In December 1984, pending the execution of the formal Development Agreement, the Council entered into a binding agreement with a consortium company, Polytown Company Limited, a wholly-owned subsidiary of New World Development Company Limited, for the development of a Convention and Exhibition Centre subject to the terms and conditions contained in the Particulars and Conditions of Grant.
The formal Development Agreement between the Council and Polytown Company Limited was signed on 19 December 1985 and this includes the following provisions:-
a) in consideration of the development of the Convention and Exhibition Centre in accordance with the terms of the Development Agreement, the Council has agreed to assign to Polytown Company Limited, subject to the fulfilment of certain conditions, a substantial portion of its interest in the land granted by the Government, representing the commercial portions of the development, whilst the Council will at all times retain ownership of the Convention and Exhibition Centre itself;
b) Polytown Company Limited has agreed to provide the Council with the use of three floors of office space in the Office Tower forming part of the commercial development of the Project for a period not to exceed the period of 75 years referred to in the Particulars and Conditions of Grant and on a rent free basis;
c) under the terms of an Operation Agreement whereby Polytown Company Limited will manage and operate the Convention and Exhibition Centre, Polytown Company Limited has agreed to pay to the Council, with effect from the date of substantial completion of the Convention and Exhibition Centre and throughout the period of the Operation Agreement, an annual fee of USD650,000 or 5% of the gross income received by Polytown Company Limited from the operation of the Convention and Exhibition Centre, whichever is the greater.
In regard to the provision of three floors of office space in the Office Tower for use by the Council on a rent free basis as mentioned in Note 9(b) above, the obligation of the consortium is satisfied by an agreement made on 13 September 1990 to exclude from the Agreement for Assignment the requirement for the Council to assign floors 36, 37 and 38 in the Office Tower. The value of these three floors has been included in fixed assets at a nominal cost.
Assets and liabilities relating to the Convention and Exhibition Centre are included in the appropriate balance sheet captions. Income and expenditure transactions relating to the Centre are readily identifiable in the Council's books and the surplus, being moneys received and interest income derived from the fund less expenses in connection with the Centre, will be recorded in this account until such time as it is determined how the Centre is to be legally structured and managed.
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