There may not be enough cash to finance the third phase of the West Kowloon Cultural District, the chief secretary admitted yesterday.
Carrie Lam Cheng Yuet-ngor, who chairs the West Kowloon Cultural District Authority, described the project’s financial pressures as “quite serious.”
“The second pressure is that, although in terms of land and financial consideration, we don’t yet have a timetable for batch three facilities, we will explore feasible financing plans … for batch three facilities including the music center, whether or not it will eventually be built, the sector has expressed its worries,” Lam told the Legislative Council’s joint subcommittee monitoring the project.
Therefore, we have asked the WKCD management to adopt a macro point of view to think of a substitute financing plan … we have proposed commercial developments so as to meet the authority’s financial challenges.”
Batch three facilities of the project include a musical theater and a musical center with a concert hall and recital hall.
Lam stated that the original endowment of HK$21.6 billion for the project, approved by Legco in 2008, had grown to HK$23.5 billion by the end of the 2014-15 financial year. “We are confident we have sufficient [funds] for batch one and batch two. But until we complete batch one, we won’t ask for extra funding from Legco,” she said.
Lam emphasized the government is still committed to completing batch three of the project.
“In the past five or six years in Hong Kong, construction costs have been rising … according to Architectural Services Department indicators, they have risen 131 percent in that period and the investment environment has also changed, so we have not been able to retain a good investment return,” she said.
“I’d like to reiterate the government has not given up the batch three facilities in WKCD. As the injection of funds is not enough to meet all the construction costs, we proposed a pragmatic approach two years ago … although we don’t have a timetable for them [batch three facilities], this year we are more positive in our approach.”
Lam revealed the accumulated return on investment of the endowment fund since 2008 was HK$4.6 billion an average annual return of 3 percent.