The Supreme Court on 26th ruled that Haeundae District in Busan does not have to return 33.38 billion won in development charges imposed on the developer of the 101-story mixed-use residential and commercial complex "LCT." Lower courts had ordered a refund, but the Supreme Court overturned those rulings.
Development charges require local governments to collect 25% of development gains from real estate developers.
On this day, the Supreme Court's First Division (Presiding Justice Shin Sook-hee) vacated and remanded the case in favor of the district office in a suit filed by the LCT developer Busan Urban Corporation seeking to cancel the imposition of development charges by the head of Haeundae District Office.
The corporation was responsible for developing the LCT project site. LCT PFV, the project's builder, purchased the land from the corporation and completed construction of the tourism facilities in March 2014. The corporation received a project completion inspection from the district office in December 2019.
The district office imposed 33.38 billion won in development charges on the corporation based on the land price as of the completion inspection date. Under the Act on the Restitution of Development Gains, development charges are calculated based on "the value of the land subject to imposition at the time the imposition ends." The office determined that the "time the imposition ends" was the completion inspection date.
However, late 2019 was when residents began moving into LCT, and real estate prices in Haeundae District had surged compared to before. Arguing that the development charges should be calculated based on March 2014, when construction of the tourism facilities was finished, the corporation filed suit. It was reported that using 2014 as the benchmark would lower the corporation's development charges to about 5.43 billion won.
Both the first and second instances sided with the corporation. The courts said, "March 2014, which is presumed to be the date land development was completed, should be set as the land price at the end of development, and development gains should be calculated using the lesser amount when compared with the land sale price."
The Supreme Court, however, found the lower courts' decisions to be wrong. The court said, "The 'time the imposition ends' should be understood to mean when the infrastructure necessary to meet the intended use as tourism facility land has been completed."
A Supreme Court official said of the ruling, "This is the first case in which the Supreme Court has set forth criteria for determining the de facto completion of development for part of the land subject to development charges."