G.S. 166
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2
projected profit on the sale of the completed development after deductions for the following:
(a) construction costs (including
substructure/foundation costs);
(b) finance charges on loans taken out
to meet the above costs.
There is no land acquisition cost involved since each owner will have effectively exchanged his land for a share in the scheme. The Corporation will pay the premium for the Crown land which will not be a charge on the development either directly or indirectly before the division of the profits. All the owners, save one, have accepted this scheme in principle, the only outstanding point being the calculation of interest on the construction costs. Although the scheme will result in the landowners (including the Corporation), as shareholders in the development, having to meet the cost of constructing the concourse, they will share in the profits to be derived from the development of. the overall site. The agreement reached between them and the Corporation is therefore deemed to be reasonable as it gives all parties a fairly apportioned share of the development profits.
4.
The owner of 170-174 Des Voeux Road Central did not accept the terms of the agreement detailed above and put forward a counter-offer proposing that before apportioning profits:
5.
(a) the estimated market value of the
combined site be deducted; and
(b)
the development be charged interest on the combined land value at the rate of 15% for the duration of the construction period.
The effect of this approach would be to diminish the profit to be divided between the owners and the MTRC and at the same time increase the private owners' share of these profits. It also proposes that the balance of the projected profits be used to pay the construction costs and associated charges.
6.
This approach has been rejected by the MTRC as being unrealistic, its view being that the developer must look to recover construction costs and associated charges from actual sales proceeds. The MTRC believes that if the amount of the proceeds is to be diminished by a land value even without any additional allowance for interest, there may be insufficient proceeds to cover the costs of the development.
CONFIDENTIAL
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