Incheon City to Recover All Excess Profits from 'Private Park Special Project'

Incheon City announced on the 30th that it has established a plan to fully recover excess profits from developers in relation to the 'Special Urban Park Development Project,' which involves developing parks and apartments simultaneously using private capital.

Recently, the city held meetings with developers of Mujugol Park in Yeonsu-gu, and Geomdan 16 Park and Yeonhui Park in Seo-gu, finalizing amendments to the business agreements that include measures for recovering excess profits. The agreements contain provisions on the standard rate of return, recovery ratios, and the timing of settlement and distribution after completion.

As nationwide allegations of preferential treatment related to private development projects arose and the city council requested measures to recover excess profits, the city proceeded with amending the agreements. An Incheon city official stated, "By amending the agreements to establish regulations for recovering excess profits, we have alleviated concerns about excessive development profits and preferential treatment for private developers. We will strengthen the public nature of the projects by ensuring sufficient development profits are invested in park creation."

The Private Park Special Project is a system where private developers create green spaces covering at least 70% of the total park area and donate them to the public, while developing apartments or other facilities on the remaining land. This system was introduced following the implementation of a sunset clause on July 1, 2020, which automatically nullifies the effect of long-term unexecuted urban planning facilities if the project is not initiated by June 30, 2020, after 20 years from the urban planning facility decision.

Scenery of Mujugol Park in Seonhak-dong, Incheon
Photo provided by Incheon City

Meanwhile, Incheon City plans to create 35 parks funded by city finances and 3 parks involving private capital by 2026. Among these, 16 parks have already been completed.

The Mujugol Neighborhood Park in Seonhak-dong, Yeonsu-gu, which was promoted as the first private park special project, opened last month. The private developer Mujugol Park invested 60 billion KRW out of the total project cost of 358.7 billion KRW to build the neighborhood park and completed an apartment complex with 767 households using the remaining budget. Mujugol Park was designated as a park facility in 1944 but was neglected as a waste storage site and farmland until it was selected as Incheon’s first private park special project site in 2016.

Additionally, regarding Yeonhui Park in Seo-gu, which is part of the private park special projects, there was controversy over soil contamination. However, investigation results showed that all 23 heavy metal items were either undetected or below the standard levels, and the project is proceeding as planned.