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Kenneth Ko

A dispute over the costs of building public facilities is threatening to delay a massive housing development at the Mass Transit Railway Corp's (MTRC) future depot site in Tseung Kwan O.

 The MTRC is fighting to gain government concessions to free it from the costs of associated government, institution and community (GIC) facilities in the property project.

 However, the Government is yet to decide on the matter, placing doubt over whether the 32.4 hectares earmarked for the depot site and related property development will be approved for development on schedule next month.

 Deputy Director of Lands John Corrigall said the GIC building costs remained an issue to be resolved and the Lands Department might fail to grant the site as scheduled.

 The disagreement involves millions of dollars as the Tseung Kwan O project comprises a large amount of GIC facilities.

 The MTRC considers it reasonable for the Government to share the costs of building such facilities in the project, which include seven schools, community facilities and two public transport interchanges.

 Surveyors estimated that given an average cost of about $150 million to build a school, the seven educational institutions could involve an expenditure of about $1 billion.

 The large tract of land on Area 86 will become a depot and Tseung Kwan O South station serving the Tseung Kwan O MTR extension and incorporating a property development branded by the MTRC as a 'city within a city'.

 The development will entail 50 residential towers with 20,000 to 21,500 flats to house about 58,000 people, with a total gross floor area of 17.7 million square feet.

 Analysts said the application to exclude the costs of building GIC facilities would lower the development cost and increase the project's appeal to developers.

 The MTRC application reflects a typical developer's eagerness to lower costs by all means as project margins are generally believed less lucrative than in the past.

 The Lands Department has taken note of developers' concerns about sharing the costs of building public facilities on GIC sites or land zoned as a comprehensive development area (CDA).

 At present, developers undertaking projects on GIC and CDA sites are required to bear the costs of building affiliated public facilities.

 The Government does not take into account such costs when assessing those sites' land premiums.

 This differs from the practice for land sold by public auction or tender, under which developers' costs of building such facilities are either reflected in the purchase prices or reimbursed by the Government.

 The Lands Department has recently considered changes to bring the two approaches into line.

 But such changes have yet to be approved.

 Analysts said it was difficult to persuade the Government to make concessions that might reduce revenues, especially when this financial year's budget was in deficit.

 A delay in a land grant could affect the development of the railway depot to serve the MTR extension to Tseung Kwan O, which is due for completion at the end of 2002.

 According to the initial schedule, the depot site's property development will be completed in 14 phases over 10 years, with the first phase to be tendered by the end of this year.



Indecision on paying for public facilities hangs over MTRC project