NEW World Development's most recent bid to build a horse racing track near Vancouver has been rejected in favour of a state-funded upgrade of the city's existing facility. Prior to an official visit to Hongkong this month, British Columbia Premier Mike Harcourt's government announced it would take ''unilateral action'' to ensure the current site was expropriated from the city and renovated under state ownership. New World's Canadian land-owning partner said a letter outlining the reasons for the government's decision against the group's plan to develop a C$95 million (about HK$582 million) track had been sent to New World chairman Cheng Yu-tung. ''The letter basically states that the government has no desire to pursue any further discussions,'' Western Delta Lands president Tom Johnson said. ''It's just nationalisation of an industry.'' In a private New Year's Day letter to Mr Harcourt, Mr Cheng lashed out at the government's decision against an original development application he made last year. His group then submitted a second proposal in February, withdrawing a condition involving tax breaks on some construction and operating costs, which the British Columbia government argued were in part subsidised by local taxpayers. While none of the correspondence between Hongkong and British Columbia has been made public, officials from the British Columbia attorney-general's office said this week that restoration of the existing track was preferred because demographic studies showed that a new suburban track ''might not be able to attract an urban-based track crowd''. In addition to upgrading the facility, the British Columbia Racing Commission will go ahead with the installation of a new state-wide tele-theatre wagering system, expected to bring in nearly $200 million a year. Commission president Caroline Askew said revenues from the track, a public market and other commercial operations, would pay for the $30 million needed for renovations, adding that New World might still be interested in bidding for the track operations contract when the current agreement with the British Columbia Jockey Club expired in 1998. Vancouver Mayor Gordon Campbell, who is a likely candidate to run against Mr Harcourt in the next British Columbia election, is opposed to state expropriation of the existing track site, adding that he believes it is a ''land grab'' with no intensions of compensating the city. ''Why does the province have to take over at all, when we had private investment lined up?'' Mr Campbell asked in a local newspaper. ''If all this takes place it would be an unprecedented step.''