[sustran] Re: innovative funding for public transport

Craig Townsend townsend at central.murdoch.edu.au
Wed Apr 5 10:47:47 JST 2000


Kaarina,

For a quite comprehensive description of instruments and policies in Hong
Kong (like Singapore a somewhat unusual case in that almost all land is in
public ownerhship), see:

Dimitriou, Harry T. and Alison H.S. Cook. (eds.) 1998. "Land-Use/Transport
Planning in Hong Kong: The End of an Era". Sydney: Ashgate. 374pp.

You will find some useful information in a number of chapters, including
"Constraints and opportunities of planning the Mass Transit Railway" by
Timothy V. Runnacles, Nigel G. Wilson and Edward C.T. So: 

p. 137 "In the overall context of the opportunities generated by Hong
Kong's transport system, it could be contended ... that the government is
the principal beneficiary of urban rail development. This is because the
government owns two railway corporations that not only have solid track
records of successful operation and profitability, but which also account
for a great deal of associated valuable property."

A chapter on policy and planning responses by the volume's editors notes
that: 

"...no other city in the capitalist world possesses the kind of control
over its land use as the Government of Hong Kong. The city enjoys this
advantage by virtue of almost all land in the territory being Crown Land
(i.e. land in public ownership). This places the Hong Kong Administration
in a position to confer leasing rights to the private sector from which it
collects substantial rent and development premiums. [F]ew cities in the
world subsidise the housing of their inhabitants to the same degree as Hong
Kong. About half of the territory's inhabitants reside in public housing,
and because such housing, is often provided in new towns or estates that
are equivalent to city populations in other parts of the world,
theoretically this enables government planners to coordinate land-use and
transport planning efforts more easily..." 

Also, from the chapter "Institutional planning framework and effective
land-use/transport planning" by Colin J. Arnott:

p. 304 "In transport, the two government owned railway corporations, the
KCRC and MTRC, have become increasingly important to the territory's
development strategy as greater emphasis is placed on rail links which have
been recommended in recent studies to relieve pressure on the road system.
... The planning, building and operation of urban railways by the MTRC and
currently, by the KCRC has proved to be a significant force for change in
the implementation of land use planning and development in Hong Kong. ...
The MTRC's remit, financial structure and development powers have combined
to make the Corporation a successful property developer and planner on a
significant scale in its own right..."

p. 306 "In Hong Kong, the adoption of the Crown Land Lease system which
separates the ulimate title of land from the right to develop, own and
occupy a building on that land, has increased the importance of the process
of land management and disposal. In public investment terms, however, the
Hong Kong government has had its greatest impact on land development through:

-land formation and assembly which is taken to include the formation of
land for development through reclamation and the assembly of existing land
for development, redevelopment or renewal; and 

-transport infrastructure and other service provision for new reclamation
areas and for the existing urban and New Territories areas. Transport
investment is the most important of these, in terms of the impact on
development, including rail, road, port and airport investment but,
arguably, the provision and improvement of environmental services to, for
example, older industrial areas, also has a potentially important role."

p. 307 "In Hong Kong, there is a greater emphasis on market returns on
public investment (e.g., from the land sales programme, new MTR/KCR rail
investments, the container terminals etc.). However, such investments are
also expected to provide 'welfare' benefits, including environmental
improvements, renewal of poor housing stock and so on. ... In Hong Kong, it
is ...insitutional arrangements which have been instrumental in the success
(or failure) of public investment in land development."

p. 310 "In practice, in virtually all 'so-called' developed nations it has
been recognised that the process of land assembly and redevelopment of
urban renewal areas must be subsidised. Mechanisms have proliferated and
now include:

-the direct grant aiding of private developers;

-the use of public sector financial assistance to 'leverage' finance from
private/public sector consortiums;

-the issuing of development or infrastructure bonds by public sector
agencies providing tax breaks for private investors; and 

-the assembly of sites and their clearance, reclamation and servicing by
the public sector for disposal at less than reclamation costs."

p. 314 "...it has been emphasised that, as well as providing a balanced
sustainable transport solution, investment in modern mass transport systems
has a significant impact on the economic development of cities. Moreover,
the benefits of this relationship can be maximised for the financing of the
infrastructure itself, for stimulating urban development and to meet wider
economic and social development policy objectives. ... the experience of
Hong Kong's MTR is one of the world's leading examples of stimulating urban
development and simulataneously meeting wider economic and social
development policy objectives. It is important to note once again, however,
that it is the institutional mechanisms and organisational arrangements for
mass transit development in Hong Kong that made this possible, and resulted
in the MTR having such an important influence on land development. ... The
direct impact on development by MTRC its development partners, at and
around its station sites, has been substantial. In the existing urban area,
the mass transit railway has led to the development at nineteen stations
and depot sites of nearly 200,000m2 of office space, over 300,000m2 of
retail space, and more than 31,000 flats."

p. 316 "Even for a system which claims to enjoy the highest patronage rates
and fare affordability levels in the world, it is important to recognise
that the growth of the MTR system has only been achieved through the
ability to cross-subsidise income from rail operation and property
development. ...it is essentially the broad concept of 'value capture' that
represents the hidden engine of success. Through the establishment of a
public transport and development agency - such as the MTRC - with access to
land assembly powers to secure the infrastructure and property development
rights at existing use values (so 'capturing' the development benefits to
cross-subsidise transport investment within the same agency) and with the
supporting mechanisms in place, Hong Kong has arrived at an extremely
effective formula for developing and financing its rail expansion
programme. In the medium to long run, this could prove critical to
environmental protection efforts and to countering the inevitable forces of
motorisation."
________________________________________________
Craig Townsend
Institute for Sustainability & Technology Policy
Murdoch University
South Street, Murdoch
Perth, Western Australia 6150

tel: (61 8) 9360 6293
fax: (61 8) 9360 6421
email: townsend at central.murdoch.edu.au



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