Disneyland Comes to Lantau:
Hong Kong's Latest Mega - Development
Disneyland Comes to Lantau:
Hong Kong's Latest Mega - Development
The government recently announced that it has agreed to join with the Disney Corporation in constructing a Disney designed theme park and destination resort at Penny's Bay on Lantau Island. Assuming it does proceed, the park will be known as Hong Kong Disneyland (Disneyland). At the time of writing, the agreement remains subject to approval by the Executive Council, the Legislative Council and the Board of Directors of Disney Corporation. (As discussed briefly below, we might also assume that the project is subject to the issue of an environmental permit under the Environmental Impact Assessment Ordinance (CAP 499) ("the Ordinance)). From the press releases the government has issued and the general tenor of statements made by the officials, it seems most probable that at least in one form or another Disneyland will become a fact of Hong Kong life. It is therefore worth considering at this early stage some of the projected statistics of the project, which we have taken from various government press releases.
The Development
Disneyland will be constructed in two phases. Phase 1 will cover 126 hectares at Penny's Bay. Provision will be made to enable this site area to be expanded to 180 hectares to allow for Phase 2 at a later date.
Phase 1 will involve construction of the kind of Disney theme park already established in the USA, Tokyo and Paris. Attached to the park will be constructed a "Disney theme" resort hotel complex together with retail, dining and entertainment facilities.
Phase 1 is expected to be completed by the year 2005. There are no details or time-frame given at this stage for Phase 2 or any subsequent phases of the development, other than making provision for the additional land.
Taking into account infrastructure and a special feature reservoir/recreational lake which will be constructed as part of the government's contribution to the project, the total site area of the project will be 280 hectares. So it is a very large development project in terms of land usage, as well as in economic terms. The development will be undertaken by a joint venture company (JVC) in which the government and the Disney Corporation will be the initial shareholders.
Infrastructure
To entice the Disney Corporation to join in establishing Disneyland the government will commit to constructing certain essential infrastructure to support the project, should the agreement be ratified and the project proceed. At this stage only very general details of the infrastructure requirements are known. The major works, which will cost the government approximately $13.6 billion, will include:
Key Financial Features
Hong Kong's financial commitment to Disneyland will be approximately $22.45 billion. Thus, the project as a whole can truly be categorized as a large-scale development, although not quite in the class of Hong Kong's new international airport and its associated infrastructure.
This broad figure commitment comprises:
The actual direct construction costs of Disneyland itself are estimated at today's prices at $14.1 billion which will be financed by an $8.4 billion debt and injection (in a pro-rata ratio) of $5.7 billion equity. The JVC's total initial issued capital will be $5.7 billion, comprising the government's contribution of $3.25 billion and Disney Corporation's contribution of $2.45 billion. Once Disneyland is operating, both the government and Disney Corporation will be permitted to sell shares to third party investors. The government will be able to sell all its shareholding should it wish to do so. However, Disney Corporation will be required under the terms of the Agreement to retain a minimum holding of $1.9 billion shares (at $1.00 per share) at all times.
Land Component
The government will receive from the JVC a land premium payment of about $4 billion, being the estimated pro-rata cost of land formation and land reclamation costs associated with creating the site. Payment will be by way of issued subordinated equity shares to the government. The site will be leased to Disneyland for 50 years with a right of renewal for a further 50 years.
Economic Advantages of Disneyland
The government anticipates Disneyland in Hong Kong will "be a tremendous tourism, entertainment and recreation asset for the community and future generations". More specifically, anticipated direct economic benefits from the project are likely to include
It is anticipated that about 5 million visitors will be attracted to Disneyland in the first year of its operations. This figure will increase to approximately 10 million per year after 15 years. The number of tourists visiting Hong Kong from other countries will increase once Disneyland is established, the government estimates. Approximately 1.4 million additional international tourists will visit Hong Kong in the first year of Disneyland's operation, rising to 2.9 million additional tourists over 15 years.
Additional income generated by increased numbers of visitors to Hong Kong should reach $8.3 billion in the first year of operation of Disneyland and approximately $16.8 billion per year after 20 years.
Tourism Strategy
The government sees the advent of Disneyland as an integral and logical component of its overall tourism strategy. That strategy includes other significant developments such as the creation of an international wetland park at Mai Po Marshes (although it is to be hoped, in the interests of responsible conservation of this RAMSAR site, that the numbers of visitors anticipated for Disneyland will not be reflected in the Mai Po Marshes project), construction of a cable car link between Tung Chung and the Big Buddha on Lantau Island, and supporting the introduction of a $500 million "adventure bay" attraction at Ocean Park.
Environmental Issues
With a development project of this size clearly many significant environmental impacts must be considered likely or at least within the scope of reasonable possibility, and therefore must be the subject of responsible consideration both from the point of view of avoidance or, in certain circumstances perhaps, minimization and mitigation. In this edition we shall not attempt to address any of those potential environmental issues specifically or in detail. Should the project proceed, later editions may focus on such issues.
However, the broad notion of significant environmental impacts from the project is most relevant at this early stage because the Ordinance requires the parties and, eventually, the Director of the Environmental Protection Department, to research, analyse and report on the range of potential impacts before construction of the project in fact commences. The project falls within Part 1 of Schedule 2 of the Ordinance in that it is "a theme park or amusement park with a site area of more than 20 hectares in size"; (this category of designated projects was added in 1999, perhaps in anticipation of the Disneyland project). Therefore an environmental permit must be obtained before construction of the theme park itself can commence: Section 9.
The Ordinance requires that the developer prepare a detailed environmental impact statement (EIS). The parties have indicated that this will be prepared and given to the Director within approximately 4 months. This seems to be a surprisingly short time within which to prepare what should be a complex and in-depth scientific document. However, we shall await publication of the EIS before commenting any further in that regard.
An issue which authors of the EIS will no doubt give particular attention to is the way in which operators of Disneyland propose to dispose of hard waste and sewerage so as not to impact the already pressured environment of the island. Based on the figures that the government projects, approximately 28,000 people a day will travel to North Lantau to visit Disneyland which must place considerable strain on not just infrastructure but also the surrounding air, water and land. Waste generated by the visitors is but one source of this environmental strain.
Obviously other issues will be prominent, including direct threats to ecologically important sites in the vicinity. Centres of heritage value will also have to be protected, such as the village communities of Taio, Tai Ho and Pui O.
The government has already committed funds to construction of part of the infrastructure development required for the project. There has been criticism, for example by Friends of the Earth, that this pre-empts the very purpose of the EIS and the procedures laid down under the Ordinance governing the application for an environmental permit, consideration of the application and the EIS by the Director and the public consultation (30 days) process. There are additional fears that under the agreement between the government and Disney Corporation penalties will be payable to Disney in the event of delays in completion of the government's component of the site and infrastructure works.
It seems apparent that as far as the government is concerned Disneyland will proceed irrespective of the EIS. That is, that the EIS will be treated more from the point of view of the mitigation of adverse environmental impacts than as the critical document determining the threshold question of whether or not the project should proceed at all. This is the approach of many governments worldwide, whereby an EIS is often viewed as a document to address and detail impact minimisation/mitigation measures, but not as a basis for concluding that there are grounds for refusing permission for the project in toto. Such an approach is also likely to be an inherent weakness of EIS legislation which requires the developer himself to prepare the EIS.
Under the Ordinance there is an avenue for the government to adopt a pre-emptive environmental approach to the Disneyland project, if indeed it does. It has the power to exempt a project from the provisions of the Ordinance, either totally or partially in respect of the Ordinance requirements and/or elements of the project itself. Given the vast size of Disneyland and its associated land works and infrastructure construction, and given that the site is an area where some of Hong Kong's remnant cultural and ecological treasures are found, it could well be that the government will need to rely on this exemption power to enable Disneyland to proceed.
The EDP
In this scenario, once again Hong Kong will be depending on the abilities and resources of the Environmental Protection Department (EPD) to monitor and contain any adverse environmental impacts of the Disneyland project. With its resources already severely stretched in monitoring various other environmental hot-spots, the EPD will need to call on all its resourcefulness and undoubted commitment to discharge effectively that responsibility.
- Our Advoc Associate, Fred Kan & Co, Hong Kong