More Hong Kong cultural facilities are closing: the President Theatre in Causeway Bay, and concert and other spaces at the KITEC building in Kowloon Bay. And developers might scrap a planned non-profit performing arts space at a new project in Causeway Bay…
…last month, [Hysan and Chinachem] announced that they could be forced to drop the cultural space in favour of a park because the Lands Department will charge a commercial land premium for an arts and cultural venue.
The cinema will presumably become stores selling luxury garbage no-one wants, while KITEC will be replaced by office blocks, as if we don’t have enough empty office space already. And developers apparently panting with desperation to promote culture should always be treated with suspicion.
But the three stories are a reminder of the never-ending absurdity of making space as expensive as possible. The Caroline Road case specifically reminds us that it is hard to have ‘nice things’ in Hong Kong urban areas because the government requires developers to pay land-development rights – ‘premiums’ – for attractive features or facilities.
One small but illustrative example is a walkway from a large office block over a multi-lane highway to a shopping mall in Admiralty, which in turn links to more walkways to other parts of the district. Rather than just walking directly into the mall, users must go down outdoor stairs, into the mall’s street-level entrance, then back up an escalator to continue elsewhere. The landlord (I heard) refused to build an entrance off the walkway because the government demanded a premium.
The premium serves as an up-front, one-off tax on the increased profits the landlord could earn. In the Admiralty case, there are no profits, nor tax revenue – just inconvenience for pedestrians. The obvious answer would be to simply collect recurrent taxes on higher profits as the landlord makes them. But bureaucrats are obsessed with collecting big premiums (which, perversely, are earmarked for infrastructure projects, however unnecessary.)
Because of this, bureaucrats see concessions on premiums as a subsidy, which in effect they are; not surprisingly, developers have a long tradition of abusing such giveaways. For example, the government offers a lower premium, but in return the developer must provide some public space – and then when the new building is opened, that space is mysteriously hard to find and/or leased out to a business. Bureaucrats and developers are trapped in a cycle of urban-planning assholery, and Hongkongers end up with a nasty living environment. (We’ll leave the Transport Bureau to one side here.)
When they’re not issuing blood-curdling warnings about national-security threats in our midst, senior local and Beijing officials insist Hong Kong must ‘focus on the economy’ and embrace a ‘new mindset’. Every time, I wait to hear how they will abandon this stupid land policy. Because if you really want to reinvigorate the economy, you need to break away from the system that lets landlords capture so much of the wealth – and that’s where you’d start. Until then, talk of focus and mindsets is empty.