LCQ6: Redevelopment project at Hanoi Road in Tsim Sha Tsui Following is a question by the Hon Wong Sing-chi and a reply by the Secretary for Development, Mrs Carrie Lam, in the Legislative Council today (March 10):
The redevelopment and planning processes of the redevelopment project at Hanoi Road in Tsim Sha Tsui, which was jointly undertaken by the Urban Renewal Authority (URA) and a private developer, as well as the circumstances surrounding the sales of its flats, have recently aroused public concern. In this connection, will the Government inform this Council, given that it has been reported that:
(a) the Town Planning Board (TPB) has approved a change of land use of the redevelopment site from commercial use to commercial/residential use, and permitted a high plot ratio of 12.366 for the project, which is higher than the plot ratio of 10 or 9 generally granted to sites for commercial/residential use, whether it knows TPB's justifications for making such decisions, why the sale of serviced apartments under the project was permitted, whether the permission for the sale of such apartments has violated any requirement or guideline, and whether this is at variance with the general procedure for approval;
(b) the aforesaid developer has entered into a partnership with URA's predecessor, the Land Development Corporation (LDC), to implement the project in its capacity as an owner affected by the redevelopment, and that among the urban redevelopment projects undertaken by LDC or URA, this is so far the only project in which participation by an affected owner is allowed, whether it knows why the owner is permitted to participate in the project, why the project partner was not determined through public tender, and whether the relevant principles or reasons will be applicable to future redevelopment projects; and
(c) some companies which are connected with the major shareholder of the developer have purchased several residential units under the project during the initial sale in the open market, but the transaction details have never been disclosed, whether the authorities will check all information concerning the property transactions under the project to find out if there are other similar purchases, and investigate the incident to ascertain if the developer has made use of the above purchase to produce confusing market information so as to attract buyers to purchase other residential units under the project?
The redevelopment project at Hanoi Road was announced for implementation by the former Land Development Corporation (LDC) in 1997. This uncompleted project was taken over by the Urban Renewal Authority (URA) when it was established in May 2001.
My reply to the three-part question is as follows:
(a) The Town Planning Board (TPB) gazetted the Development Scheme Plan of the LDC Hanoi Road Project in Tsim Sha Tsui as early as May 1995. The area was designated "Comprehensive Development Area" (CDA). According to the Notes of the relevant Development Scheme Plan, the maximum development plot ratio was 12. The Notes did not impose any restriction on the ratio between the domestic plot ratio and the non-domestic plot ratio within the development plot ratio of 12. The Development Scheme Plan was approved by the TPB in accordance with the prevailing procedures. In October 2003, the TPB rezoned this CDA site and the adjacent site originally zoned "Commercial" to be "Comprehensive Development Area (1)" (CDA(1)). Apart from maintaining a similar maximum gross floor area (GFA) under the aforementioned plot ratio, the Notes of the plan also stated that bonus floor area could be granted under the circumstances specified in Section 22(1) or (2) of the Building (Planning) Regulations.
At present, the plot ratio of the completed redevelopment project is 12.366, which includes the GFA of the CDA(1) zone, as well as a bonus GFA equivalent to a plot ratio of 0.366 (about 3,000 square metures) granted under Section 22(1) of the Building (Planning) Regulations that I mentioned just now in return for the dedication of the street frontage along Mody Road, Hanoi Road and Carnarvon Road as a public passage. The bonus GFA is to compensate the building set-back for the provision of a widened pavement for use as a public passage.
The lease conditions of the development project were made with reference to the Master Layout Plan approved by the TPB. The land use of the project as approved by the TPB includes hotel, retail facilities and service apartment. Generally speaking, except for special purposes such as hotel, hospital, social welfare and petro-filling station, there is generally no alienation restriction on properties in land leases, or sales on an individual unit basis. In drawing up the lease conditions for the development project at Hanoi Road, the Lands Department imposed alienation restriction on the part of the hotel in line with the prevailing practice. In other words, no alienation restriction was imposed on the service apartment of the project.
According to the financial arrangement between the Government and the URA, it has to pay full land premium at market value to the Lands Department in respect of development projects commenced by the former LDC. The URA has paid full land premium for the GFA allowed in the land lease, including the bonus GFA granted under section 22(1) of the Building (Planning) Regulations.
In other words, the plot ratio of the above project and the sale of service apartment under the project have not violated any applicable requirements or guidelines at the time. The project was also approved in accordance with normal procedures.
Based on the explanation above, it can be seen from the planning history of this project that it has not involved any rezoning of the area from "Commercial" to "Commercial/Residential". But in line with the prevailing practice of the TPB, when a project located in a CDA zone is completed, the relevant area will be rezoned for the most compatible use under the relevant Outline Zoning Plan. According to this principle, the TPB rezoned the area from CDA(1) to "Commercial (10)" on March 20, 2009.
(b) Prior to the redevelopment project at Hanoi Road, the former LDC has also proposed the introduction of an Owner Participation Scheme for more than 180 owners at the acquisition stage of the H1 project at Queen Street, Sheung Wan (now known as Queen's Terrace). However, in view of the lukewarm response to the proposal from the owners, the former LDC decided to abandon the Owner Participation Scheme in favour of a public tender to identify a joint venture partner. It can therefore be seen that the Hanoi Road Redevelopment Project was not the only project for which the LDC had considered implementing an Owner Participation Scheme.
According to information obtained from the URA, when the LDC launched the Hanoi Road project, all the affected owners were invited to participate in the Owner Participation Scheme. Among the 143 property interest owners affected by the project, 70 participated in the Owner Participation Scheme; 64 accepted cash compensation; while the remaining nine rejected both the Owner Participation Scheme and the cash compensation. Eventually, the LDC applied to the Government to invoke the Lands Resumption Ordinance to resume the remaining interests in November 1998.
The 70 property interest owners who participated in the Owner Participation Scheme were related to ten companies, including the present developer of the project. Through transfer of company shares, the related companies of the developer successfully gained control of all the ten companies within a short period of time. At the end, only the related companies of the developer and the LDC were left to jointly implement the Owner Participation Scheme. In terms of the value of properties held, the developer’s share of the project accounted for 80%, while the LDC only 20%.
We have enquired with the URA on whether there was not a public tender to determine the project partner at that time and learned that the arrangement was determined by the LDC prior to the establishment of the URA. The Board of the LDC had subsequently discussed the matter and considered that as the related companies of the developer in this project held 80% of the value of the properties, the project should be developed by the developer.
We are conducting a review on the urban renewal strategy. The feasibility and justifications of owner participation is one of the many topics under review.
(c) As with other redevelopment projects of the URA, the pricing of all the residential units of the redevelopment project "The Masterpiece" at Hanoi Road in Tsim Sha Tsui must be approved by one of the partners in the development project, that is, the URA. The URA has also engaged two independent international valuers to conduct the valuation to ensure that the pricing of the units is in line with the market price. The developer must put up the units for sale at prices approved by the URA. No one will be offered any concession or discount when purchasing these units. The developer has also followed the prevailing practice agreed between the Government and the Real Estate Developers Association of Hong Kong to publish the price list of units before sale.
It is not specified in the Owner Participation Agreement signed by the URA and the developer that at the stage of public sale of the flats under the project, buyers must disclose their identities to the URA or seek approval from the URA beforehand. However, in view of the concerns expressed by the community and some LegCo members, the URA will discuss with its Board to see if the existing regulatory measures applicable to the URA staff in the purchase of flats under URA projects (that is, in case any staff member who wishes to buy flats under the URA projects, he has to seek written consent from the Managing Director) should be extended to its joint venture partners, and in particular, the members of the board of directors, the senior management and staff involved in the sale of the subject flats of its joint venture partner.
Ends/Wednesday, March 10, 2010
Issued at HKT 17:54