Prosecutors investigating the Daejang-dong development lobbying and preferential treatment allegations conducted a search and seizure at Seongnam City Hall on the morning of the 15th, while city hall employees covered the office under search with newspapers. It has been revealed through the minutes of the Seongnam City Council that the land compensation ratio in the Daejang-dong development project was based on the officially announced land price, which is lower than both the market price and the usual appraised price. The controversy that the original residents’ land was acquired at a low price, enriching investors, is expected to expand further.
According to the minutes of the Seongnam City Council on the 14th, during a meeting held in February 2015, Yuhan-gi, head of the Development Project Headquarters at Seongnam Urban Development Corporation, answered “officially announced land price” when asked by the city council about the basis for calculating land compensation prices. He is considered one of the key figures who led the Daejang-dong project at Seongnam Urban Development Corporation, along with former Planning Headquarters Director Yoo Dong-gyu.
The city council pointed out that the officially announced land price was unreasonably low compared to the market price and that there could be strong resistance from the original residents during the land compensation process. However, Yuhan-gi responded, “When comparing and analyzing the actual transaction prices in Daejang-dong, the calculation basis appeared similar.” Former Director Yoo said, “There were hardly any transactions (in Daejang-dong),” adding, “Only one transaction took place in 2014.” He also said, “(The compensation price in Daejang-dong) was almost close to the actual transaction price.” One city council member criticized, “Even if it were the appraised price, how can the officially announced land price be the actual transaction price?”
Despite this controversy, the agenda was approved as originally proposed on the same day. Afterwards, Seongnam Urban Development Corporation announced a public bid for private developers for the Daejang-dong development project and selected Seongnam Utddeul, which has a special relationship with Hwacheon Daeyu, as the private developer. An official from the urban development industry said, “Even if there are no comparable transactions, claiming that the official price is ‘an amount close to the actual transaction price’ and using it as the basis for the compensation ratio is difficult to understand.” A Seongnam City Council official said, “Although the compensation price was partially adjusted later through appraisals according to the Land Compensation Act, it cannot be ruled out that the adjustment rate was affected because the initial compensation price was set very low.”
In fact, there are suspicions that Hwacheon Daeyu and others initially estimated over 1 trillion won for land compensation costs but actually used only 610 billion won. On the 5th, Park Soo-young, a member of the People Power Party, claimed based on land compensation contracts of original residents in Daejang-dong that “Hwacheon Daeyu offered the original residents a land compensation price of about 2.5 million won per pyeong,” arguing that “the original residents were forcibly dispossessed of their precious land at a low price.” The residents maintain that the market price in Daejang-dong at that time was around 6 million won per pyeong.
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