Testing published in December 1999 has already been promulgated
in the above Works Bureau Technical Circular, and implemented in the specifications
used in public works. [Source:
Hong Kong Government, 15 May 2002] 3.
KCRC boss to apologise for Siemens row
Kowloon-Canton Railway Corporation (KCRC) chief executive Yeung Kai-yin will make
a public apology today for keeping the KCRC's managing board in the dark about
delays on a key West Rail contract. Insiders yesterday said Yeung would admit
senior KCRC executives should have told the rail company's board much earlier
about hold-ups on a HK$287 million telecommunications deal awarded to German contractor
Siemens. Yeung, together with KCRC chairman Michael Tien, senior director, capital
projects James Blake, West Rail director Ian Thoms and company secretary and general
counsel David Fleming, will brief legislators this morning. This will follow the
publication of a report by auditor Ernst & Young on the corporation's handling
of HK$1.53 billion in extra payments to West Rail contractors, including HK$100
million to Siemens. Insiders said Yeung's apology would follow one of the main
findings of the Ernst & Young probe. The accountancy firm was appointed by
Tien two months ago to replace KPMG, which was initially given the assignment
but resigned after it objected to some of the conditions of its appointment. Ernst
& Young will find that the KCRC was right to pay the extra cash, including
the additional money to Siemens. It supports the KCRC's commercial decision to
settle contract disputes as they arose rather than to wait to the end of the contract
as on most projects. Justifying this approach, the rail company said: ``The corporation's
contract strategy is based upon an equitable form of contract that fairly apportions
risk between the corporation and the contractor.'' But Ernst & Young also
recommends that communication should be improved between the board and senior
management, including Yeung and senior director Blake. The board includes Yeung,
Secretary for the Treasury Denise Yue, Hang Seng Bank chief executive Vincent
Cheng and Housing Society chairman Tim Chung. Insiders told Hong Kong iMail last
night that although the report recommends strengthening communication between
the board and management, ``there is no intention of making a scapegoat'' either
of Yeung, Blake or other senior staff. The investigation shows nothing untoward
and dismisses any hint of negligence or dereliction of duty in managers' handling
of the affair. A source told the Hong Kong iMail he was unaware of any pressure
for senior staff to resign. ``If they are trying to find heads to roll, I'm not
aware of it.'' The KCRC confirmed senior management had been aware of delays on
Siemens' contract for more than a year before they told the board. The board was
only told of the problems after management decided to visit Siemens' in Germany
in a last-ditch attempt to agree to a settlement. KCRC managers needed the support
of the board to visit Germany. While the KCRC agreed to pay Siemens an additional
HK$100 million to complete the project, the corporation rejected the company's
demands for an extra HK$173 million. KCRC chairman Tien chose a five-person independent
committee, that included former Legco president John Swaine and former Hong Kong
Society of Accountants president Thomas Stevenson, to oversee Ernst & Young's
work and ensure impartiality. Several legislators have promised to call for a
separate Legco probe into the affair if they are unhappy with the Ernst &
Young findings. [Source:
Hong Kong iMail, 16 May 2002] 4.
Doubts cast on merit of mixed housing plan
The mixed-development proposal for North Point Estate failed to realise the full
value of the prime site, Swire Properties and Sun Hung Kai Properties (SHKP) said
yesterday. But Director of Lands Bob Pope said it was a good concept to balance
public and private-sector housing interests. The mixed development idea was floated
by the Housing Authority for the redevelopment of the aged public housing estate
on North Point waterfront. It suggested the six-hectare site be sold to developers,
with about 25 per cent of finished flats reserved for rental or sale as public
housing. The Housing Authority's strategic planning committee is expected to meet
tomorrow to finalise details of the redevelopment. Swire Properties managing director
Keith Kerr expressed concerns that a mixed housing concept would adversely affect
the design, layout and value of the site's development. Mr Kerr, who is executive
chairman of the Real Estate Developers Association, said developers had reservations
about the idea. He said they would like to see the site sold on a "clear
and uninhibited" basis, so as to realise its full potential. SHKP vice-chairman
and managing director Thomas Kwok Ping-kwong agreed that it was better to allow
for an entire private-sector development, saying the North Point land was a rare
site in urban areas. Mr Pope said the Government was aware of the effect of mixed
development on land value. "The price will be lower [for mixed development]
but it's the price the Government had to pay. Mixed development is a good concept
as private developers produce all the flats and the Government decides which ones
are going to be HOS [Home Ownership Scheme] and which ones are going to be private
development," Mr Pope said. He said it could lead to a win-win situation
as developers could buy cheaper land and the Government could save the cost of
building subsidised housing. The North Point site probably would be scheduled
for sale next year. Mr Pope said the Government had serious concerns over the
sale of HOS units. "The Government has to decide the correct number of units
for sale rather than to stop it," he said. Mr Kwok and Mr Kerr repeated calls
for the Government to come up with a clear housing policy with the review headed
by Chief Secretary Donald Tsang Yam-kuen nearing completion. Mr Kerr said it was
important to re-establish confidence in home buying. Stronger recent sales of
residential projects were a good sign but were only the first step to improving
market stability. Mr Kwok also said the low interest rate environment would be
sustained, which should be positive for consumption and the economy. He did not
expect rates to rise despite signs of economic recovery in the United States.
Swire and SHKP are releasing the first 32 units of Ocean Shores phase three development
in Tseung Kwan O at HK$3,088 per square foot for sale on May 25. Agents said the
price was below secondary market value. Swire senior sales manager Mabelle Ma
said it planned to sell initially about 700 flats of the 2,272-unit phase three,
with the remainder to be released later. She estimated the initial 700 units would
generate proceeds of more than HK$2 billion. Buyers are offered various incentives
such as mortgage rates as low as 3.5 per cent below prime for the first 12 months
and a 25 per cent second mortgage. Those choosing top-up loans or staggered payment
schemes are required to pay a 2 per cent to 6 per cent price premium. [Source:
SCMP, 16 May 2002] |  |
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