CONFIDENTIAL
機密
XCC(76)85
(a)
16
(b)
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the grants now paid by the Government towards the management cost of Group B estates should cease after the current financial year, but a grant should continue to be paid in respect of cottage areas; and
the Authority should repay all borrowings after 1st te April 1976 from the Development Loan Fund spread over 40 years (with a grace period for construction).
As regards paragraph 15(a) (cessation of grants for Group B estates), the implication is that the deficit in respect of Group B estates will be met within the total resources of the Authority. The Authority would, as a result, have less cash to apply towards its building programme but, as future borrowings from the Development Loan Fund will be interest-free, the Authority would not be in a disadvantageous financial position. There is the further point that this arrangement would enable the Authority to meet its financial objective, which is defined in section 4(4) of the Housing Ordinance as follows:
(4) The policy of the Authority shall be directed to ensuring that the revenue accruing to it from its estates shall be sufficient to meet its recurrent expenditure on its estates"
44:
But there is the point that Group B estates include, for administrative reasons, cottage areas. The income accruing from the cottage areas arises from permit fees for the use of land and for which, unlike rent, there is little or no scope for periodic increases. Because it is highly unlikely that the Authority will balance income with expenditure in respect of cottage areas, it is proposed that the Government should continue to pay the Authority a grant based on the difference between income from permit fees and recurrent expenditure on the management of these areas. Also, there is a possibility that the rate payment in respect of the Group B estates will increase with effect from 1st April 1977, as a result of the recent revaluation. In this event, it is proposed that a special rate subsidy should be paid to the Authority to meet the increase, until such time as Group B rent levels are further raised.
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As regards paragraph 15(b), given that the Authority is the Government's agent for implementing the Government's public housing programme, there is no question that its net cash requirements to finance new estates will not be met. In the circumstances there is no good reason why it should not repay its borrowings made from 1st April 1976. The requirement to repay its borrowings should not put the Authority in any difficulties, because provision is already made for depreciation and the term for repayment is generally no different from the term for depre- ciation already applied. Finally, it is proposed that repayments should
CONFIDENTIAL #
機密