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Following is a question by the Hon Alice Mak Mei-kuen and a reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (November 12):
Question:
In 2005, the Hong Kong Housing Authority (HA) divested certain retail and carpark facilities of its public housing estates to The Link Real Estate Investment Trust. The Link Management Limited (The Link), which manages the Investment Trust, sold the shopping centres and car parks of nine housing estates (the resold facilities) this year. Some shop tenants and residents of these housing estates have relayed to me their concern that the new owners may raise parking fees and shop rentals significantly, leading to increased commodity prices in their estates, and that the quality of managing the resold facilities may deteriorate. Meanwhile, the Housing Ordinance provides that HA shall secure the provision of ancillary facilities fit for public rental housing estates, including amenities and commercial retail facilities. In this connection, will the Government inform this Council:
(1) whether it knows if The Link had informed various stakeholders (including HA and the owners' corporations (OCs) of the housing estates concerned) prior to the sale of the relevant facilities; whether, after learning of The Link's intention to sell such facilities, the authorities have implemented corresponding measures, such as assessing the impact of the resale of the such facilities on HA as well as on the shop tenants and residents of the housing estates concerned, and providing consultation and support services to the OCs and residents concerned; if they have implemented such measures, of the details; if not, the reasons for that;
(2) whether the authorities have approached the new owners of the resold facilities and explained to them the service targets of such facilities and their management responsibilities, and that in managing such facilities, priorities should be given to addressing the needs of residents of housing estates; if they have, of the responses of the new owners; if not, how the authorities ensure that the new owners will continue to shoulder the responsibilities of the former owners; and
(3) as some residents of housing estates have relayed to me their concern that the new owners may transform the shopping arcades in the resold facilities into ones that mainly serve tourists or residents outside the estates, or they may even refuse to shoulder the maintenance responsibilities associated with public areas and facilities, how the authorities will prevent such situations from occurring, with a view to ensuring the continuous provision of suitable facilities to the residents; whether the authorities will set up a task force to monitor and follow up the management issues of the resold facilities?
Reply:
President,
My consolidated reply to the Hon Alice Mak Mei-kuen's question is as follows:
The Government has explained to the Legislative Council (LegCo) on various occasions the background and objectives of the divestment of retail and car parking facilities by the Hong Kong Housing Authority (HA) in 2005, as well as the mechanism to regulate the uses of the relevant facilities, including Secretary for Transport and Housing's comprehensive response to the motion debate relating to The Link Real Estate Investment Trust (The Link) in November 2012 on whether the Government should buy back The Link, and our discussion with the LegCo Panel on Housing on relevant issues in June this year.
In July 2005, the Court of Final Appeal (CFA) affirmed that the divestment of retail and car parking facilities by the HA was consistent with the HA's object, as laid down in section 4(1) of the Housing Ordinance. It was pointed out that to secure the provision of retail and car parking facilities did not mean that the HA needed to be the direct provider itself, but the HA secured the provision of such facilities so long as such facilities were available, even though they were not provided by the HA but by a third party. In reaching its conclusions, CFA noted that The Link would adopt a market-oriented commercial approach in operating the relevant retail and car parking facilities, whereas the HA's approach at that time might not always be in line with private sector practice; and after the listing of The Link, there might be changes in relation to the operation of the relevant facilities, including the tenant trade mix.
The Link is a private enterprise. So long as The Link's operations comply with prevailing legislation, conditions of government leases (commonly known as "land leases"), and terms of covenants made between The Link and the HA, the Government and the HA cannot and will not interfere the day-to-day operation and commercial decisions of The Link, including its disposal or acquisition of any properties. The Link is not obliged to inform the Government nor the HA before disposing of its properties. However, The Link and the new owners of the relevant facilities are obliged to comply with the relevant legislation and the conditions of land leases, just like other private property owners. The assignment deeds between the HA and The Link also contain certain restrictive covenants. All these ensure that changes in the management or control of the facilities divested by the HA will not affect commercial, car parking, educational, social welfare and recreational uses of such facilities.
Firstly, the land leases have stipulated the land uses of the relevant lots. If an owner wishes to change the relevant land uses, prior agreement from other owners of the lots (including the HA and flat owners) and approval of the Lands Department have to be obtained. The conditions of land leases vary case by case. Generally speaking, there are lease conditions clearly stipulating car parking spaces are restricted to the parking of vehicles by the residents and visitors of the lot concerned, and some land leases may require spaces be provided for the parking of vehicles by the residents and visitors of other specified lots, unlike public carparks.
The assignment deeds between the HA and The Link also contain certain restrictive covenants, which stipulate that if The Link and any future owners dispose of the retail and carparking facilities, the subsequent owners shall also comply with the relevant restrictive covenants. These restrictive covenants stipulated that the commercial and carparking facilities shall not be disposed except as a whole. If the HA still holds any proprietary interest in the relevant estate or court, the restriction that the shopping centre shall not be disposed except as a whole will still be effective. If the HA holds all residential units in the relevant estate or court, the restriction that the carparking facilities shall not be disposed except as a whole will still be effective. The covenants also require The Link and the new owners to continue to let out certain commercial units to non-profit-making organisations nominated by the Education Bureau or the Social Welfare Department at concessionary rents for operating social welfare and educational facilities.
As regards the management and maintenance of common area and recreational facilities in the concerned estates or courts, the Deeds of Mutual Covenant (DMCs) set out provisions to ensure relevant owners to discharge their obligations. For instance, regarding the recreational facilities ancillary to the divested facilities, the owners shall open such recreational facilities for use by residents of the relevant estates and courts, and properly manage and maintain such facilities and the access thereto in accordance with the provisions of the DMCs. By virtue of the provisions of the DMCs, DMC managers, which in certain estates and courts are performed by the HA, may require The Link or the new owners to comply with the provisions of the DMCs.
The HA divested 180 properties in 2005. The actual circumstances of individual properties varies, and the HA has been communicating with The Link as appropriate, depending on the circumstances of individual properties. For example, if the HA holds any interest in land for a concerned lot, as a co-owner, the HA will consider the suggestions to amend the land leases by other owners, including The Link. When the HA acts as the DMC manager, the HA will require other owners, including The Link, to observe the provisions of the DMCs. For those properties which are subject to welfare letting covenants, the Housing Department (HD) will coordinate with the Education Bureau or the Social Welfare Department to handle the matters relating to the letting of educational or social welfare facilities. Should other owners be found to violate any of the requirements as set out in the covenants, the HD will definitely follow up the case and take actions as appropriate.
With reference to the relevant legal documents and the established mechanism as mentioned above, and depending on actual circumstances, the HD will take actions to ensure the proper execution of the legal documents, and take appropriate monitoring actions.
Objectively speaking, the commercial facilities of The Link are located in public housing estates. Their clientele and target customers are mainly public housing residents. When deciding on the market positioning of their commercial facilities, the owners will have to consider the preference and needs of their major target customers. At the same time, shopping habits vary from person to person and will change over time. Owners and commercial tenants have to respond to market signals appropriately, and adjust their modes of operation to keep pace with the times in order to succeed in their businesses.
Ends/Wednesday, November 12, 2014
Issued at HKT 14:59
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