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West Kowloon Cultural District

Hong Kong arts hub in need of extra HK$11.7 billion to complete construction of facilities

Lawmaker claims it’s a scam as calls to suspend or downsize controversial development are brushed aside with mismanagement denials

PUBLISHED : Tuesday, 21 February, 2017, 9:51pm
UPDATED : Tuesday, 21 February, 2017, 10:09pm

An extra HK$11.7 billion would be needed to complete the second and third phases of facilities at the West Kowloon arts hub, Chief Secretary Matthew Cheung Kin-chung said, despite the management body making a HK$5.9 billion profit over the years.

Lawmakers slammed the difference from the original estimated cost and the latest budget overrun, describing it as a scam, but calls to suspend or downsize the remaining portions of the development were dismissed.

During a meeting of a Legislative Council subcommittee to monitor the project yesterday, Cheung revealed the West Kowloon Cultural District Authority (WKCDA) had earned HK$5.9 billion since it was given a one-off injection of HK$21.6 billion in 2008. That represents an average annual return of about 3 per cent.

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Deducting operating expenditure, the body’s reserves would stand at HK$20 billion by the end of the current financial year.

But HK$11.7 billion was still needed to complete the third batch of core arts and cultural facilities, namely a music centre and two theatres, as well as two theatres from the previous phase and other retail, dining and entertainment facilities.

The authority is also expected to run into operating deficit in the coming financial year – it is set to lose HK$1 billion by 2019 to 2020.

Cheung stressed the financial woes had nothing to do with the body’s mismanagement, and blamed the surging costs on delays caused by nearby works on the high-speed rail link to Guangzhou. “Construction costs also ballooned by 137 per cent between 2006 and 2016,” he added.

Instead of asking lawmakers for another cash injection, the government will bail out the authority with an “enhanced financial arrangement” which will grant the WKCDA the right to develop hotels, offices and residences within the area.

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Kwok Ka-ki of the Civic Party labelled the plan as a scam. “Using an estimate of HK$25,000 per square foot ... we’re now giving away HK$130 to 150 billion to an independent kingdom,” he said.

Fellow lawmaker Claudia Mo Man-ching asked if the Batch Three facilities could be downsized or even suspended.

“Our commitment is that the authority would deliver the whole project – not half the project, or a third of the project. And the batch three is the next stage, it has to be taken forward,” WKCDA chief executive officer Duncan Pescod said.

“This approach will allow us not only to build, but also equally important – perhaps more important – to operate. A box is no good if it doesn’t have content, and this will give us both the box and the content and allow us to continue operations.”

He also rejected fears that the authority will become a developer, saying the majority of the staff remained geared towards arts and cultural development.