Recapturing Urban Development Profits to Expand Infrastructure... Incheon City Introduces 'Public Contribution Pre-Negotiation System'

Approximately 60% of the increased floor area ratio from urban planning changes is recovered as planned gains
About 2% of the target area in land use changes is allocated for public contribution facilities installation

Concept of Urban Planning Change Gain Recovery [Provided by Incheon City]

[Asia Economy Reporter Park Hyesook] Incheon City will implement the 'Public Contribution Pre-Negotiation System' starting this month, which recovers part of the benefits equivalent to the increased floor area ratio when changing urban plans to expand infrastructure.

The city announced on the 5th that this system was introduced to resolve controversies over special favors related to urban plan changes and urban development projects, as well as conflicts between the public and private sectors.

The city plans to select 2 to 3 projects through a site recruitment this month and then proceed with pre-negotiations on a pilot basis.

This system requires recovering up to about 60% of the planned benefits from the increase in floor area ratio in general residential, semi-residential, semi-industrial, commercial areas where mixed-use development occurs, as well as in idle sites and relocation sites (vacant land left after facilities are moved).

For urban development projects changing green, agricultural, forestry, and management areas to residential use, public contribution facilities must be installed on about 2% of the total area.

Projects currently at the stage of urban development zone designation or in the process of establishing development plans will proceed with related administrative procedures after completing consultations on the installation of public contribution facilities.

Until now, urban plan changes or urban development projects involving land use changes have caused conflicts between the public interest as the licensing authority and the profit-seeking private developers, resulting in project delays and disputes between the public and private sectors.

Also, even after urban plan changes and urban development are confirmed, controversies over special favors in terms of fairness have arisen by comparing public facility donations and contributions with similar other projects.

An official from Incheon City said, "The Public Contribution Pre-Negotiation System is a cyclical structure that recovers benefits generated from land use changes and permits to expand public facilities needed by citizens," adding, "We plan to establish a fund for the installation and operation of public facilities and use cash or in-kind contributions to expand infrastructure and living SOC."