Gyeongja Agency to Entrust Ungdong 1 District to Gyeongnam Development Corporation ... Sole Designation as Project Operator

The Busan-Jinhae Free Economic Zone Authority has decided to designate Gyeongnam Development Corporation as the sole project operator by administrative order to normalize the development project of Ungdong District 1 in Jinhae-gu, Changwon Special City, Gyeongnam, which has been stalled for a long time.

As the project approval authority, the Free Economic Zone Authority held a press conference at the Gyeongnam Provincial Government Press Center on the 17th and announced, "In accordance with the Special Act on the Designation and Operation of Free Economic Zones, we plan to designate Gyeongnam Development Corporation as the sole project operator by administrative order."

The authority cited public interest, accountability, and expertise as the background for this decision.

It explained that when the project agreement was signed in 2009, the land acquisition cost for the 2.24 million square meters of Ungdong District 1 was only 13.6 billion won, but the current officially assessed land value has reached 191.5 billion won.

Sungho Park, head of the Busanjinhae Free Economic Zone Authority, is speaking about the sole designation of the project operator for the Woongdong 1 District development project and future development plans. Provided by Gyeongnam Provincial Government

The authority stated, "There is a need to prevent excessive development profits and potential preferential treatment for private operators, and as the land value is expected to increase astronomically during future development, public development is inevitable."

It also emphasized the necessity for prompt normalization of the project by designating a sole operator to resolve issues stemming from Jinhae Ocean Resort, the private operator, failing to repay loans by the deadline.

Furthermore, it explained that designating Gyeongnam Development Corporation, which has experience and capability in development projects, as the project operator would prevent decision-making confusion and delays that occurred when Changwon City and Gyeongnam Development Corporation were joint operators, and would ensure efficient and swift project implementation.

The authority plans to complete the designation of Gyeongnam Development Corporation as the sole project operator within this month.

Gyeongnam Development Corporation will revive the development plan that ended in 2022, complete the process of changing the development (implementation) plan for a period extension by September, and finish remaining infrastructure such as roads.

For the livelihood countermeasure sites for the extinguished fishermen who lost their fishing rights due to the Ungdong District 1 development project, the project area will be divided, and the fishermen will be granted project operator status to carry out their own development projects.

To this end, starting in September this year, the process of changing the development plan for area division will be initiated, aiming for completion by April 2026.

Development site of Ungdong 1 District, Jinhae-gu, Changwon-si, Gyeongnam. Provided by Changwon Special City Hall

The development corporation will also address the issue of payment for confirmed investment costs to Jinhae Ocean Resort, which stopped construction after building only the golf course in December 2017, following groundbreaking in November 2013.

According to the existing agreement, if the confirmed investment costs for the golf course construction and other expenses incurred by Jinhae Ocean Resort are paid, Jinhae Ocean Resort will be allowed to operate the golf course until December this year.

Afterward, a new operator will be selected on the condition that Changwon City and Gyeongnam Development Corporation bear the confirmed investment costs, and after negotiating the transfer of facilities such as the golf course, the right to operate the golf course will be granted.

Previously, in March 2023, the authority determined that Changwon City and Gyeongnam Development Corporation, the joint project operators, were responsible for the prolonged delay and decided to revoke their project operator status.

In response, Changwon City filed a lawsuit to cancel the revocation of project operator status, and the appeal is currently ongoing. As the recent request to suspend execution was dismissed, Changwon City lost its operator qualification on January 11.

The authority explained that it has been consulting with Changwon City regarding the designation of a sole project operator since the end of last year, but although Changwon City initially agreed to the sole designation of Gyeongnam Development Corporation, it recently reversed its position and requested joint operator status. It also noted that two attempts to operate a consultative body for project normalization in 2020 and 2022 ended in failure, providing the background for the sole operator designation.

It added that, given the high likelihood of prevailing in the second and higher court appeals against Changwon City's lawsuit, it plans to respond actively according to law and principle if Changwon City continues with the litigation.

Commissioner Park Sungho stated, "The normalization plan is a realistic and optimal alternative prepared for the normalization and prompt development of the Ungdong District 1 project in accordance with the relevant special law," and added, "We will ensure that each phase, including the establishment of future development plans, proceeds without delay."