The Taipei City Government’s plan to negotiate conditions with Farglory Group to dissolve the contract for the Taipei Dome project and seek a third party to take over the construction is a trade-off — albeit a reckless, perhaps ill-conceived one — made without the city taking all possible consequences into account.
Taipei Mayor Ko Wen-je’s (柯文哲) administration imposed a strict set of safety standards on Farglory and demanded that the complex’s evacuation readiness meet the requirements of the city’s evacuation simulations, which were conducted using a scenario where all five buildings in the complex — including the Dome, a department store, a movie theater, a hotel and an office building — were at full capacity.
This means that any third party would have to follow the city’s demand that Farglory reduce the space taken up by commercial facilities surrounding the Dome to facilitate evacuation.
With the structures of all five buildings completed or near completion, the first problem a third party would face is demolishing facilities and devising new uses for the vacated areas — with both tasks requiring a lot of money.
Therefore, it would be virtually impossible for the city government to transfer the project without making compromises.
To attract interest, the city government would have to provide incentives, which could mean that its new contract would be even more disadvantageous to the city than the contract with Farglory. For example, the life of the contract could be extended from 50 years to 70 years, so that the third party would be better able to offset the costs of construction.
In addition, there would be no guarantee that the city government would not be required to pay compensation to Farglory.
Skeptics of the plan to transfer the project have raised legitimate questions over its viability, saying that the city government would probably struggle to find a new contractor, because the sheer floorspace of the project would drive up the rent for people who want to use it, and there are already plenty of department stores and theaters nearby.
Questions were also raised over the city’s apparent reluctance to take legal action against Farglory, despite its strong criticism of the company over alleged breaches of contract — which included allowing construction to fall seriously behind schedule and deviating from the approved plan in 79 areas, even though it is likely to win a lawsuit.
Long-time Dome opponent Arthur Yo (游藝) interprets the city’s reluctance to go to court with the group as Ko being worried that the length of time the lawsuit would take would hurt his chances of re-election.
Yo’s analysis holds water, as according to recent surveys the Dome debacle was one of the major causes of Ko’s slide in approval ratings, and Ko is obviously feeling the pressure.
Ko had said that he is worried about lawyers’ fees that would be generated from a legal battle with Farglory, but the cost would pale next to the compensation the city might have to pay to Farglory, which by some news outlets’ estimates would exceed NT$10 billion (US$309.93 million).
Ko’s remark that entering negotiations with Farglory to terminate the contract would be an easy way out of his predicament was surprising. With so many uncertainties lying ahead, it would not be easy at all.
On all fronts, dissolving the contract by negotiating terms with Farglory is a risky endeavor and would be a Pyrrhic victory for Ko even if it were possible.
If he wants to win praise, he should be tough and terminate the contract via legal channels. He might find that Taipei residents are more reasonable than he thinks.
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