The CCAC has released the results of an inquiry into the land plot at Rua dos Pescadores where buildings no. 15 and 17 (commonly known as the “Leather Factory”) were located. In response to the fact that at that time the Administration accepted the maintaining of the status of the building already constructed on the grounds that it should not be subject to the declaration of invalidation arising from the corruption case of the former Secretaryfor Transport and Public Works Ao Man Long and the fact that the land use period was approved to be extended in and after 2018, the CCAC believes that they, to a certain extent, met the principle of useful and effective use of land and there were no apparent administrative illegalities or irregularities. The street alignment plan, on which the construction of the relevant building was based, was issued four years before the entry into force of the Law of Urban Planning, and there was therefore no situation of false starting or circumventing the law as such. Nevertheless, in the CCAC’s opinion, as the Administration did not, when calculating the premium for the aforesaid land plot, deduct the amount of the premium according to the amount already paid for the fulfillment of the original concession contract but according to a hypothetical amount of the premium payable by the current concessionaire if it had completed the architectural project of the previous concessionaire, such practice lacked consideration of logical reasonableness and fairness of interest distribution. Therefore, public works departments are suggested to seriously review the relevant practice and step up efforts to consolidate the premium regime in force so that the actual market value of the land of Macao may be reflected on the premiums and the precious land resources of the Macao SAR may be fully protected.
According to the letters sent to the CCAC by different associations in 2018, the matters queried included the non-declaration of expiry of the concession in spite of the expiry of the land use period of the land plot at the Leather Factory, the premium calculation for the land plot for repurposing and the circumvention of the Law of Urban Planning. In response, the CCAC specifically formed an “inquiry group” to follow up the case. The CCAC points out that the concession of the aforesaid land plot on long-term leasehold was a definite concession and the buildings of the Leather Factory were constructed there, with Chong Fok Technical Service (Macau) Co. Ltd. being the owner of the relevant right, who applied for a change of the land purpose to a residential-cum-commercial complex in 1989. Later, the land plot experienced concession change for two times, with Nam Fong Construction & Real Estate Co. Ltd. and Trust Art Investment and Development Co. Ltd. being the concessionaires respectively, during which the concession contract was revised for several times and the land use period was extended. In 2006, the current concessionaire Trust Art Company was given a green light to construct two 26-storey towers over a six-storey podium. Later, the corruption case of Ao Man Long came to light, and the Court of Final Appeal, in 2009, decided that the construction project at the land plot concerned was related to a project approved by Ao Man Long in exchange for bribes. The then Land, Public Works and Transport Bureau (DSSOPT) immediately declared the relevant works permit invalid, despite that 15 floors of the building had been built at that time. In the same year, the then DSSOPT, on the grounds of the principle of good faith, authorised the maintaining of the structure of the building that had been built by Trust Art Company and went forward with preparing and issuing a new street alignment plan. Trust Art Company submitted a new application in 2014 and it was given a green light in 2018 to revise the land concession contract for the construction of a residential-cum-commercial complex with two 13-storey towers over a six-storey podium.
According to the CCAC, despite that the previous concessionaire and the current concessionaire of the land plot, that is, Nam Fong Company and Trust Art Company, obtained authorisations to extend the land use period several times between 1993 and 2003 and between 2004 and 2014 respectively, both of them failed to complete the land use. The Administration however did not rigorously enforce the fines set forth in the contracts or declare the recovery of the land plot concerned. The CCAC points out that the habitual practice of the public works departments of not recovering land in the past had all along been a subject of criticism. With the entry into force of the new Land Law in March 2014, the Administration pledged that the regime and the provisions pertaining to the use of land would be rigorously enforced. In 2018, rules on expiry of the land concession and recovery of the land plot were added to the revised concession contract for the land plot at the Leather Factory. In March 2022, a use license was issued by the then DSSOPT to Trust Art Company upon completion of the use of the land plot by the latter within the respective land use period. Therefore, violation of the law or non-compliance with the contract clauses has not been found.
Moreover, regarding the declaration of nullity of the relevant administrative act following the conviction in Ao Man Long’s case, at that time the Administration considered that if the completed building on the land plot at the Leather Factory had been removed, it would have involved resources and costs and had negative environmental impact. The Administration believed that the maintaining of the status of the building already constructed was better for the common good. The CCAC considers that the decision made by the Administration at that time enhanced the use of public land to a certain degree and conformed to the principle of useful and effective use of land. So far, the CCAC has not found any signs involving crime and cannot identify any apparent administrative illegality or irregularity.
The CCAC also proved in the investigation that the building proposal for the land plot at the Leather Factory approved in 2018 was made based on the building requirements laid down in the official street alignment plan which was remade in May 2010. The timing was apparently four years earlier than the implementation of the Urban Planning Law and even earlier than the submission of the relevant bill for legislation. Although afterwards it was necessary to make several applications for street alignment plan within the validity period of land use due to revisions of the building proposal, there was no change in the building requirements. Therefore, the CCAC believes that the competent authority neither made a false start of the planning nor circumvented the Urban Planning Law.
Regarding the method of calculation of the premium of the land parcel, the CCAC considers that although the then DSSOPT did not make any mistake in the application of law, the department lacked consideration of reasonableness and fairness of interest distribution regarding the logic on the calculation of deduction of the premium required to be paid. The CCAC found in the investigation that Trust Art Company requested for revision of the land concession contract for the land plot at the Leather Factory in 2014. The then DSSOPT calculated the amount of the premium in line with the land value in 2014 based on the amount used as basis for calculation of the value of the premium for that year together with the gross construction areas for the purposes in the revised plan of Trust Art Company and the formula provided for in the Method of Determining the Amount of Concession Premium. Then the department calculated the amount of the hypothetical premium that Trust Art company should have paid if it, in 2014, had completed the building proposal planned by Nam Fong Company in 1996 based on the base value and formula for premium calculation in 2014. Since the latter subtracted from the former equalled to a minus amount, the department came up with the conclusion that Trust Art Company did not need to pay any additional premium for the new building proposal.
The CCAC considers that Nam Fong Company already fully paid the premium set in the original land concession contract in 1995 and the amount was calculated based on the economic background at that time, while the land concession contract was also in line with the building proposal approved at that time. Since the revision of the building proposal of Trust Art Company was approved in 2014 and the socio-economic situations have significantly changed, regardless of other objective factors that benefited the concessionaire or sub-concessionaire of the land plot, the premium paid under the original contract should be the deduction amount applied to the calculation of the premium to be paid under the revised land concession contract instead of the hypothetical premium that Trust Art Company should have paid for the building proposal of Nam Fong Company.
The CCAC reiterates that land concession contracts are by nature administrative contracts such that relevant departments should ensure that the concession contracts are strictly implemented in order to safeguard the public interests that relate to land. Moreover, one of the purposes of charging the premiums is to safeguard the interests of the local region and serve as a form of sharing of profits that are expected to be earned in the development of the building projects by the concessionaires. Therefore, the practical calculation methods for the premiums should be determined by the visions and purposes of charging the premiums, and based on the then socio-economic situations when the revised plans for the buildings were approved and the expected profits to be earned rather than just the safeguard of the stability and safety of the land concession contracts. It is only through this method that the spirit of legislation related to the land laws and regulations and the public interests can be realised and safeguarded to the greatest extent. Otherwise, the land concessionaires will propose to redevelop the land only after the value of the land has been constantly increased. Along with the aforesaid logic of deduction to recalculate the premiums by the public works departments, the consequence like land hoarding will inevitably be led to and the public interests that relate to land will unavoidably be harmed.
The CCAC stresses that Article 155 of the new Land Law introduces the formula for calculating the premium under the circumstance of transfer of concession, in which the amount to be deducted corresponds to the amount of premium which has actually been received by the SAR Government and the difference calculated refers to the amount of premium that should be paid for the newly revised concession contract. This provision, which can be considered as a milestone for combating the act of land hoarding, hopes to reduce the situations where the original land concessionaires did not use the land during the effective land use periods in a bid to seek to make excessive profits through the transfer of the land concession contracts when the value of the land increases. Therefore, the relevant departments indeed have to seriously reconsider reviewing the concept and relevant calculation logic for the premiums, among others, so that the value of the premiums can, as much as possible, approximate to the market value of the land.
The CCAC also points out that for circumstances that have not been expressly provided for in the law, the public works departments used to act according to the internal unwritten rules or instructions, such as the alternative method related to the calculation for the street shadow area and the rules for deducting the premiums, among others. However, the methods and rules to handle situations that are closely related to the overall interests of the society and public safety should not be just determined by the internal discussion and decision made by certain departments. Instead, they should be presented in the form of legal norm in a general and open way such that the credibility and transparency can be achieved.
The CCAC has already reported to the Chief Executive on the results of the investigation and suggested to urge the public works departments to, through the case of the land plot at the Leather Factory, attach more importance to the management of land and adhere to and implement the land use regime provided for in the new Land Law. They should also seriously consider reviewing relevant practices including the calculation methods and the need for the logic of deduction. They should incorporate the internal instructions or the methods or instruments that are accustomed to use in the legal framework and step up efforts to consolidate the premium regime in force so that the actual market value of the land of Macao may be reflected on the premiums and the precious land resources of Macao may be fully protected.