05-JUL-1996
11:05
FCO FIANCE DEPT
2 July 1993
B Marr Esq
AEF
HM Treasury
Parliment Street
London
SW1P 3AG
P.00
210-6090
HONG KONG: NEW CONSULATE GENERAL
I have
Your letter dated 24 June asked me a number of questions on the financing arrangements with the British Council. answered your points in the order you raised them.
The British Council will be expected to pay a proportion of the ground rent (although this is relatively small) and they will pay a share of the running costs. The background is that the funding is on the principle of co-location and as such contains an element specifically to provide for the British Council's part of the building. The principle of co-location was set out in the Foreign Secretary's letter to the then PM dated 17 June 1990. [+ ref. to letter from PM to be supplied by HKD] The capital funding was listed under the FCO heading given that the FCO were clearly in the lead on this co-location project.
You pointed out that the British Council currently have an office in Hong Kong (Easey Building). The Council do not own this building but pay rent under a number of leasing arrangements (various agreements apply to different floors that are occupied) and they are all timed to end with the opening of the new building. The rent they would pay if they were not housed in the new building is reflected in the DCF of the rent option sent to you by Alex Smith in OED on 7 June. Currently their rent and running costs are relatively low and the financial benefits of low ground rent are expected to be largely offset by the running costs of the new building and compound.
OED/hongkg, bc,tsy
1
TOTAL P.03
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