TNAG-2968-FCO40-4247-Future-of-Hong-Kong-British-Consulate-General-inclusion-of--1993 — Page 22

7.

6%

understate the return Treasury would expect us to aim for by two elements of cost. The first is depreciation which can be remedied by adding in 2(ii) above. The second is a return on the land value, which (though provided free) has a worth that the Treasury would except to be recognised in any charge to a private market. I have copied this minute to Mr Smith, OED, for his comments and for his estimate of the site's worth in order for the figure for land return to be calculated.

3. In summary the cost options are:

(i)

the commercial rate of £56 150 -

preferred

depreciation plus capital return:

(ii)

(a) £6 838 + £27 352 = £34 190 + land return

defensible

********

£27 358 + land return

(b) £6 838 + £20 520

probably defensible

(iii) capital return:

(a) £27 352 - very difficult to defend

(b) £20 520 very difficult to defend

-

4. We need to remember that there is no lost opportunity cost in this case ie if we do not reach agreement with the Chamber the offices will stand empty and we will have no income from them.

5.

When you have sounded out the British Chamber of Commerce, you should consult Mr Popplestone again because he has the formal responsibility for agreeing to cases such as this.

Ala Mootte

A.J.Wootton

RFD

OAB 2/119

210-6090

17 November 1993

CC:

OED/hongkg, chamcom

Mr Twigg, Joint Directorate Mr Brinkley

Mr Popplestone

Mr Smith

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