Gwangmyeong City, Redevelopment Bonus Cancellation Controversy

Redevelopment unions are strongly protesting Gwangmyeong City's request to change the redevelopment maintenance plan. The unions claim that Gwangmyeong City suddenly changed its mind and tried to overturn the plan when the project was already well underway, arguing that this clearly constitutes retroactive application. They pointed out that a local government unilaterally revoking an already confirmed plan severely damages administrative credibility.

Gwangmyeong City recently sent official letters to redevelopment unions in the Cheolsan and Haan districts, requesting their cooperation to ensure that public rental housing supply plans are reflected when establishing maintenance plans. While ostensibly a 'cooperation' request, it is interpreted as an administrative measure virtually demanding additional rental housing, given that it comes from the local government holding permitting authority.

The Gwangmyeong City Cheolsan and Haan district redevelopment projects were promoted based on a standard floor area ratio of 220%. With the 'overlapping floor area ratio system' applied, unions could receive up to 330% floor area ratio if they chose either eco-friendly building certification or public rental housing supply. This was designed to allow additional floor area ratio by utilizing separate incentives like the Building Act or the Green Building Promotion Act, in accordance with superior laws such as the National Land Planning Act. At the time, most unions chose eco-friendly certification methods like zero-energy buildings rather than supplying rental housing to secure business feasibility.

When Gwangmyeong City established the maintenance plan, apartment prices in the area were around ₩20 million per pyeong. At that time, floor area ratio incentives were granted, allowing the choice of eco-friendly construction instead of rental housing supply, to compensate for low business feasibility and encourage redevelopment. However, the situation changed dramatically as apartment prices in the area recently soared more than twofold to ₩43 million per pyeong. As business profitability significantly improved beyond expectations, Gwangmyeong City's calculations changed, leading to a belated demand for additional rental housing supply.

In 2020, the estimated incentive effect of a 50% increase in floor area ratio in Gwangmyeong City's redevelopment projects was approximately ₩400 billion. However, due to recent housing price increases, the value of this incentive has swelled significantly to ₩700-800 billion. Even considering the increase in construction costs (approximately 10%), the project's profitability far exceeded expectations, leading Gwangmyeong City to take the stance that the city and the public should also share the increased profits.

The official notification of a redevelopment maintenance zone designation has legal effect, meaning that the business feasibility analysis is complete and the union proceeds with design according to those conditions. Since the major conditions of the project are virtually confirmed once officially notified, any unilateral attempt by the local government to change the project plan afterwards cannot avoid controversy over retroactive application. This can directly impact administrative credibility.

Gwangmyeong City sent the demand for additional rental housing in the form of a 'cooperation letter' rather than a 'mandatory order.' However, a request from a local government with permitting authority inevitably acts as real pressure on the union. If a local government demands changes to major project plans like rental housing supply after the maintenance zone designation has been officially notified, and proceeds unilaterally without the union's consent, it can face issues of retroactive application.

While the past Seongsu District case involved project delays due to changes in higher-level legal plans, it is pointed out that Gwangmyeong City's current demand is mainly due to a change in the mayor's policy or the city's calculations, rather than a legal basis. Applying such changes retroactively to ongoing projects without changes in higher-level legal plans has a high potential to infringe on the property rights of the unions.

Gwangmyeong City's current demand is also showing signs of escalating into an issue of fairness between complexes. While Cheolsan 12 and 13 complexes have already completed official notification of maintenance zone designation and their project plans are confirmed, later complexes like those in the Haan district are still in the planning stage and may be classified as subject to mandatory rental housing supply according to Gwangmyeong City's demands. This could lead to strong protests from later complexes as they receive different treatment due to arbitrary policy changes by the local government within the same area.

Gwangmyeong City's current demand for additional rental housing is criticized for attempting to change project plans based on mayoral discretion without legal standards. Revoking an already officially notified maintenance plan retroactively can severely damage administrative trust, and it appears that the local government, with its permitting authority, is exerting practical pressure on the unions through this. This raises criticism that it is not about changing based on specific criteria, but rather Gwangmyeong City's unilateral pursuit of profit.

Some also criticize that it is forcing sacrifices on minority unions, who have legal rights under official notification, to appease the sentiments of the majority. The situation where the local government exerts pressure with the practical weapon of permitting authority is even being compared to the extreme example of the Chun Doo-hwan regime forcing companies to provide slush funds. This has a strong potential to be interpreted as undue interference in a legally conducted project.

Redevelopment union members are already anticipating an average contribution of about ₩100 million when moving from a 30-pyeong unit to another 30-pyeong unit. With the redevelopment excess profit recovery system also expected to apply, it is argued that the actual profit returning to union members is not significant, even if profitability improves. In this situation, Gwangmyeong City's demand for additional rental housing supply is criticized as being tantamount to double regulation or double taxation.

In the permitting process, 'before official notification' and 'after official notification' carry significantly different legal weight. Before official notification is the stage of discussion and adjustment, but after official notification signifies the final confirmation of major project details. Once the maintenance plan is confirmed, major changes such as allocating half of the 50% increased floor area ratio to rental housing become a very burdensome demand. It is pointed out that it is problematic for a local government to send such a burdensome official letter when unions are in a difficult position to simply ignore it and insist on proceeding according to the law. Such post-hoc revocation can lead to 2-3 years of unnecessary project delays and enormous losses for the unions, thus requiring the assurance of certainty and reliability in the permitting process.