TNAG-0961-FCO40-1180-Legislation-for-piers-and-harbours-in-Hong-Kong-1980 — Page 5

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G.S. 84

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XCR(80)64

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Since the majority of such piers do not form separate rating assessments and rental evidence is limited, the Secretary for the Environment is satisfied that a strict valuation approach to the question of pier rentals is not practicable and there is no more suitable alternative to the method adopted which has been to update pier rentals by comparison with the twelvefold rise in industrial land prices since 1964. This produces an average initial annual rental figure of $150/m2 which does not seem unduly expensive taking into account the limited number of these piers and the considerable advantage of exclusive use conferred on the present lessees. It is intended that the same method will be adopted when reviewing the rentals in future. Parts I and II of the schedule at Annex A also give a comparison between current annual rentals and proposed annual rentals.

Proposals

I Annual/Monthly Tenancies

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The 10 piers scheduled in Part I of Annex A are either (5 piers) subject to an agreement to surrender by 4th October 1983 as a part of a land exchange or (5 piers) will be affected by reclamation works within the next two to three years. The five piers to be surrendered as part of a land exchange can reasonably be put on to "annual tenancies" at the revised rental, as their term is well defined, and the Company will have the choice of whether to continue on revised terms or to discontinue their use. The three piers in Western District will have to be removed in the course of this year, and the lessees could legitimately object to a substantial increase in rental at this stage. For this reason it is proposed that they should be permitted to hold over on their existing leases until they are required to be removed. In the case of the two piers affected by the East Island Corridor, which are expected to have to move in either 1981 and 1982, some abatement of the standard rent seems reasonable, and it is proposed that in these two cases rent should initially be assessed at 80% of standard rent i, e. at $120 per m' per annum, provided that the lessees accept an obligation to remove the piers without compensation, on due notice being given. The lessees should be offered an annual tenancy for a year certain with provision for renewal for a further year or on a monthly basis.

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The conditions of both annual and monthly tenancies will be carefully worded to ensure that the tenant will have no right to object to or claim compensation in respect of any public works or reclamation in the vicinity of the pier. The tenant will also be obliged to repair and maintain the pier at his own expense. No compensation would be payable for the pier structure on termination of the tenancy.

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