Provisional Legislative Council

PLC Paper No. CB(1)1238
(These minutes have been
seen by the Administration)


Provisional Legislative Council
Panel on Planning, Lands and Works

Minutes of meeting held on Friday, 27 February 1998, at 10:45 am in Conference Room A of the Legislative Council Building

Members present :

Hon Edward HO Sing-tin, JP (Chairman)
Hon KAN Fook-yee (Deputy Chairman)
Hon HO Sai-chu, JP
Dr Hon Raymond HO Chung-tai, JP
Hon Ronald ARCULLI, JP
Hon LEUNG Chun-ying, JP
Dr Hon Charles YEUNG Chun-kam
Hon IP Kwok-him
Hon LAU Wong-fat, JP
Hon CHOY Kan-pui, JP
Hon NGAN Kam-chuen

Member attending :

Hon LEE Kai-ming

Members absent :

Hon CHENG Kai-nam
Hon Timothy FOK Tsun-ting

Public officers attending :

Items IV and V

Mr Esmond LEE
Principal Assistant Secretary for Planning, Environment and Lands/Lands

Item IV

Mr Richard LUK
Principal Assistant Secretary for Planning, Environment and Lands/Urban Renewal

Assistant Director of Buildings/Control and Enforcement

Assistant Secretary for Planning, Environment and Lands/Urban Renewal

Item V

Mr George CHUNG
Government Land Agent (Estate Management) Lands Department

Clerk in attendance :
Miss Odelia LEUNG,
Chief Assistant Secretary (1)1

Staff in attendance :

Ms Connie SZE-TO,
Senior Assistant Secretary (1)1

I Confirmation of minutes of meeting

(PLC Paper No. CB(1)1007)

The minutes of the meeting held on 15 January 1998 were confirmed.

II Date of next meeting and items for discussion

2. Members agreed to discuss the Final Executive Report on the Territorial Development Strategy Review at the next Panel meeting scheduled for Friday, 27 March 1998, at 10:45 am. A joint meeting with the Environmental Affairs Panel would be held immediately after the regular meeting to discuss the subject of quality of Dongjiang water.

(Post-meeting note: Upon the request of the Administration, the regular Panel meeting would be re-scheduled for Thursday, 26 March 1998, at 4:30 pm. The joint meeting would be held at 11:45 am on Friday, 27 March 1998.)

3. The Chairman informed the meeting that in accordance with Rule 77(14) of the Rules of Procedure of the Provisional Legislative Council, each Panel shall at least make one report to the Council during the session. The report for the Panel would be circulated to members for comments and endorsed at the next Panel meeting.

III Information papers issued since last meeting

(PLC Paper No. CB(1)989 - an information paper from the Administration on procedures and measures adopted for the award of sewage tunnel completion contracts)

4. Members noted the paper.

IV Building Safety Improvement Loan Scheme

(PLC Paper Nos. CB(1)997(01), CB(1)997(02))

5. The Principal Assistant Secretary for Planning, Environment and Lands/Urban Renewal (PAS/PEL(UR)) briefed members on the proposal of setting up the Building Safety Improvement Loan Scheme (the Loan Scheme) to assist owners of domestic and domestic/commercial buildings who needed financial assistance to participate in the Building Safety Inspection Scheme (BSIS). Members noted that an advisory committee comprising both official and non-official members would be formed to oversee the implementation of the Loan Scheme including giving advice in vetting loan applications. Whilst supporting the spirit of the Loan Scheme, members sought detailed information on its scope, financial requirement and repayment arrangement.

Scope of the Loan Scheme

6. PAS/PEL(UR) explained that the Director of Buildings (D of B) was empowered under section 26A of the Buildings Ordinance (BO) (Cap. 123) to issue an order requiring the owner of a building to carry out detailed investigation and/or remedial works for the building which, upon inspection, were found to show signs of dilapidation or defect. The prime candidates of the Loan Scheme were owners of buildings aged 30 years or above showing signs of dilapidation or defect who were invited by the D of B to participate in the BSIS, i.e., to undertake regular inspections and maintenance for their buildings to ensure compliance with safety standards in respect of structural stability, integrity of external finishes, and fire safety. Building owners served with orders under section 26A of the BO would not be eligible for the Loan Scheme if they intended to carry out only those works required under the order. Should the owner fail to comply with the order, the D of B would carry out the investigation/works and recover the costs from the owner. On the other hand, owners who carried out the investigation/repair works required under a section 26A order in conjunction with the inspection and improvement works under the BSIS would be eligible to apply for the Loan. Moreover, owners of buildings not served with a repair order under section 26A might participate in the BSIS on their own initiative and apply for the Loan. The Assistant Director of Buildings/Control and Enforcement (AD/B) added that the Administration planned to inspect 400 buildings aged 30 years or above to assess whether to issue a section 26A order and invite owners of 700 other buildings in the first year to participate in the BSIS.

7. Members noted that an order under section 26A of the BO might be served in respect of common areas of a building or individual premises. As such, there would be cases where section 26A orders would only affect certain owners within a building. In such circumstances, the Administration should consider differentiating the amount of loan that should be granted to those BSIS participants who had received section 26A orders from those who had not. They requested the Administration to provide a supplementary paper to elaborate on the details. PELB

8. In response to members’ further enquiries on the eligibility of applicants, PAS/PEL(UR) pointed out that tenants would not have the legal responsibility nor the right to carry out works on property not under their ownership. As such, only owners were eligible to apply for the Loan. Also, the Administration did not intend to impose a strict minimum threshold as regards the percentage of owners of a building consenting to apply for the Loan as a pre-requisite for accepting a loan application. Each application would be considered on its merits. To ensure repayment of loans, a charge would be registered in the Land Registry in respect of the property of the individual owners. The Administration recognized the important role of owners’ corporations (OCs) in co-ordinating and carrying out building maintenance and repair works since, under the Building Management Ordinance (BMO) (Cap. 344), OCs were the legal entity responsible for the management of the common parts of buildings. However, legal advice indicated the BMO did not give OCs the power to obtain loans. The Administration would consider the need to amend the BMO to give OCs this power. He noted a member's suggestion of enhancing the statutory power of OCs to recover costs from building owners for maintenance works carried out by the OCs.

Financial and repayment arrangements

9. PAS/PEL(UR) advised that the Loan Scheme would be non-means tested. A "no-gain-no-loss" interest rate, the same as that applied to the Home Finance Scheme for civil servants, would be charged on the loans. This rate, assumed to be 6.5% in Appendix I to the paper, would be updated in April 1998. The Administration would consider granting interest-free loans or loans at a concessionary interest rate for special hardship cases. Loans would be repayable by 36 monthly instalments commencing from the completion of the maintenance works. While the interest rate would be fixed for the entire repayment period, the applicable interest rate for new loans would be reviewed every six month to tie in with the prevailing "no-gain-no-loss" interest rate. He undertook to consider a member's suggestion of offering owners with the option of choosing either a fixed or floating interest rate. However, he pointed out that offering such an option could have implications on the administrative costs of the Loan Scheme. PELB

10. At members’ request, AD/B explained the projected financial requirement as detailed in Appendix I of the paper. He highlighted that the amount required was worked out on the assumptions that 30% of owners of buildings issued with an order under section 26A and invited to take part in the BSIS would apply for the Loan and 10% of owners from other buildings would apply on their own initiative; the estimated average loan per unit was $40,000; the "no-gain-no-loss" interest rate was assumed to be 6.5%; and the default repayment rate was assumed to be 5%. PAS/PEL(UR) added that subject to the funding approval of $500 million from the Finance Committee at the meeting on 20 March 1998, the Administration intended to implement the Loan Scheme in mid-1998. The start-up fund was estimated to be sufficient for operating the Loan Scheme in the initial two years. The Administration would conduct a review after the first year and assess the need for further funding requirement.

V Small House Policy

(PLC Paper Nos. CB(1)997(03), CB(1)997(04))

11. Noting a total of 17,640 outstanding small house applications as at 31 December 1997, members expressed concern about the Administration's slow progress in processing the applications. Some members pointed out that although the Lands Department (Lands D) had committed to processing an application within 170 working days, the period was calculated from the day on which a case file was open and there was no pledged time between the submission of an application and the opening of a case file. Members called on the Administration to review the existing vetting and approval procedures for small house applications with a view to expediting the process and improving the efficiency of relevant government departments. A member queried whether an annual quota on the approval of applications had been set for each district.

12. Responding to the concern about the lengthy time for approving applications, the Principal Assistant Secretary for Planning, Environment and Lands/Lands (PAS/PEL(L)) said that applications received by District Lands Offices would be processed on a first-come first-served basis. The processing of applications involved a lot of complex issues and the level of complexity of each application varied. The Government Land Agent (Estate Management) (GLA/EM) stressed that no quota had been imposed on the number of annual approval cases and the same vetting procedures applied in every district. He added that Yuen Long, North District and Tai Po had received the greatest number of applications in recent years and hence had a relatively large number of outstanding cases. Additional staff had been deployed to these districts for processing applications. The Administration intended to clear all the outstanding cases within three years. In order to speed up processing, a trial scheme lasting for 17 months had been implemented in Yuen Long in February 1998 under which an applicant might elect for the provision of survey and legal services by a contractor at a fee of $22,000. The scheme would be reviewed after implementation for six months and would be extended to other districts if proven to be successful. Moreover, starting from February 1998, the Lands D conducted a preliminary screening of each application to ascertain the eligibility of the applicant. Applicants who were found to fall short of the basic requirements would be given an early notification; and eligible applicants who had not provided the requisite documents would be informed accordingly.

13. As regards the suggestion of reviewing the existing application procedures, PAS/PEL(L) advised that a committee was set up in September 1997 to review the Small House Policy. All relevant issues including land availability, eligibility criteria, standards for a small house, current application procedures, and options for the way forward would be examined. The committee aimed to complete the review in 1998 and would consult relevant parties including the Heung Yee Kuk (HYK) and the legislature on the outcome. He agreed to provide members with information on the scope and progress of the review after the meeting.PELB

14. On the trial scheme under implementation in Yuen Long, a member enquired how it could expedite the processing of applications. While some members considered the trial scheme acceptable, other members doubted the equity of a policy to provide speedy service to applicants who were willing to bear the legal and surveying costs. They were of the view that if the delay in processing small house applications was due to inadequate staff, this should be addressed by increasing manpower resources the costs of which should be recovered from the service charges.

15. In response to members, GLA/EM explained that due to stringent manpower resources, additional manpower could not be deployed to deal with small house applications solely. The Lands D upon request by the HYK, recommended the implementation of the trial scheme to employ professionals in the private sector to carry out works relating to demarcation of a small house site, preparation of a site plan to be attached to the land grant documents, legal documentation and registration of title deeds. The HYK had been consulted on and supported the trial scheme. It was estimated that the processing time could be shortened by five to six months under the trial scheme. The contractor fee of $22,000 was arrived at by an open tender and was considered reasonable. The administrative fees per application for a free building licence and a private treaty grant of Government land were $5,400 and $9,000 respectively. These fees represented only 20% of the total cost for processing a small house application.

16. In this connection, a member opined that an applicant might have no alternative but to opt for a trial scheme if he wanted to have his application to be processed more quickly within the time frame under the contract. Another member remarked that the trial scheme should be an interim measure to expedite the processing of small house applications and the long term solution was to simplify and streamline the existing procedures.

17. Noting a drastic increase in the number of applications submitted during the period from April to December 1997, members urged the Administration to take into consideration the projected number of applications in the review of the trial scheme and the overall review on the Small House Policy. PAS/PEL(L) clarified that the existing outstanding cases constituted a number of re-submitted applications which had been rejected on grounds such as inavailability of land and objections from concerned parties. Nevertheless, the Administration would take note of members’ views in the review of the Small House Policy. PELB

VI Any other business

18. A member enquired about the decision of the Administration on his request raised at an earlier meeting to conduct joint consultancy studies and draw up joint strategies with the Shenzhen authorities on wetland compensation. PAS/PEL(L) undertook to refer the matter to the relevant department for a response. PELB

[Post-meeting note : the Administration's response was circulated to members vide PLC Paper No. CB(1)1045 on 3 March 1998]

19. The meeting ended at 12:40 pm.

Provisional Legislative Council Secretariat
1 April 1998