Establishment of Public Contribution Guidelines
Ordinances Take Priority... Legislation to Follow
The Ministry of Land, Infrastructure and Transport announced that it will establish new public contribution guidelines and distribute them to local governments nationwide on the 26th. The public contribution system is a mechanism to share the benefits arising from urban planning changes with local communities through methods such as donations in kind. Until now, local government ordinances have defined the specific scope and scale, but the new guidelines set standards to increase predictability during project implementation and to prevent excessive burdens on developers.
The basic principle is to secure public interest while reasonably sharing development gains and avoiding excessive burdens. The guidelines apply to mixed-use developments, development of idle land or relocation sites over 5,000㎡, changes or cancellations of urban planning facilities, or designation as spatial innovation zones where building uses or restrictions are relaxed. Existing ordinances or guidelines will still take precedence.
The burden limit is set within 70% of the land price increase. Some local governments have previously accepted up to 100% of the land price increase as public contribution due to concerns over preferential treatment controversies, which is the legal maximum. However, considering factors such as average land prices by land use zone in the project area, development demand, and the status of infrastructure installation, developers may be charged up to 100% if reasons are explained.
The pre-change land price evaluation point is set as the day before the initial public inspection and announcement of the plan, and the post-change evaluation point is the date of decision and announcement of the plan including the public contribution plan. The post-change evaluation is based on the current point in time, not on project completion. Two appraisal firms are selected through a lottery with the participation of local governments and developers, and the arithmetic mean of their appraisals is used.
Exemption criteria were also established. These include projects realizing public purposes, public facility management and operation costs borne by developers, low-profit or non-residential function-centered developments, and land price changes unrelated to plan changes. The Ministry of Land, Infrastructure and Transport will review and supplement the guidelines during their operation and plans to pursue legislation in the future.
With the establishment of these guidelines, the Ministry expects that leading projects in spatial innovation zones selected last year?such as Seocho District Office, Gimpo Airport, Doksan Air Force Base, Cheongnyangni Station (Seoul), Yeongdo District, and Geumsa Parkland (Busan)?will accelerate. Lee Sang-joo, Director of the Land and Urban Office at the Ministry, stated, "There has been a lack of concrete standards at the central government level and the system operation has been constrained due to controversies over preferential treatment. With the enactment of these guidelines, development projects utilizing sites with great potential to create regional growth engines will be promoted."
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