LCQ13: The Hong Kong Housing Authority's single operator markets
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Question:
The Hong Kong Housing Authority (HA) has adopted since 1988 a single-operator arrangement for letting markets in public rental housing (PRH) estates, under which a single tenancy for a market is awarded to an operator, who will be responsible for the management of the whole market, including subletting market stalls to individual stall operators. All markets in PRH estates completed from 1997 onwards have been let under the single-operator arrangement. In this connection, will the Government inform this Council:
(1) of the number of newly completed markets in PRH estates that will be let under the single-operator arrangement in the coming five years;
(2) given that some single operators calculate the rents payable by individual stall operators according to the operation modes of different trades and the business turnover of the stalls, whether HA will include a provision in new contracts for single-operator markets to specify the maximum rent levels that single operators may charge stall operators;
(3) whether HA has currently put in place any mechanism to monitor the quality of single operators' management of markets and rate of increase in rents that stall operators are charged; if so, of the effectiveness of the mechanism; if not, the reasons for that;
(4) whether HA has currently put in place any mechanism or set up any committee to handle complaints lodged by stall operators against single operators; and
(5) whether HA will take over the management of a market which has been let to a single operator when most of the stall operators of the market have closed down their business due to their inability to afford the rents, so as to ensure that such markets will continue to serve the residents in the neighborhood; if HA will not, what HA will do to meet the residents' shopping needs?
Reply:
President,
My consolidated reply to various parts of the question raised by the Dr Hon Priscilla Leung Mei-fun is as follows.
The Hong Kong Housing Authority (HA) has adopted a single-operator letting arrangement for its markets since 1988. Under this arrangement, a single tenancy is awarded to an operator who will let parts of the leased area to individual stall operators, and will be responsible for the management of the whole market. The purpose of implementing single-operator markets (SOM) is to leverage on the expertise and flexible management and operation mode of the private sector, with a view to providing better shopping choices and service environment for residents.
Since 1997, all HA's new markets in public housing estates have adopted the abovementioned single-operator letting arrangement. There are currently 22 markets under HA, six of which are SOMs. It is anticipated that a total of 12 new HA markets will be completed in the coming five years and the single-operator management mode will continue to be adopted.
To achieve the purpose of providing better shopping choices and environment through flexible management and operation as mentioned above, it is necessary for HA to allow single operators sufficient flexibility in the management of the markets to deal with the changing business environment. Based on this principle, single operators can select individual stall operators and negotiate with them on the rents and terms of letting on a commercial basis. As HA has no contractual relationship with individual stall operators, it is not appropriate for HA to intervene or participate in the negotiation or agreement between the operators and individual stall operators. HA also does not set a ceiling for the rent or rate of rental increase. However, to ensure the protection of stall operators, HA will, by means of standard terms in tenancies with single operators, restrict single operators from charging stall operators fees other than rent, air-conditioning charges, rates and management fees. Furthermore, air-conditioning charges and rates cannot exceed the actual amount required to be paid by single operators. In addition, the increase in management fees can only be commensurate with the increase in the Nominal Wage Index published by the Census and Statistics Department, and cannot be imposed more than once a year. Single operators are required to submit a monthly return to HA setting out all fees collected from stall operators.
There is an established mechanism in place for HA to assess the performance of the single operators and to monitor the management quality of the markets, including regular inspections of markets by frontline staff of the Housing Department (HD) to ensure that the operators comply with the tenancy requirements and maintain the quality of their management services. HD will assess the performance of the operators every two months, taking into account views of Estate Management Advisory Committees, District Council members and local residents. Through the performance assessment system, HD encourages the operators to maintain communications with stall operators and other stakeholders. This includes holding regular meetings so that the stall operators and other stakeholders may reflect their views to the operators for follow-up and improvement, as well as fostering good relationships between the operators and various stakeholders, which will facilitate the effective and smooth operation of the markets. In fact, whether the operator is capable of managing the daily operation of the market in an effective and smooth manner is HA's most important consideration when making decisions on tenancy renewal.
For those operators who fail to fulfill the tenancy requirements, including situations where the market cannot be operated effectively because most stall operators cease their operations, HD will arrange meetings with the operator and issue warnings. If the poor performance persists despite warnings, HA has the right to terminate the tenancies concerned before their expiry and not to invite the relevant single operators to submit bids for other HA's SOMs for a specified period of time. If the tenancy of a SOM is terminated, HA will arrange re-tender as soon as possible, so that the new single operator can take over the market as early as possible and maintain services to residents.
The current monitoring measures for SOMs implemented by HA enable an appropriate balance between the practical circumstances of commercial operations and shopping needs of residents, and have been operating effectively. HA will review the letting arrangements for SOMs from time to time. The most recent review was completed in early 2017, under which a series of measures were put forward to enhance the protection of stall operators and the monitoring of the operators, so that the single-operator letting arrangements can be implemented more effectively. The recommendations were endorsed by the Commercial Properties Committee of HA in March 2017 for implementation (note).
Note: Reference may be made to the Memorandum for the Commercial Properties Committee of HA relating to "Single-operator Letting Arrangements for Housing Authority's Markets" for details –www.housingauthority.gov.hk/en/common/pdf/about-us/housing-authority/ha-paper-library/CPC06-17.pdf.
Ends/Wednesday, May 17, 2017
Issued at HKT 12:35
Issued at HKT 12:35
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