West Kowloon Cultural District project financial black hole, public subsidies likely

West Kowloon Cultural District project financial black hole, public subsidies likely

Danny Chung:

 

The government has warned the public to steel themselves for additional cash subsidies for its troubled West Kowloon Cultural District project amid concerns the project would be a financial black hole.

Answering questions in the Legislative Council yesterday, Chief Secretary for Administration Carrie Lam Cheng Yuet-ngor said everybody had to have their minds ready for additional fund injections in the next few years.

“But by that time, we hope to see results [from the project],” Lam added.

Lam is also chairman of the board of the West Kowloon Cultural District Authority.

Regarding the option of increasing the plot ratio from 1.81 to 2 to improve the financial viability of the project, Lam said the authority has yet to study how to best use the extra floor space of about 70,000 to 100,000 square feet.

“In the end, we may not necessarily agree to it being used for the most profitable use,” Lam said.

The government continued to face criticism over the financial arrangements for the project.

Legislator Gary Fan Kwok-wai said the government, in pledging to use HK$10 billion to build the basic infrastructure, was using administrative measures to bypass the Legco oversight and hide huge costs from the public.

Another legislator Ma Fung-kwok said: “I only demand the government face reality. That is, the money is not enough and no matter how you reduce [costs], it is not enough.”

In May news reports emerged claiming the project would require HK$47 billion to complete compared with the endowment of HK$21.6 billion that was approved by Legco in 2008.

In a paper submitted to the Joint Subcommittee to Monitor the Implementation of the West Kowloon Cultural District Project for its meeting yesterday, the Home Affairs Bureau confirmed the authority did make a “ballpark estimate of around HK$47.1 billion in money-of-the day (MOD) prices for the design and construction costs of all facilities”.

However this figure was not based on actual design and did not undergo value engineering to minimise costs.

Apart from the option of increasing plot ratio, the paper said it would study other ways to raise funds such as seeking donations, sponsorship and granting naming rights.

Also to relieve the financial pressure on the authority, the paper said the government would meet the entire capital cost of the infrastructure works for the huge basement necessary for the project.

Lam said last week this cost would be over HK$10 billion.

The government will pick up the tab for basic infrastructure works for the West Kowloon Cultural District, estimated to be over HK$10 billion  (Danny Chung)

The government will pick up the tab for basic infrastructure works for the West Kowloon Cultural District, estimated to be over HK$10 billion (Danny Chung)

At a meeting of the joint subcommittee, Secretary for Home Affairs Tsang Tak-shing reiterated the government and the authority had a responsibility to control costs.

He said when the authority was choosing the winning design for the Xiqu Centre, estimated construction costs for each submission were also reviewed by a consultant quantity surveyor.

However in view of the public concern over costs, Tsang said in future design competitions for the other facilities, the weighting for cost efficiency would be increased in the scoring system from the current 10 percent.

Tsang did not indicate what figure the future weighting would be set at.

Radical pan-democrat lawmaker Raymond Wong Yuk-man launched a furious attack on the project, saying the main reason for the quagmire the project found itself in was the low quality of the management by the government on the project.

“If this government does not die, it would be useless,” Wong said.

To that end, he called for Tsang and the management at the authority to resign en masse.

 

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