The Ministry of Land, Infrastructure and Transport presented guidelines to limit the public contribution cap of development projects to 70% of the increase in land value. This is to provide reasonable standards for public contributions and prevent delays in development projects caused by excessive public contribution burdens. This is the first time that public contribution guidelines at the government level have been released.
The public contribution system under the National Land Planning Act is designed to share the benefits arising from changes in urban planning with the local community through methods such as contributed acceptance. It is carried out in forms such as the installation of public facilities, provision of sites, and cash payments.
On the 25th, the Ministry of Land, Infrastructure and Transport stated that it would distribute guidelines to local governments to operate the public contribution system consistently and reasonably. In these guidelines, the government suggested the standard for public contribution to be ‘within 70% of the increase in land value.’ The ministry noted, “We established a level to secure public interest while preventing excessive profits from urban planning changes.”
Previously, local governments operated public contributions based on their own ordinances and guidelines without a common standard. Consequently, some local governments rigidly managed the public contribution system due to concerns over preferential treatment, resulting in instances where they received public contributions up to the legal cap of ‘100% of the increase in land value.’
However, the Ministry of Land, Infrastructure and Transport has allowed local governments to receive public contributions up to the legal cap if they explain the reasons to developers, considering the average land value by zoning, development demand, and current public facilities installation status.
The application target of this guideline includes areas designated as district unit planning zones or spatial innovation zones where the purpose of building and building coverage ratio and floor area ratio are relaxed. Redevelopment and reconstruction projects are excluded from the application target.
Accordingly, it is expected that there will be increased momentum in promoting spatial innovation zones where density and use regulations are dramatically relaxed. Guidelines can be applied in calculating public contributions for development projects such as the Seoul Yongsan International Business District utilizing the railway maintenance site and Hyundai Motor's ‘Global Business Complex (GBC)’ in Samseong-dong, Gangnam-gu, Seoul.
Lee Sang-joo, head of the Land City Division at the Ministry of Land, Infrastructure and Transport, said, “While the previous regulatory framework for public contributions under the National Land Planning Act has given local governments the flexibility to operate detailed standards and procedures through local government ordinances, there was a lack of specific criteria at the central government level, and the system's operation has been stifled due to concerns over preferential treatment.” He added, “With the establishment of these guidelines, it is expected that development projects that utilize potentially significant sites will be promoted to create regional growth engines.”