TNAG-0669-FCO40-818-Policy-on-housing-and-resettlement-in-Hong-Kong-1977 — Page 146

G.F. 323

CONFIDENTIAL #2

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10 -

Criteria and Procedure for Joint Venture Schones

16.

As regards paragraph 3(c): a joint venture with a private suctor developer to build flats should satisfy the following criteria -

17.

(a) the scheme must serve the purposes

(b)

흐흐

of promoting home ownership in the target income group;

it must be simple to operate;

(c) the developer should be given a

reasonable deal but he must not be absolved from 11 the risks he usually takes;

(a)

(G)

it must offer the Government adequate consideration for its investment;

developers can be selected competitively.

A scheme meeting these criteri would revolve round a contract, entered into after appropriate tender procedure, by which the Government provides sites and the developer builds on them to produce suitable flats at pre-determined selling prices. Sale prices must be fixed, for any arrangement that allows for price. fluctuation (to meet cost escalation or to maintain 1 profit margin) would tend to frustrate the intention of producing flats within the appropriate price range. As the developer would have to face an unusual risk of having to build flats in accordance with greed specifications and selling them at fixed prices unusual in the sense that he would not incur a risk of loss through fixing his sale prices ahead of development if he were buying land from the Government under auction arrangements he should be absolved from it by way of a guarantee by the Government that all his flats would be bought within à stated time limit - either by the Governm nt's nominated buyers or by the Government itself. This guarantee is attractive to developers, while the Government would incur little risk if it were fairly certain, first, about the size of the home ownership market and, second, that the flats would be suitabl. for that market. On the other hand, the developer should not be placed in an unusually advantageous position or be absolved from normal commercial risks. This situation could arise if a developer were to secure 1 contract

/(a)

CONFIDENTIAL

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