Introduction

At the meeting of the LegCo Bills Committee on the Provision of Municipal Services (Reorganization) Bill on 27 July 1999, Members asked the Administration to provide information on the following:

1. the existing mechanism for determining the market stall rentals, the existing appeal systems; the proposed mechanism for LegCo Panel to monitor the fee revisions; and

2. the rationale of applying different regulatory requirements to public markets in Government and Housing Authority premises and markets in private premises.

This paper sets out the Administration's response.

Regulation of Public and Private Markets

2. Public markets are managed by the Provisional Municipal Councils (PMCs) and governed by the Public Market (Urban Council) Bylaws and Public Market (Regional Council) Bylaws (Cap.132 sub. leg.). The Bylaws mainly provide for the lease of market stalls and the proper management and sanitary maintenance of public markets.

3. It is the PMCs' policy that other than food premises in markets (such as fresh provision shops) which are licensed on food and environmental hygiene grounds, private markets, including Housing Authority (HA) markets which are operated on a commercial basis, should normally not be subject to any licensing control. Any nuisance or hygiene problem which the management of a private market fails to handle properly can be dealt with under the relevant environmental hygiene provisions in the Public Health and Municipal Services Ordinance (Cap.132).

4. Nevertheless, there is one private market, namely Luen Wo Private Market at Fanling, which is subject to licensing control by the Provisional Regional Council (ProRC) under the Private Market (Regional Council) Bylaws (Cap.132 sub. leg.) mainly for historical reasons. The market has a long history dated back to the pre-World War II period. It is not operated on a purely commercial basis as the market operator has been playing the role of a non-profit making organization serving the local community. The market management is therefore subject to some form of public supervision. For example, Bylaw 9 of the Private Market (Regional Council) Bylaws requires the owner of the private market to prepare annual accounts in such form as the ProRC may require and post the accounts together with any reports by the ProRC thereon in the market place for at least 7 days. Luen Wo Private Market will be phased out upon the completion of the Luen Wo Market (a public market) in 2001-2002.

Market Rental Policy of the Provisional Municipal Councils

5. The Provisional Urban Council (PUC) and ProRC each has different rental policy for public market stalls under their management. The market rental policy of each Council is summarised below.

(A) Provisional Urban Council's Policy

6. Market stalls in PUC public markets are normally rented out initially for a term of 3 years. The stall agreements are renewable subject to a review and revision of rental every three years. All stalls in the public markets in the PUC area are let out by auction with the upset price determined by the PUC having reference to the Open Market Rent (OMR) of the stalls as assessed by the Rating and Valuation Department (RVD). There are two types of auctions, namely open and restricted. In open auctions the upset price is normally set at 100% of the OMR. In restricted auctions, which are held pursuant to resiting exercise of hawkers or displaced market stallholders, the upset price is reduced and normally set at 75% of the OMR, subject to approval of the PUC Markets and Street Traders Select Committee.
7. In revising stall rentals, the PUC makes reference to the changes in the Consumer Price Index (A) (CPI(A)) preceding the renewal of the stall agreement and the OMR assessed by the RVD.

(B) Provisional Regional Council's Policy

8. The mechanism for setting the upset price of public market stalls in the ProRC area is the same as that of the PUC, except
that successful bidders are required to enter into a 4-year agreement with the ProRC which is renewable upon expiry at the rent level to be determined at the time.

9. Subject to the proviso that no stall agreement will be renewed at a rental lower than the existing rent, a market stallholder who has obtained his agreement through open auction may renew his agreement upon expiry at a rent set at 100% of the new OMR. As regards a market stallholder who has obtained his agreement through restricted auction, he will be offered to renew his agreement upon expiry at a rent to be determined on the basis of a formula which allows for increase by phases, depending on the percentage difference between the existing rent and the new OMR.

Existing Review Systems for Market Stall Rentals

10. The PUC and ProRC each also has different review system for market stall rentals. Both Councils allow a market stallholder who disagrees with the new rental upon renewal of stall agreement to put forth his reasons with reference to a set of assessment criteria and request RVD to review the OMR assessment. USD/RSD would notify the stallholder the result of RVD's review.

11. The ProRC has introduced another tier of review mechanism since May 1997. Should a market stallholder in the ProRC area still feel dissatisfied with the result of RVD's review, he may put forward reasons anew and lodge his submission with the ProRC's Market Stall Rental Review Sub-committee. RSD would present RVD's review result together with the stallholder's submission to the Sub-committee for consideration. Since its establishment, the Sub-committee has reviewed a total of 3 cases. It upheld RVD's review results in two cases.

12. Once the review result is available, the stallholder concerned would be asked to renew his agreement at the adjudicated rental, and the new agreement would take effect from the date immediately after the expiry date of the current agreement .

The Future

13. We intend to preserve the existing market stall rentals in force immediately before the reorganization and aim to harmonize the different public market stall rental policies in the urban area and the New Territories within two years after the reorganization. We shall keep the relevant LegCo Panel informed of our progress in this area. As regards stall rental review, we intend to adopt the one-tier review mechanism currently used by the PUC. In general, cases can be satisfactorily dealt with under that mechanism. There appears no strong need to set up a statutory committee as a second-tier review/appeal mechanism after the reorganization.

Constitutional Affairs Bureau
3 September 1999

Misce-marketrental