Goyang City Reaches Final Conclusion: "No Liability for Compensation" in Reserve Fund Use for City Hall Relocation

Goyang City Special Audit Results
Reserve Fund Use Met Requirements
Lawful Execution of Reserve Funds
Reporting Procedures to Council to Be Strengthened

Goyang Special City in Gyeonggi Province (Mayor Lee Donghwan) announced on the 6th that it had conducted a special audit regarding the use of reserve funds for the feasibility study fee for relocating the city hall, following the final court ruling on a resident lawsuit, and reached a final conclusion of "no liability for compensation."

Goyang Special City Hall exterior. Provided by Goyang Special City.

This special audit was conducted starting from October 28, targeting 14 related individuals, in order to clearly determine whether there was any compensation liability. This followed a ruling by the Uijeongbu District Court on September 16, 2025, which found that Goyang City had acted unlawfully by neglecting to address the city council's demand for compensation.

The audit found that, at the time the reserve funds were used to pay the feasibility study fee for the city hall relocation service on July 25, 2023, the responsible department only became aware that the fee for the feasibility study would arise after submitting the first supplementary budget proposal. Considering that failure to pay the service fee by that date would have resulted in financial losses due to contract cancellation, it was concluded that the use of reserve funds met the requirements for unforeseeable and extraordinary expenditures and was therefore appropriate.

In addition, the city determined that the process had included prior control procedures such as consultation with the budget department and routine audits, and that the expenditure did not fall under any inherent or statutory restrictions on the use of reserve funds. Therefore, the execution of the reserve funds was deemed lawful.

Furthermore, since the "feasibility study report," which was the result of the service, was utilized in administration, it did not constitute a case where intentional or gross negligence caused damage to property in violation of laws or regulations, which is required for compensation liability under the Act on Liability of Accounting Staff, and thus, there was no liability for compensation.

However, regarding the "handling of the city council's compensation demand," although the auditor at the time responded by giving cooperative approval to the budget officer's reply to the council-which stated that the feasibility study fee was within the intended scope of reserve fund use and did not fall under any inherent or statutory restrictions-the court appears to have determined that, regardless of the presence or absence of compensation liability, there was a procedural obligation to report the results to the council after sufficient review.

Accordingly, the auditor plans to take measures so that, in the future, if there is a compensation demand from the city council under Article 150 of the Local Autonomy Act, a thorough review of the facts related to the compensation demand will be conducted, and the results will be reported to the local council in accordance with the intent of the Local Autonomy Act.