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    Following is a question by the Hon Leung Kwok-hung and a written reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (May 25):

Question:

    It has been reported that, although The Link Real Estate Investment Trust could not be listed as scheduled, The Link Management Limited ("The Link") had taken over the divestment portfolio of the Housing Authority ("HA") and the related services half a year ago.  In this connection, will the Government inform this Council whether it knows:

(a) the amount of funding provided by HA to subsidise the monthly operating expenses of The Link, and the details of the manpower deployed to monitor its operation;

(b) whether HA has conducted any tendering exercise before handing over the divestment portfolio and the related services to The Link; if it has, of the details of the tendering exercise and the tender results; if it has not, the reasons for dispensing with the tendering exercise; and

(c) whether, after the taking over of HA's divestment portfolio and the related services by The Link, HA has received any complaints concerning the closedown of shops in The Link's shopping centres, the charging of new fees by The Link and increases in the rents of shop premises and parking spaces in car parks; if so, of the number of such complaints and their details?

Reply:

Madam President,

    My reply to the three-part question is as follows:

(a) Prior to the listing of The Link Real Estate Investment Trust (The Link REIT), The Link is a wholly-owned subsidiary company of the Housing Authority.  The operating budget of The Link has to be approved by the Housing Authority and The Link's expenditure is fully met by the Housing Authority.  According to The Link's operating budget for 2005-06, its average monthly operating expenditure is about $12 million.

    Since The Link is a subsidiary company of the Housing Authority, the Housing Authority monitors its operations in a different manner from that applicable to general outsourcing arrangements.  Specific measures include:

- A joint committee, comprising senior management of the Housing Authority and The Link and chaired by the Director of Housing, has been set up to discuss important issues relating to operations and management of the properties to be divested.

- The Housing Authority's Commercial Properties Sub-division keeps close contact with The Link over daily operational matters so as to ensure that requests and demands of commercial tenants and residents are properly responded to.  Final decisions on tenancy matters rest with the Commercial Properties Sub-division.

- The Link has to obtain the Housing Authority's consent before undertaking any major improvement works for shopping centres.  The Housing Authority's approval is also required for any capital expenditure incurred for such works.

- The Link keeps the Housing Authority's Commercial Properties Committee (CPC) informed of its work from time to time.  Prior consent of the CPC has to be obtained for any major changes to management policies of shopping centres or carparking facilities.

- The Housing Authority's internal audit section scrutinises The Link's key internal codes and auditing mechanism for the deployment of resources.  The Housing Authority's auditors may examine the financial system and accounts of The Link as and when necessary.

    The Housing Authority and The Link work closely together.  This involves considerable manpower from different divisions of the Housing Authority (including the Commercial Properties Sub-division, the Divestment Sub-division, the Finance Sub-division and the Estate Management Division), many of whom also attend to other work at the same time.  Hence, we have not worked out specific figures on the manpower deployed for monitoring The Link.

(b) Prior to the listing of The Link REIT, the shopping centres and carparking facilities to be divested remain the Housing Authority's properties, and The Link a wholly-owned subsidiary company of the Housing Authority.  Transfer of management responsibilities for these facilities by the Housing Authority to its subsidiary company is different from general outsourcing arrangements.  Hence, no tender exercise needs to be conducted.

(c) The Housing Authority and The Link have been liaising with commercial tenants and have received feedback and enquiries concerning tenancy renewal, rent, carparking fee, and other related charges.  However, after The Link's takeover of the management of the facilities concerned, the Housing Authority has received no complaints concerning the closedown of any shops, or any rent increase of shops or parking spaces under the Link's management.  Moreover, The Link has not charged any new fees and the Housing Authority has not received any complaints in this respect.

Ends/Wednesday, May 25, 2005

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