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Uniquely Singapore, F1 or F9: “Residents willing to pay more for service and conservancy”?

Posted by theonlinecitizen on December 2, 2007

By Leong Sze Hian and Andrew Loh

The following article was first published here in TOC on the 2nd of Oct 2007. The Straits Times has a report titled “New rule to safeguard council funds“, December 2nd 2007, which addresses some of the issues in our article.

In a report titled “Punggol 21 Plus masterplan is a long-term one: Grace Fu” on the 15th of September 2007, Channelnewsasia website stated:

“But according to feedback to HDB, 81 percent of residents said they were willing to pay more for service and conservancy to enjoy the new flat designs. About half of them said they were willing to pay above S$10 more than the usual rates.”

The report did not reveal the details of the “feedback” which HDB had received. How the percentage of 81% was arrived at was also not revealed.

We have managed to obtain copies of the financial reports of 6 Town Councils (TC) out of the 16 TCs in Singapore, for the financial year 2005/2006. These 6 Town Councils are:

Aljunied Town Council (pdf file)

Bishan-Toa Payoh Town Council (pdf file)

East Coast Town Council (pdf file)

Holland-Bukit Panjang Town Council (pdf file)

Sembawang Town Council (pdf file – part 1) (pdf file – part 2)

Hougang Town Council (pdf file)

Unfortunately, we have not been able to obtain a copy of the Pasir Ris – Punggol and Potong Pasir Town Councils’ Financial Reports.

Going through the 6 reports above, what is evident is that most of these town councils have substantial funds in their accounts.

For example, the Sembawang Town Council has $269 million in its funds, with $237 million going into its Sinking Fund. Aljunied TC has $93 million ($67m going into its Sinking Fund) and Bishan-Toa Payoh $139m ($96m going into its Sinking Fund.) Opposition-held Hougang Town Council has $14 million in its Sinking Fund.

(The sinking funds of Town Councils largely comprise S&CC contributions from residents. They are meant for the long-term cyclical maintenance of HDB estates. Works like the replacement of roofing systems, water tanks and electrical sub-systems, repainting, and major repairs and maintenance of common property.) (Ministry of National Development)

So, where do these funds come from?

Service and Conservancy Charges (S&CC)

The 6 Town Councils collect Service and Conservancy charges from residents and businesses within their constituencies. For residential properties, they range from the lowest of $18.00 (1-room flat in Hougang and Hong Kah GRC) to the highest of $80 (executive flat in Bishan-Toa Payoh GRC) per month.

(Figures derived from the town councils’ websites. East Coast, Jurong and Marine Parade Town Councils do not list their S&CC charges on their websites.Figures for Hougang are before the latest revision on Oct 1st, 2007.))

Renting out of facilities

Town councils also rent out facilities to residents and businesses. For example, in Aljunied GRC, void decks, banner arms, acrylic panels for advertisements and event halls can be booked for use. The charges are anywhere from $25 per month for an acrylic panel to $2,000 a day for use of the event hall at the town centre for commercial purposes. (link)

Car parks

According to this website, carparks at Hong Kah GRC “are managed by the Town Council for the HDB on an agency basis”. We are unsure if other town councils also run or manage carparks.

Government grants

Government grants received by the town councils include Service and Conservancy Grant, Citizens’ Consultative Committee Grants and the Community Improvement Projects Committee fund (CIPC).

According to the Straits Times’ report of March 25, 2006, “The gathering storm”:

Taking into account all the grants from the Government, the Aljunied Town Council, for example, gets $560 per household for the financial year ending March 2005.

The grants include funds from the Community Improvement Projects Committee (CIPC), which is controlled by the Ministry of National Development.

In contrast, government grants came up to just $113 per household in Potong Pasir.”

In another report on the same day, “Hougang’s Low may be ‘heart’ to beat”, the Straits Times reported:

“Government grants came up to about $111 per household in Hougang in 2004-05. By contrast, neighbouring Aljunied Town Council, which has access to funds such as the government-controlled Community Improvement Projects Committee (CIPC), got $560 per household for the same period.”

One therefore will have to question why the Aljunied Town Council charges more for S&CC than Potong Pasir and Hougang, across the board – from 2 rooms to executive flats – when the Aljunied TC is getting more government grants than the two opposition wards.

In one instant, a one-roomer’s S&CC in Aljunied Crescent rose from $3.50 to $18.50 from 1994 to 2005 – an increase of about 428 per cent.

Community Improvement Projects Committee (CIPC)

The Straits Times, June 2006, (link) reported what the Minister for National Development, Mr Mah Bow Tan, said:

Turning to the question of the funds from Community Improvement Projects Committee (CIPC), a source of funds controlled by the National Development Ministry for minor improvement work in the estate, Mr Mah revealed that a town of 100,000 households could stand to get a few million dollars of funding a year, depending on the projects its grassroots leaders proposed.”

Opposition-held wards Potong Pasir and Hougang have long complained that CIPC funds are not made available to them, unlike PAP-held ones. The funds are “always disbursed through Citizens’ Consultative Committees (CCCs), which have PAP politicians as their advisers”, according to the Straits Times report.

CIPC funds are “used to build amenities such as street soccer courts, playgrounds and sheltered linkways, but cannot be used for major projects like lift upgrading”, the report says.

Investments

Town councils also invest their funds to generate more revenue. Details of such investments are not readily available, however. There are no breakdown of any such investments in the financial reports.

How much of your S&CC goes into the Sinking Fund

The minimum amounts to be paid, by property type, into the Sinking Funds are as follows: (link)

i) 1-room to 3-rooms – 30% of the conservancy and service fees and grants-in-aid

ii) 4-rooms – 35% of the conservancy and service fees and grants-in-aid

iii) 5-rooms – 35% of the conservancy and service fees

iv) Executive – 35% of the conservancy and service fees

v) Shop with living accommodation – 35% of the conservancy and service fees

vi) Commercial property – 35% of the conservancy and service fees

Surpluses

In a recent letter sent out by the Hougang Town Council, which is run by the opposition Workers’ Party, in September 2007, residents in Hougang were informed that S&CC were being raised – with effect from 1st Oct 2007. The letter said:

“Further, with the compulsory transfer of 80% of its accumulated surplus into the Sinking Fund as required under the Town Councils Act after the last General Elections, there is also no longer reserved funds which were accumulated in the past years through prudent management to cushion the shortfall which would have allowed the Town Council to further delay a revision of the sc/cc.”

One wonders if this has anything to do with crippling the opposition Town Councils from undertaking lift upgrading works. In a 2005 newsletter, the Hougang Town Council revealed:

The residents did not have to pay as the Town Council was able to carry out the upgrading with funds from its accumulated surpluses.” (link)

So, the question is: Why is more than 1/3 of S&CC and 80% of the accumulated surpluses required to be transferred to the Sinking fund?

*Hougang’s last revision of the S&CC was in 1997. PAP-run Town Councils last raised theirs in 2004.

Death does not mean you don’t have to pay

Lastly, according to the Ministry of National Development website, with regards to deceased persons with outstanding S&CC Charges:

Clause 8 amends Section 39(14) to include the Personal Representative of a deceased lessee as a party who will be liable for any outstanding S&CC due from the deceased lessee. This is to overcome the operational constraints faced by Town Councils today in recovering outstanding S&CC in cases where lessees have passed away. (link)

Questions to ask before government allows S&CC to be raised again

In light of all the above information, and in anticipation of a potential hike in S&CC among all Town Councils, perhaps we should be asking some questions of the town councils and the government – before town councils again propose raising S&CC charges, as the channelnewsasia report on Punggol 21 quoted above seems to suggest they might.


Here are 20 questions to ask:

1. Why does the Sembawang Town Council (STC) need to have $269 million of funds? In contrast, for example, Aljunied has $93 million and Bishan-Toa Payoh has $139 million.

2. Why is the percentage of S&CC amounts to be put into the Sinking Fund so high? Why are town councils like Sembawang apportioning 39%, which is 11.4% more than the prescribed minimum?

3. What is the purpose of Sembawang Town Council accumulating $237 million in its sinking fund? Aljunied and Bishan-Toa Payoh have $67 and $96 million respectively. In contrast, Hougang Town Council has only $14 million.

4. Since only 10 per cent of the Sinking Funds can be utilised for lift upgrading, with the primary purpose of the sinking fund as stated above, why do we need to accumulate so much ? How often are works such as the replacement of roofing systems, water tanks and electrical sub-systems, repainting, and major repairs” undertaken to warrant such huge reserves in the Sinking Fund?

5. Hougang has $14 million. How much funds do the opposition held town
council (OHTC) of Potong Pasir have relative to STC and other town councils?

6. Are OHTCs collecting too little, or is STC or other town councils collecting too much?

7. Are there any guidelines on how much town councils should collect in growing the Sinking Fund?

8. Are not both OHTCs and other town councils subject to the same guidelines?

9. Do OHTCs and other town councils collect as much as 39 per cent of S & CC (like STC) for the sinking fund? For example, the percentage for Aljunied and Bishan-Toa Payoh is 35 per cent.

10. What is the accumulated Sinking Fund to household ratio for each and every town council?

11. How many HDB flat-owners are in arrears on their S & CC? (HDB provided financial assistance to 28,386 HDB flat-owners last year.)

12. What is the rate of increase in S & CC over the last few years for OHTCs, relative to PAP-run town councils?

13. For one 1-room HDB flat renter in Aljunied Crescent, S & CC went up from $3.50 to $18.50 from 1994 to 2005 – about 428 per cent. Annual inflation during this 11 years was less than 2 per cent. How is it that the 1-room S & CC works out to an annual compound rate of increase of about 16 per cent per annum?

14. To what extent has the high proportion of S & CC chanelled to the Sinking Fund, resulted in higher increases in S & CC?

15. What is the norm for the percentage of private condominiums’ maintenance charges that go into the sinking fund? What is the norm in other countries’ town councils?

16. Why did the Pasir Ris-Punggol Town Council recently increase their late payment charge to a 2 per cent penalty interest per month for S&CC arrears late payments?

Why is the late payment penalty so high? It is equivalent to the 2% charged on credit cards which we believe is the highest for credit facilities in Singapore.

What are the late payment charges for Hougang and Potong Pasir town councils?

17. The S&CC for Pasir Ris – Punggol, Potong Pasir and Hougang town
councils for 3, 4 and 5-room flats are, respectively:

$36.50, $50.50, $63.50 (Pasir Ris – Punggol)

$35.50, $46.00, $58.00 (Potong Pasir)

$36.00, $48.00, $59.50 (Hougang)

Why is it that Punggol-Pasir Ris charges 2.8, 9.8, 9.5% more than Potong
Pasir, and 1.4, 5.2, 6.7% more than Hougang, respectively?

18. Why are PAP-run town council charging more for S&CC when they have economies of scales. For example, Yio Chu Kang Town Council has been “merged” with Ang Mo Kio Town Council (link) and Nee Soon Central and Nee Soon East Town Councils with Sembawang Town Council. (link)

19. Why was the Town Councils Act amended after the last General Election, such that there is now a compulsory transfer of 80% of the accumulated surplus to the Sinking Fund? As explained in Hougang Town Council’s letter to residents in September 2007, it “is also no longer (able to use) reserved funds which were accumulated in the past years through prudent management to cushion the shortfall which would have allowed the Town Council to further delay a revision of the S & CC”.

20. Has anybody ever asked the above questions?

Inform residents about funds collected

Before the government or town councils increase S&CC further, even for new towns like the upcoming Punggol 21-plus, these questions should be satisfactorily answered.

The Pasir Ris – Punggol Town Council should also make its latest financial report easily available to residents so that residents can make an informed decision on whether they would be willing to pay more for S&CC.

And while we’re at it, the HDB, which was quoted by the CNA report, should also reveal how they arrived at the conclusion that “81 percent of residents said they were willing to pay more for service and conservancy to enjoy the new flat designs. About half of them said they were willing to pay above S$10 more than the usual rates.”

One can only wonder if the “81% of residents” who “said they were willing to pay more for service and conservancy charges” are aware of the substantial funds which the town councils have already accumulated, along with substantial government grants for PAP-run Town Councils.

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12 Responses to “Uniquely Singapore, F1 or F9: “Residents willing to pay more for service and conservancy”?”

  1. James Chia said

    Does anyone feel our towns are getting dirtier these days? I stay in Hong Kah GRC and I don’t know if it’s the same case as in other GRCs. My place is full of cockroaches, litter, and even my lift has a permanent foul smell. If they ask for an extra $10 in service and conservancy fees in my area, I would not agree unless they really clean up the place.

  2. […] Daily Discourse – My Singapore News: Should the people save? – The Online Citizen: Uniquely Singapore, F1 or F9: “Residents willing to pay more for service and conservancy”? […]

  3. Robert HO said

    RH:
    1. Thanks to my wife’s hard work and intelligence, I get to live in a condo and even get to drive her car, despite 15 years of criminal attacks and criminal virtual imprisonment that prevent me from earning a cent, despite a headful of some of the biggest commercial Ideas of all time. LIE KY LHL PAP hate me because I am such a genius and they are such idiots. The whites also hate any non-white smarter than them. This pretty much explains the unexplainable hostility I have suffered.

    2. Today, just an observation or insight from Hongkong. In Hongkong, there are many, many, what I call “no-frills condos”. These no-frills condos are simply high-rise blocks, several in 1 development, with modest car lots and just a little condo public space. No huge swimming pools, tennis courts, billiard room, karaoke rooms, barbecue pits, squash courts and exercise gym like my Guilin View condo. BUT THEY ARE AFFORDABLE AND VERY POPULAR, WHICH MEANS PROFITABLE FOR THE DEVELOPER, AND MEET THE HOUSING NEEDS OF HONGKONGERS.

    3. In Singapore, because the PAP wants to rape all the citzens’ CPF accounts, an unlimited source of free or cheap funds with which they can play Warren Buffet or George Soros, as well as gain an immense clout and “weight” [as recently admitted by a PAP Minister] in international affairs, the PAP is determined to keep 85% of the people in HDB flats, simply by making it too expensive for them to buy private condos and landed property, through a variety of land development charges, high price land sales, and other taxes.

    4. However, this may now be time to copy the Hongkong idea. Firstly, HDB prices have gotten so ridiculous [75% pa increase over 4 months being normal — and unknown if not for genius Mr LEONG Sze Hian], see :

    http://theonlinecitizen.com/2007/09/26/why-does-hdb-need-to-increase-prices-of-flats-so-rapidly/#more-503

    RH: … that there is now opened a niche market for private condo developers to develop Hongkong style no-frills condos THAT CAN COMPETE DIRECTLY WITH THE HDB, DOLLAR FOR DOLLAR, SQ METRE BY SQ METRE.

    5. Simply by not having huge swimming pools, tennis and squash courts, karaoke rooms, billiard room, barbecue pits, gym, etc, or having just small and cheap things like the gym, etc, condo developers can reduce the price of each flat dramatically, thus gaining a new market from those currently only able to buy say, 4 and 5 room HDB flats. I have lived here 7 years and have hardly used the swimming pools and never the billiard, tennis, squash, karaoke, function, rooms, etc, and I don’t miss anything. So, many frills are actually little used by the vast majority.

    6. No frills will also lower maintenance fees dramatically. Currently, the 5 blocks in my condo require over 30 security guards for 24/7 patrols and duties, plus many cleaners and gardeners to keep the estate neat and landscaped. Plus a condo manager and a few staff in a small office. Most of these can be done away with. Probably, all you need in a no-frills condo are half a dozen security guards and a few cleaners. And maybe just 1 condo manager/staff to keep an eye on things. Volunteers from the residents can also help manage the condo in a residents committee. Thus, it can be very affordable.

    7. I believe that there is now a market for these no-frills condos. Go to Hongkong and see how they do it. Hongkong developers with the experience can also look at Singapore to see if they can do it here. The PAP will fight back with more dirty tactics and tricks as usual. But despite these, I think there is a huge untapped market. MAY I ALSO ADD THAT THE MAIN DIFFERENCE BETWEEN HONGKONG AND SINGAPORE IS THAT “HONGKONG SOLVES ITS PROBLEMS WHILE SINGAPORE HIDES ITS”. There, my good deed for the day.

    *To Robert: Please remove your NRIC number from your post in future. Else, we will not allow you to post anymore. We’ve told you this before. Please understand that personal particulars are not allowed to be posted here, unless under very special circumstances which will be determined by us. Thanks.

  4. shoestring said

    The NRP is a waste of money and I wouldn’t want to pay a single cent more for that.

  5. toeJAM said

    James,

    You are right, over here at Yishun, it’s also getting dirtier by the day and I am wondering if I should stop paying S&C until TC get their act together.
    They also have Banglas working at a cheap rate that my calculation shows there is excess profit, so no need to raise charges.
    I think we should collectively voice our concerns and challenge that we take over the maintenance with the same charges and yet do a better job.

  6. Leong Sze Hian said

    Oct 8, 2007 Straits Times Forum
    Conditions unchanged, why 8% rise in flat price?
    I READ with interest the reply by the HDB, ‘Fernvale flat prices: Comparisons inapt’ (ST, Oct 2).
    From the letter, it would seem that the pricing of units in the Build-To-Order project is justified. However, I would like to ask HDB to justify this.

    I bought (although technically I leased) an executive apartment in Sengkang in January.

    At the time of booking, the unit one floor below mine was going for $298,000. After six months, the same unit was going for $322,000.

    Absolutely nothing was done to the unit to justify an 8 per cent increase in selling price, considering there was no change in facilities or ‘improved design features’.

    Another issue I would like to raise is the so-called subsidy new flat buyers like me are supposed to enjoy.

    At the point of signing the lease agreement, my flat was priced at a mere $10,000 less than resale flats with similar qualities, that is, same cluster and same flat size. What is more, resale flats came renovated.

    May I ask, where is the subsidy? It is unfair that I have to pay a levy of $50,000 for a price difference of only $10,000.

    Liew Yi Xui (Ms)

  7. Leong Sze Hian said

    Oct 8, 2007 Straits Times Forum
    Why build flats when so many units unsold?
    I READ with renewed surprise that the HDB will build even more flats (‘Govt to boost supply of homes’; ST, Oct 2), even as many blocks in Jurong West remain fenced up and unsold and many individual units in my block and neighbouring blocks remain unsold.
    The HDB should be responsible in its building programme as resources should be well used.

    Who bears the brunt of these bad decisions in which poor planning led to these unsold flats? Buyers like me who collected my keys more than eight years ago when demand was so high I had to queue. I paid $387,000 for my HDB executive flat.

    When I wrote previously to ST Forum about high prices, I was told they were subsidised and based on real cost of construction and so on. Well, guess what. Over the past 12 months, the HDB has sold the same types of flats including some in the same block as mine at about $260,000. Has their value dropped so drastically in eight years? Or does the costing now get some subsidy from elsewhere to allow the flats to be sold so cheaply?

    Now, original buyers are unable to sell their second- hand flats, because the HDB is selling ‘new’ ones in the same block at more than $100,000 less than what we paid. The HDB has effectively taken the bottom off the resale market for new home owners who qualify to buy directly from it, leaving a much smaller group of resale buyers who do not meet the guidelines for direct HDB purchase. These buyers are willing to pay a little more but are unwilling to pay a decent price since the HDB set the ‘new’ sale benchmark.

    Lawrence Ng Wai Chun

  8. Leong Sze Hian said

    Town councils investing in stock market
    October 11th, 2007 by mrbiao

    While looking through Creative Technology’s latest Annual Report, I was surprised to see “Holland-Bukit Panjang Town Council” listed as one of the majority shareholders with 530,000 shares currently valued at about S$3,000,000.

    While I understand that town councils would want to invest their funds to get some capital gains on their surpluses, I wonder if there are any policies to guide their investments. Should town councils be allowed to invest their funds in high-risk equities? Who approves the investments? And, why would the Holland-Bukit Panjang Town Council invest in Creative Technology, a company that has been losing value on the stock market for years? If the town council had already owned the shares since long ago, they should have sold their holdings to prevent further losses. If they had just bought in not long ago, the question would be about how wise the decision to buy was, or whose idea/advice was it for the town council to throw their money into this counter.

    I would think town councils should put their money in lower risk investments such as fixed deposits or funds with track records of stable performance… at the end of the day, town councils should not see investments as a primary source of income – after all, the funds come from taxpayers and should rightfully be used for improvements to facilities rather than as capital for investments.

  9. blackshirt said

    Transparency is a marketing word used in our government speeches. It is for the world to hear but not practice. In reality, the lack of information is key to their control of the population. We all know too well about the ambiguity of “Singapore residents”. And MOM statistics are state secrets?

    People are willing to pay more for service and conservancy? Nobody like to pay more money for anything, even the rich. In some instances, the government like to pay less for things. Dr Vivian Balakrishnan believed in dishing out no more than $290. They like to pay the least possible for water from our neighbouring country. Buy cheaper sand. Take your land and pay you prevailing rates based some previous years and not current rates.

    But then, they are willing to pay more for overseas investments. In the end, it is the population that is paying for the dismay results of those investments now.

  10. Seeking Salvation said

    U be very surprised that the Regency Park Condo in the pretigious district of 10 About 20 units are owner by a town councile known as EM Services Pte Ltd. What has the town council with so much excess funds doing in buying condos
    Aren’t we paying to much maintenance to allow a body to dabble
    in real estate. The main aim of collecting maintenance is to maintain the estate. I see some estates being painted with the gaudiest and ugliest paint which u yourself would not buy off the shelves of the paint shop. Its about time things be set right

  11. heng yp said

    high time to change the people on top that runs these town council.they are making money using our money. how can these people sleep tight at night without nightmare. sick fellows !!!

  12. Aunty said

    wow , wat a website, will come back again , i agree with all of you here, we are being fleece by the father , the son, and the holy ghost huh, when will they go to heaven ?

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