Category Archives: COC & VOCs

What is the “We Deserve Better Action Group”?

The We Deserve Better Action Group has suddenly appeared out of the blue. Following distribution of their flyer to all households in DB this past week, people are asking: Who and what are they?

We-Deserve-Better-Circular-Sept-2015

According to the We Deserve Better Action Group flyer, the key members are Francis and Carmen Chiu, Maggie Chan, Joe Law and Victor Riley.

These same people largely make up the Steering Committee of Love.Together@DB, a group funded by the developer of Discovery Bay, Hong Kong Resort Company Limited (HKR). According to an announcement by Tony Cheng of HKR at the COC meeting on 7 May, 2014, HKR allocated a total of $5 million to Love.Together@DB between 2012 and 2015.

6.7.6 Tony Cheng informed Members that in the past two years, HKR allocated $1.5 million annually to sponsor the Love.Together@DB community programme. In view of the most positive feedback from residents, HKR would allocate $2 million to fund the programme in the coming year. He thanked Simon Mawdsley, Francis Chiu and Maggie Chan for serving in the Steering Committee of the programme to offer advice on the types of events to be held in the past two years. In the coming year, they will continue to offer advice together with two new members, namely Mr. Victor Riley and Mr. Joe Law.

To put that amount into perspective, consider that HKR International (HKRI), the listed company that manages HKR, donated a total of $2.2 million to charity during the past two years. HKR’s donation to Love.Together@DB during that same period is almost 60% more!

Francis Chiu has been named frequently in publicity leaflets distributed around DB as the Convenor of Love.Together@DB. Both he and Maggie Chan are members of the COC.

Their involvement with HKR is a declarable relationship under the terms of the COC Declaration of Interest. The Declaration requires that members declare “any relationship of any kind with … any … company which has dealings with the City Owners’ Committee or Discovery Bay Services Management Limited.”

Whenever a matter involving HKR comes up at the COC, the Declaration would oblige Francis Chiu and Maggie Chan (as well as COC Chairman Simon Mawdsley) to declare an interest . Yet, no such declaration is recorded in any COC minutes.

The We Deserve Better Action Group’s flyer is laced with references to sabotage, obstacles, perpetual opposition, political stunts and fighting for the sake of fighting.

No one could object to the We Deserve Better Action Group’s efforts to strive for better. But why does striving for better have to be combined with such bitterness?

What evidence does the We Deserve Better Action Group have to support their claims, and who are these people who are “fighting for the sake of fighting?”

By making such unsubstantiated claims in a flyer distributed to all households in DB, whose interests is the We Deserve Better Action Group really serving?

Declaration of Interest by COC members

COC members deal with a wide range of financial matters, from review of budgets, to award of contracts, to relations between the developer (HKR), the Manager (CM) and the Owners (you and me).

Millions of dollars are involved. According to the audited accounts, the total income received by the Management Fund in 2013-14, mainly from management fees, was $169 million. This excludes renovations, which are billed separately. It also excludes internal transfers of some $19 million.

Some COC members have long considered it advisable that COC members sign a Declaration of Interest, given the duty that they have to other Owners.

For many years CM objected, stating that there was no such requirement in the Deed of Mutual Covenant (DMC). In 2011, the representatives of the Villages on the COC finally agreed to prepare a Declaration of Interest form, and encourage both COC and VOC members to sign the form on a voluntary basis. It was also decided that any COC member who wished to join a COC working group involving a major contract award would be required to sign the Declaration.

The approved form may be found here.

It has largely been left to the individual VOC chairpersons (who are all COC members) whether or not they inform VOC members of the Declaration of Interest. CM takes a hands-off attitude.

Indeed, both CM and HKR refuse to sign the Declaration of Interest. When challenged about possible conflicts of interest, HKR representatives have repeatedly said that no one has the right to prevent HKR from voting at a COC meeting.

This misses the point. A Declaration of Interest is not about depriving anyone of a vote. It is aimed at improving transparency and accountability at the COC, where many issues that impact the operation of Discovery Bay and charges levied upon Owners are discussed.

The Declaration of Interest has been been raised at a number of COC meetings since adoption, specifically at Item 3.4 on 28 March, 2012, at Item 4 on 7 November, 2012 and at Item 5.8 on 12 February, 2014.

It may be noted from the meeting on 28 March, 2012 that COC member Amy Yung sought transparency in the handling of the COC Register of Declaration of Interests, while COC member Francis Chiu raised privacy concerns.

At the meeting on 7 November, 2012, the COC Chairman confirmed that public release of the COC Register of Declaration of Interests would not contravene the Privacy Ordinance.

Nonetheless, the Register has never been incorporated in COC minutes, even when it has been presented by Powerpoint at COC meetings. Why is there such reluctance to release this information?

Make Work, Make Money

Scaffolding: A common sight around DB
Scaffolding: A common sight around DB

 

It is common around DB to see buildings clothed in scaffolding, as yet another village embarks on the once-in-seven-years renovation exercise. No other residential estate in Hong Kong carries out major renovations so frequently. Why do we renovate our buildings so often?

Because City Management (CM) tells us to. Renovations are a nice little earner for Hong Kong Resort (HKR), as CM charges Manager’s Remuneration on all expenses. A major renovation exercise can cost $30 million for a small village like La Costa (including houses), to over $100 million for a large village like Greenvale. According to the 2013-14 audited accounts, the gross expenditure for the management of DB last fiscal year, not including renovations, was $148.42 million. Hence, a major renovation exercise creates a significant bump in expenditure — and earnings for CM/HKR — for relatively little work for CM.

Manager’s Remuneration is set at 5% of expenditure, including all salaries, rents and contract expenses. CM presently rebates 2% on renovation expenditure.

CM encourages Village Owners’ Committees (VOCs) to embark on a new renovation exercise by advising that the mandatory seven-year inspection under the Deed of Mutual Covenant (DMC) is due, and then issuing a three-stage tender document that includes survey, tender preparation for renovation, and project management. If any VOC objects, CM advises that stages two and three are optional. Of course, the survey is always designed in a way that encourages the VOC to proceed to the remaining stages.

Perhaps even worse, surveys are delayed until they can be combined with a renovation. Throughout the 30-year history of DB, only Headland Village (2014) has tendered for a survey without bundling tender preparation and project management.

Under the Building Management Ordinance (BMO), any expenditure of a kind not incurred annually requires the approval of the Owners’ Committee. VOCs can say no to a major renovation. But few do.

VOC members would be wise to review the DMC instead of relying on CM. Here is the relevant section of the DMC:

 … the Manager shall have the following duties :-
(1) At least once in every 7 years to employ a competent and qualified person or persons to inspect the entire City (save only the interior of the Residential or Commercial Units or Other Units) and the City Common Facilities and Village Common Facilities and to prepare a report of such inspection which report will be kept at the Manager’s office in the City and will be open to inspection by all Owners and tenants of any part of the City and the Manager will furnish to any such Owner or tenant on request a copy of such report at a reasonable charge.

Thus, the requirement under the DMC is very different from the practice followed by CM for the past 30-plus years. The DMC requires that CM employ “competent and qualified persons” to inspect buildings and city/village infrastructure, and to keep the report at its offices “open to inspection” by both owners and tenants. Any owner or tenant in DB is entitled to inspect any report for any building in DB, including the schools and commercial properties.

These reports in fact represent an audit of the standard of maintenance provided by CM and HKR. The inspections are not intended as the precursor to a renovation exercise, but as a useful reference for all owners and tenants.

Do you want to know whether Discovery Bay International School (DBIS) is properly maintained and safe for your children? Once in every seven years CM is required to hire competent persons to conduct an inspection of the school premises and keep the inspection report open for viewing at its offices.

Do you want to know a professional’s opinion of the condition of the main road? Ditto. The reason that water pressure from the common pipes is low? Ditto. The condition of the common drains? Ditto.

It is the right of every owner and every tenant in DB to view these reports and obtain a copy at nominal cost. No fuss, no waiting. That’s what the DMC says.

And knowing the actual condition of buildings would make it much easier to plan for and carry out a proper renovation when it is really needed.

 

2013-14 Audited Accounts

The Audited Accounts of the Management Funds for the financial year 2013-14 have now been added to the top menu, “Accounts”.

The main source of the Management Funds is the monthly management fee paid by owners and residents. However, in fact, all monies received by City Management (CM) in pursuance of its role as Manager of Discovery Bay must be deposited to the Management Funds — everything from parking fines to renovation charges to late payment fees.

The Management Funds (the DMC term, but more descriptively called the “Discovery Bay City Owners’ Fund” by the auditor) belong to all the owners of Discovery Bay. CM holds the funds on trust for the owners, and is entitled to draw on the funds to carry out its duties as Manager under the DMC. (This, incidentally, is why one should never withhold payment of management fees as a way of protesting the actions of CM — you are not punishing CM, you are punishing your fellow owners.)

CM is required by the DMC to produce a set of audited accounts within 180 days of the end of each financial year. In addition, the DMC authorises the City Owners’ Committee (COC) and each Village Owners’ Committee (VOC) to review any of the accounts itemised on the last page of these audited accounts throughout the year. This power is above and beyond the right of any owner to receive a copy of any of the budgets, account statements and audited accounts, as shown at paragraph 8 in the link above.

Thus, the owners potentially have significant power to ensure that the Management Funds are properly deployed. However, very few COC and VOC members are aware that they have this important right. Nor has CM volunteered this information. CM perpetuates the myth that the COC and VOCs are advisory bodies only, by selectively quoting the DMC and Sub-DMCs and ignoring the paragraph highlighted in the link above.

COC Minutes and Audited Accounts

Neo Horizon Village, Discovery Bay
Neo Horizon Village

I will slowly put up the entire set of minutes of the City Owners’ Committee and Audited Accounts of the Owners’ Funds for Discovery Bay. I am starting in opposite directions, with the COC minutes beginning from the earliest meetings in 1983 and 1984, but the accounts from the most recent. Everyone is probably interested to know the beginnings of DB, but, as far as money is concerned, the latest information is the most relevant.