[Q&A] Ministry of Land, Infrastructure and Transport: "Yeongdeungpo Sjjokbangchon Public Project Is a Last Resort"... "Additional Measures If Nearby Markets Are Affected"

▲ Participants engaged in a Q&A session after the presentation at the "Public Housing Project Promotion Plan for Improving Residential Environment and Urban Maintenance in Yeongdeungpo Ssokbang Village" held at Yeongdeungpo Station in Seoul on the 20th. From left to right: Kim Se-yong, President of SH Corporation; Kim Young-joo, Member of the Democratic Party; Park Won-soon, Mayor of Seoul; Kim Hyun-mi, Minister of Land, Infrastructure and Transport; Chae Hyun-il, Mayor of Yeongdeungpo District; Byun Chang-heum, President of LH. Photo by Lee Chun-hee

[Asia Economy Reporter Lee Chun-hee] The area around Yeongdeungpo Station's jjokbangchon, an old residential area in Seoul, is being reborn as a residential, commercial, and welfare town. The jjokbangchon will be completely demolished, and over 1,200 households will be supplied, including permanent rental housing for residents and happy housing for young people.

The Ministry of Land, Infrastructure and Transport, Seoul Metropolitan Government, and Yeongdeungpo District announced on the 20th the "Public Housing Project Promotion Plan for Improving the Residential Environment and Urban Maintenance of Yeongdeungpo Jjokbangchon." On the same day, Yeongdeungpo District, Korea Land and Housing Corporation (LH), and Seoul Housing and Communities Corporation (SH) participating as project implementers also signed a Memorandum of Understanding (MOU) for the "Yeongdeungpo Jjokbangchon Maintenance."

Kim Hyun-mi, Minister of Land, Infrastructure and Transport, said, "(The resettlement of jjokbangchon residents) is an important task," and expressed expectations, saying, "If happy housing is created while developing the jjokbangchon and young people and newlyweds move in together, it will become a space where various social classes interact."

Project officials said, "There are currently four more jjokbangchons in Seoul," hinting at additional projects. Currently, there are 10 jjokbangchons nationwide, including five in Seoul. They also stated that through the residential environment improvement project, "If there are concerns about stimulating the surrounding (real estate) market, additional measures will be considered."

Below is a Q&A with Minister Kim Hyun-mi of the Ministry of Land, Infrastructure and Transport, Seoul Mayor Park Won-soon, Kim Young-joo, Democratic Party of Korea lawmaker (Yeongdeungpo Gap), Chae Hyun-il, Yeongdeungpo District Mayor, Byun Chang-heum, LH President, and Kim Se-yong, SH President.

- The announced content omitted the part about the funds needed for the project. What is the estimated amount?

▲ (President Byun Chang-heum) The total project cost, excluding the private sector, is about 298 billion KRW. Of this, about 210 billion KRW is for land costs, and 50 billion KRW for construction costs. LH and SH will jointly invest and execute the project. In fact, the project is expected to incur a significant deficit due to poor profitability. The Ministry of Land, Infrastructure and Transport and Seoul Metropolitan Government are expected to compensate for the deficit.

- The existing plan announced in 2015 included a maintenance plan for the nearby red-light district. Is there any plan for that area?

▲ (President Byun Chang-heum) The rights relations in that area are complicated. However, since Yeongdeungpo is one of Seoul's three major downtowns, it should naturally be included and promoted accordingly. Whether to designate it as a public housing district and expand it will be discussed later with Seoul Metropolitan Government and the Ministry of Land, Infrastructure and Transport.

▲ (Mayor Chae Hyun-il) Since last year, according to the Yeongdeungpo urban comprehensive management plan, we have reviewed maintenance plans not only for the jjokbangchon but also for the red-light district. The jjokbangchon project is led by the public sector, while the red-light district project is being considered as a combination of private-led projects and public administrative support. We are preparing to proceed with both projects by gathering opinions from experts and residents.

- There has been an issue of isolation among residents in previous jjokbangchon maintenance projects. This policy seems to have a social mix aspect. Could you explain the goal?

▲ (Minister Kim Hyun-mi) The reason jjokbang residents cannot leave this area is that community support is needed, and it is difficult for them to leave for work. Therefore, resettlement is a very important task. Without resettlement, the project itself would have been impossible. By accommodating jjokbangchon residents in public rental housing and creating happy housing where young people and newlyweds move in together, the space where jjokbangchon residents lived isolated will become a space where various social classes interact. This will revitalize the lives of those who lived in the jjokbangchon. We plan to include various social welfare facilities in the project plan. Without these, public rental housing could become slums. We are helping jjokbangchon residents not only with housing convenience but also with various social welfare services to support healthy rehabilitation. We will create a coexistence model where various social classes can live and interact together.

▲ Conceptual diagram of early relocation and virtuous cycle for public housing projects to improve residential environment and urban maintenance in Yeongdeungpo jjokbangchon (Provided by Ministry of Land, Infrastructure and Transport)

Following is a Q&A with Kim Seung-beom, Director of Public Land Planning at the Ministry of Land, Infrastructure and Transport; Myung No-jun, Director of Public Housing at Seoul Metropolitan Government; and Lee Jeong-ha, Director of Urban Affairs at Yeongdeungpo District.

- The project was also promoted in 2015 but failed. What was the decisive reason for the failure?

▲ (Director Lee Jeong-ha) There are three main reasons. First, there was no relocation plan to accommodate all jjokbang residents. Second, when a relocation plan was made for about half of them, the project was not profitable. Therefore, it did not proceed. Third, under the Urban and Residential Environment Maintenance Act (Dojungbeop), consent is required to carry out the project. However, due to complicated ownership relations and poor profitability, it was difficult to obtain the required level of consent. It was a situation that could not be resolved without active public intervention.

- This project is a maintenance project under the Special Act on Public Land. Is there any particular advantage in proceeding under the special law rather than the Urban and Residential Environment Maintenance Act?

▲ (Director Kim Seung-beom) The difference between the project method under the Special Act on Public Housing and the method promoted in 2015 is that the public sector becomes the implementer, minimizing the time required for forming separate associations. Also, since public interest is secured, the approval process is faster. Most importantly, tenant measures have been strengthened. Existing maintenance projects include some relocation support but lack provisions for re-occupancy. By implementing the project under the Public Housing Act, jjokbangchon residents can 100% move into newly built permanent rental housing. This improves the resettlement rate of existing residents. However, the project may have lower profitability due to additional costs. We are working with Yeongdeungpo District, LH, and SH to overcome this. Permanent rental and happy housing will be constructed and operated by LH and SH, and there is a separate site for sale to the private sector. Currently, it is a commercial area, and the sale price varies depending on how the land use is set. If Seoul Metropolitan Government and Yeongdeungpo District approach this from an urban planning perspective, they can absorb losses and improve profitability.

- Can this type of development be seen as a kind of 'alternative redevelopment'? It also seems like a 'last resort.'

▲ (Director Kim Seung-beom) The Yeongdeungpo Station jjokbangchon was previously planned for maintenance but was not fundamentally resolved. It was promoted through private full demolition, but resettlement issues for jjokbang residents were not resolved, so it was halted. There were concerns about neglecting the area, and to solve this, the Ministry of Land, Infrastructure and Transport, related agencies, and private organizations applied a project method not previously used. Development under the Special Act on Public Housing is not necessarily applicable to other areas, but for Yeongdeungpo Station jjokbangchon, it was the 'last maintenance plan' and at the same time the 'best maintenance plan.'

- Is there a possibility of additional public housing supply in this form? Also, recently, neither the Ministry of Land, Infrastructure and Transport nor Seoul Metropolitan Government has been expanding redevelopment maintenance projects. Are there concerns about stimulating the real estate market?

▲ (Director Myung No-jun) There are currently four more jjokbangchons in Seoul. Seoul has areas with somewhat different characteristics. We will consider whether to develop under the Special Act on Public Land or explore other methods.

▲ (Director Kim Seung-beom) There is no disagreement that residential environment improves with area maintenance. However, since the project area is only about 10,000 square meters, we believe the impact on surrounding real estate will not be significant. If there are concerns about stimulating the surrounding market, we will consider additional measures.

▲ Perspective view of the public housing project for improving the residential environment and urban maintenance of Yeongdeungpo jjokbangchon (Provided by the Ministry of Land, Infrastructure and Transport)

- Yeongdeungpo jjokbangchon is currently designated as a Seoul Future Heritage. There is a preservation aspect. What happens if development proceeds?

▲ (Director Lee Jeong-ha) Some residents consider the jjokbangchon like their hometown, and even those who have left visit during holidays. Since the jjokbangchon has historical stories and symbolism, it is expected to have educational effects. While carrying out the development project, we plan to create spaces for physical preservation, memory, and education.

- How will compensation for jjokbangchon building owners be handled?

▲ (Director Kim Seung-beom) About one-third of the target area is public land. There are corporate sites, but general land parcels have complex ownership relations, with about 20 rights holders per parcel. Since the current land use is commercial, the official land price is high. We plan to provide fair compensation based on the current land use and nearby transaction cases. Those currently operating businesses in the area will receive business compensation and support plans to operate shops in the newly created commercial spaces at rents lower than market rates.

- The announcement timing is just before the Lunar New Year holiday and three months before the general election. There are reactions that the timing is peculiar. What is your comment?

▲ (Director Kim Seung-beom) This was a proposal from Yeongdeungpo District during a meeting to expand public rental housing in August-September last year. Since then, the Ministry of Land, Infrastructure and Transport, Seoul Metropolitan Government, Yeongdeungpo District, LH, and SH have been continuously consulting. The timing was constrained by related ministries' schedules and security. The announcement was made immediately after the project method was agreed upon due to the start of public inspection for district designation by Yeongdeungpo District today. Many stakeholders are involved, so for security reasons, the announcement was made as soon as the agreement was reached. Even now, the area's owners and residents are unaware of the matter.