New Applications Accepted from the 10th
Adjustment Period to Be Cut in Half
The Ministry of Land, Infrastructure and Transport announced on the 9th that it supported the normalization of project financing (PF) projects worth 21 trillion won last year, which faced difficult business conditions.
Through the public-private joint PF Adjustment Committee, the Ministry received 81 adjustment applications last year and, after consultations between public and private operators and 10 committee deliberations, recommended adjustment plans for 72 cases. Among these, 69 cases have reached agreements between the public and private sectors and are preparing to resume projects.
The PF Adjustment Committee is an organization that normalizes projects by resolving stakeholder disagreements such as changes in project plans and cancellation of agreements in development projects jointly promoted by the public and private sectors.
In the recent adjustment cases, public housing projects involving private participation (approximately 15 trillion won) faced concerns of delays due to soaring construction costs. The Adjustment Committee judged that the cause of the construction cost increase was due to unforeseeable situations such as the Russia-Ukraine war. Accordingly, it recommended that the public sector bear part of the construction costs and that projects not yet started be adjusted according to local demand. The amount borne is calculated by multiplying the total construction cost by the difference between the actual inflation rate and the normal inflation rate (3.15%), then applying the respective sharing ratio.
The development of the Godeok Seojeong-ri Station area (about 800 billion won) was blocked due to loan restrictions caused by the private developer's delayed land payments. The Adjustment Committee judged that it was more advantageous for the region for the existing developer to promptly establish infrastructure rather than stopping the project and finding a new developer. Accordingly, the deadline for the remaining land payment was extended by 1 year and 6 months to enable financial procurement.
The Osan Cheonghak public-supported private rental housing project (about 1.3 trillion won) was at risk of being halted for more than 9 months due to delays in adjacent land development. Gyeonggi Province and Osan City shortened the permit procedures by about 8 months through prior review, enabling project normalization.
Project Financing (PF) Adjustment Committee Procedure. Provided by the Ministry of Land, Infrastructure and Transport
The Ministry of Land, Infrastructure and Transport will accept new adjustment project applications from the 10th until 2025. Application methods and procedures will be guided by the REITs Review Department of the Korea Real Estate Board.
From this year, the Ministry plans to operate the PF Adjustment Committee as a permanent system and reduce the adjustment period by half. In the past two years, applications were accepted once a year (for one month), and it took up to 8 months from application to adjustment.
Additionally, as a bill to elevate the Adjustment Committee to a statutory committee under the "Act on the Management of Real Estate Development Projects, etc." has been jointly proposed by the ruling and opposition parties in the National Assembly, the Ministry plans to strengthen cooperation with the National Assembly to pass the bill.
Jin Hyun-hwan, the 1st Vice Minister of the Ministry of Land, Infrastructure and Transport, said, "In the process of promoting PF projects, proactive administration such as changing project plans or agreements in response to internal and external changes is necessary," and added, "We will actively support the Adjustment Committee to serve as a bridge for public-private cooperation."
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