Hong Kong Business News

The Chief Executive-in-Council yesterday conditionally approved the relaxation of the Enhanced Financial Arrangements for the West Kowloon Cultural District (WKCD) to lift the “Build-Operate-Transfer only” restriction for residential developments within Zone 2 of the cultural district and permit the sale of residential developments.

Announcing the decision today, Secretary for Culture, Sports & Tourism Kevin Yeung told reporters that relaxing the financial arrangement will provide the economic prerequisites for the operation of the WKCD and resolve the WKCD Authority’s current cash flow problem.

Mr Yeung said: “The authority is now facing financial challenges as a result of the significant resources required to operate the arts and cultural facilities in the district, the mismatch with the revenue-generating commercial development and the COVID-19 pandemic in 2020 to 2022.

“With the relaxation, the authority will have sufficient funding to sustain 10 years’ operation.”

He added that the authority shall observe a number of key performance indicators on financial discipline set by the Government, including a triennial cap on operating deficits and a cap on the percentage of staff cost to the total annual operating expenditure.

For new capital projects, the authority shall demonstrate to the satisfaction of the Government the reasonableness of the cost estimates for any new projects before they can be given the status of committed projects.

Furthermore, in respect of tenders for developments with residential components, the authority shall submit its tender schedules for the agreement of the Development Bureau, and seek the bureau’s comments on the mechanism for setting the reserve price of the residential components of such tenders and the tender award recommendations for each sale exercise with residential components.

There is no change to the maximum total residential gross floor area of 170,280 sq m permitted under the extant WKCD Development Plan, the Government noted.

The authority has to make good use of the land resources provided by the Government to ensure its own financial sustainability and thus ultimately achieve self-financing, which was the original intention of the WKCD’s business model, Mr Yeung noted.

During the 10-year period, the authority will devise and implement robust revenue generation and commercialisation measures, and strictly control operating costs in order to fulfil its commitment to operate the WKCD project on a self-financing basis.

The Culture, Sports & Tourism Bureau added that it will closely monitor the WKCD Authority’s financial status and performance based on the key performance indicators, and work with the authority to identify feasible measures to resolve its long-term financial challenges.

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