Lower Standard Floor Area Ratio: Three Sectors Including Reconstruction, Redevelopment, and Urban Development Projects
Ulsan City will expand and improve the “Local Construction Industry Revitalization Incentive” system, which has been in effect since January.
The “Local Construction Industry Revitalization Incentive” system allows for a maximum 20% relaxation of the floor area ratio (FAR) for projects constructing multi-family housing complexes (including residential-commercial complexes) with more than 200 units, depending on the participation rate (5% to 90%) of local companies.
The city has applied this system to seven categories: joint contracts, subcontracting, electrical/communication/firefighting, design services, local materials, local equipment, and others, and has identified some areas for improvement.
Accordingly, three main areas will be improved and expanded: 1) downward adjustment of the standard FAR by land use zone, 2) application of the same incentives to reconstruction and redevelopment projects, and 3) application of incentives to multi-family housing in urban development project zones.
Looking at the main improvements, first, the range for applying incentives has been expanded by lowering the standard FAR for each land use zone.
Multi-family housing construction projects can receive FAR relaxation within the permissible range if they meet various public interest requirements such as infrastructure development, public open space, and green building certification. However, in most cases, projects reach the permissible FAR simply by providing infrastructure, leaving little room for additional incentives.
Therefore, it became necessary to widen the gap between the “standard FAR” (which serves as the basis for applying incentives) and the “permissible FAR” (which defines the maximum FAR).
To address this issue, Ulsan City partially revised and implemented the “Ulsan Metropolitan City District Unit Plan Establishment Guidelines” on August 8, lowering the standard FAR for each land use zone: general residential area by 5%, semi-residential area by 3.75%, and commercial area by 2.5%.
For example, the standard FAR will be lowered from 200% to 190% in Type 2 General Residential Areas, from 350% to 337% in Semi-Residential Areas, and from 600% to 585% in General Commercial Areas.
Second, incentives can now be applied equally to reconstruction and redevelopment projects.
Previously, for reconstruction and redevelopment projects, the local construction industry revitalization incentives could only be applied to three categories?joint contracts, subcontracting, and designers?based on the participation rate of local companies.
To prevent confusion in applying incentives and to expand the scope of local company participation, Ulsan City amended and announced a partial change to the “2030 Ulsan Metropolitan City Urban and Residential Environment Improvement Master Plan” on August 1, so that the “Detailed Operational Standards for Local Construction Industry Revitalization Incentives” can be applied equally to reconstruction and redevelopment projects.
As a result, the same incentives?up to 20% FAR relaxation based on local company participation rates (5% to 90%)?will be applied to all seven categories: joint contracts, subcontracting, electrical/communication/firefighting, design services, local materials, local equipment, and others.
Finally, the incentives will also be applied to the construction of multi-family housing within urban development project zones.
The “Detailed Operational Standards for Local Construction Industry Revitalization Incentives” previously applied only to district unit plan projects, so there were limitations in applying them to multi-family housing sites in urban development projects under the “Urban Development Act.”
Since June, the city has established an internal policy requiring a minimum 10% local company participation rate as a condition for calculating incentives when proposing new urban development projects or designating zones (determining FAR), thereby paving the way for local companies to participate in all multi-family housing construction projects under its jurisdiction.
An Ulsan City official stated, “By not only establishing the standards for the local construction industry revitalization incentives but also addressing the difficulties and limitations in their application, local companies can now participate more effectively in large-scale multi-family housing construction projects. We plan to analyze the effects and issues arising from the implementation of these incentives and flexibly adjust the standards as needed to suit local conditions.”
Ulsan City Hall.
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