1

Housing Redevelopment Policy

September 22, 2003

Joo-Hyun ChoProfessor

Konkuk University

2

Basic Concepts Housing Redevelopment Projects

Redevelopment (1976~) Improvement (Housing Environment

Improvement Projects) (1989~) Reconstruction (1987~) Renovation (Remodeling)

Renovation

Classification Tuning (functional improvements)

Replacing heating pipes Refill (adding new functions)

Adding new internet lines Conversion

Extension of balcony Removing non-bearing walls Adding exterior stairs Adding underground parking spaces

4

Policy Overview Redevelopment methods by period

1955~1972: Clearance & Relocation Squatter Clearance & Relocation Civil Apartment Projects (1969~1970) Legitimization, On-site Rehabilitation (24,875HH’s) (1966

~) 1973~1983: Legitimization, On-site Rehabilitation,

Clearance & Self-help Reconstruction, International Loan Program, Outsourcing (Agency Dev’t)

Legitimization, On-site Rehabilitation (95,095HH’s) (1972~) : Public subsidy for infrastructure

Abolished because of cost burden & lack of Comprehensive plan

Designation of Redevelopment District (1973) : 196 districts, 4,470 thousand pyung, by Temporary Measure Law on Housing Development Promotion

Urban Renewal Law (1976): Self-help renewal projects Land readjustment by Seoul City Gov’t + Self-help housing

AID loan renewal projects (1976~1978): Installment payment plan, 9 districts

Redevelopment by outside agency (1978~1982): public implementation, housing by private contractors, land by residents, 12 districts, stopped by high costs

1983~ : Private-Private Partnership No intervention by public Resident owners (Coop) + Private Contractors (Capital, Co

op member) Self-sustained dev’t by public sale of finished apartment

s supported by housing boom esp. in Seoul Mostly built high-rise apartments & sale of extra units to t

he general public Triggers new law on self-help housing (1989) for the low-i

ncome people

1987~ : Reconstruction New demand for reconstruction of apartments

built in 1960’s Land shortage for New Apt in Large Metropolitan

Area 1989~ : Housing Environment Improvement

Projects On-site improvement/ Under 85 ㎡ per unit Financial Aid for Existing Tenants’ Rental Housing Total area should be smaller than 2,000 ㎡ .

2003~ : Urban & Housing Environment Alignment Projects

Unified process of three projects

Housing Redevelopment Project Performance by the end of 2001

No. of districts

Area(1000㎡ )

No. of houses demolished

No. of new HH’s

Nation-wide

Total 402 17,347 143,647 279,344

CompletedUnder Const.No Implement.

273 81 48

10,949 5,247 1,150

89,39344,622 9,632

168,952183,469

-

Seoul Total 331 14,633 125,005 259,513

CompletedUnder Const.No Implement.

212 78 41

8,519 5,150 964

72,46743,880 8,658

166,331 93,182

-

Apt. Reconstruction Project PerformanceYear Coop Established Project Permitted

No. of Coops

No. of CoopMembers

No. of Coops

No. of Coop Members

No. of Dwelling Units Planned or Completed

Total 1,562 253,661 1,055 146,460 292,225

’88~’90

30 5,139 14 1,239 2,076

’91 27 4,426 14 2,672 4,989

’92 65 9,716 21 3,718 8,213

’93 114 12,165 60 6,696 15,168

’94 156 21,591 76 9,115 24,028

’95 210 30,484 122 15,316 35,697

’96 200 31,473 136 18,952 44,310

’97 184 26,696 110 18,911 38,233

’98 86 18,490 49 7,124 15,685

’99 65 16,388 81 15,814 26,114

’00 294 36,338 231 27,609 48,526

’01 145 40,755 141 18.294 29,186

Housing Env’t Improvement Projects by the end of 2001 (1,000 HH’s)

City

Designation Under Const. Completed

No. of District

s

No. of Houses

No. of District

s

No. of Houses

No. of District

s

No. of Houses

Nation-wide

629 160.3 465 133.3 106 19.8

Seoul 99 17.1 68 12.6 21 3.7

Busan 130 44.3 124 43.6 6 0.7

Daegu 59 19.2 45 16.3 12 2.5

Incheon 50 15.1 40 11.8 10 3.4

Gwangju 22 5.4 13 3.8 9 1.6

Daejeon 22 7.8 18 6.9 4 0.9

11

• Reconstruction Before 2003

Reconstruction allowed only after 20 years since completion: average 20.4yrs.

Housing Stock by Age (Multi-Family)Total

-10yrs.

10~20 yrs.

20~30

yrs.

30~40

yrs.

+40 yrs.

1,000 DU’s(%)

3,516(100)

1,204(34)

1,852(53)

442(12.5)

17(0.5)

0.067(0.0)

12

Urban and Housing Environment Alignment Law(2003)

Comprehensive plans required for cities with populations of 500 thousands and more (17 cities)

Designation of Alignment Area Development Phases, Land Use, FAR Plans, etc. Need designation: 300d.u’s & over, lot size 10,000 ㎡ a

nd over New criteria for safety diagnosis

Preliminary safety diagnosis Structural Safety Architectural finish & Facility condition Living Environment

Main safety diagnosis Prelim criteria + Cost Analysis Structure: Slant, Crack, Corrosion, etc. Finish & Facility: Roof, Heating, Water, Electricity, Livi

ng Env.: Urban Appearance, Fire, Parking, Flood, Daylight, etc.

Cost Analysis: ∝=(renovation & maint. Cost/ reconst. & maint.c

ost) Score=0(if ∝≥1) ~ 15(if ∝≤0.69)

Total Score: Weights: Structure (45%), Finish&Facility (30%), E

nvironment (10%), Cost (15%) Over 56 points: Renovation 31~55 points: Conditional Reconstruction Under 30 points: Reconstruction

Cooperatives agreement requirements Redevelopment: over 4/5 of Land & Bldg. owners (before 2

/3) Reconstruction: over 4/5 of owners & 2/3 of owners by bu

ilding. Partial reconstruction possible

Reconstruction+remodeling Unified procedure of sale (recon & redev)

Project permit →Estimation of costs (3weeks) & application for sale (30~60days) →Disposal Plan →Public notice (30days) →Plan permit →Building start

Registration of project consulting firms

Project Process

Before 2003After

Redevelopment ReconstructionHousing Env. Im

provementBasic Plan↓Area Designation↓Project Committee↓Cooperative Est.↓(Contractor selection)Project Permit↓Disposal Plan↓Building Start & Sale↓Completion↓Account Settlements

Project Committee↓Safety DiagnosisCooperative Est.↓Contractor select.Project Permit↓

Bldg. Start & Sale↓Completion↓Coop. Dismiss

Area Designation↓Improvement Plan↓

Project Permit↓

Bldg. Start& Sale↓Completion

ComprehensivePlan ↓Area Designation↓Alignment PlanProject Comm.↓Safety Diag.Coop. Est.↓Project Permit↓Contractor SelDisposal Plan↓Bldg. Start& sale↓Completion↓Acc. Settlements

16

Policy Evaluation & Market Responses Policy Evaluation

Positive Side Alleviation of Housing Shortage

No. of dwelling units doubled after implementation (Dec. 2002)

Housing Redevelopment Projects Apt. Reconstruction Projects

No. of Existing

Houses (A)

No. of Houses Completed

(B)

B/A No. of Existing

Houses (C)

No. of Houses Completed (D)

D/C

89,393 168,952 1.9 146,460 292,225 2.0

Improvement of Living Environment Larger Unit Size

Redevelopment: 18.4 py → 25.1 py Reconstruction: 27.6 py → 32.5 py

Improved quality of Facilities: kitchen & Bath Improved infrastructure: road, parking, green Improved appearance Improvement in retail & services

Increase in Property Value Activation of Housing Construction Industry

Negative Side Same projects under different laws

Redevelopment: Physical Aspects emphasized Rehabilitation: Squatters with low feasibility Reconstruction: Not based on Urban Planning Proces

s No linkage between three projects

Inequality in distribution of development benefits

Housing Owners: 70% left the site because of the financial burden

Contractors & Local Gov’t: Profit & Tax New Owners: Large Capital gains

Externalities High Density: FAR 172.3%~406.7% (’90~’99) Inadequate Location & Infra: Access roads, scho

ols, water and sewer overload, high-rise apts. on hillside

Sunlight & privacy problems Lack of Public Financial Aids Speculation

Excess Expectation on Dev’t Profits

20

Market Responses on Reconstruction

Negligence of Maintenance Willful negligence for passing safety diagnosis This trend intensifies as neighbor housing prices increasi

ng and there are not much land left for new apartment construction

Struggle for higher FAR Reconstruction is a bargain between existing member of

Coop (giving up part of their land share) and new member (paying for construction costs)

Conflicts among Participants Land & Building owners, Current Tenants, Construction C

ompany, Local Gov’t

Owners vs. Owners Agreement, expectation, selection of contractors Appraisal of existing property

Owners vs. Tenants Insufficient consideration for existing tenants Forceful evacuation process

Owners vs. Project Company Conflicts on share, purchase price of land, relocation costs

and coop management fees Owners vs. Local Gov’t

Area designation (e.g. boundaries) Ratio of public land for infra & park etc.(2~30%)

Tenants vs. Tenants Timing & Place of relocation Different expectation on compensation methods

Tenants vs. Project Company Relocation & Compensation

Tenants vs. Local Gov’t Demand for public rental housing, temporary housing Demand for jobs & welfare

Project Company vs. Contractors Valuation of each inputs and allocation of outputs

Project Company vs. Local Gov’t Disputes over optimum FAR

Local Gov’t vs. Local Gov’t MOC vs. Metropolitan Gov’t(e.g., Levy of Excess density charge) City Gov’t vs. District(Gu) Office

23

Renovation Projects Mapo Yonggang Apartment

Objectives Model case by KHC Discourage reconstruction & Resource abuse Promotion of apt. remodeling projects

Process Dec. 2002: Safety diagnosis-Grade D April 2002~July 2003: Construction (13mos.)

General Description Location : Yonggang-dong, Mapo-Gu, Seoul

Project Size 18 pyung (59.5 ㎡ )x60 units (2 buildings)

Total costs: 3.2billion won ($27million)

Major Contents of Renovation Reinforcement of Structure Improvements of layout Installation of new balconies (4.5 pyung) New Insulation New kitchen system Replacement of heating and water pipes Modern exterior walls New electricity & communication lines

27

Issues for Discussion The role of public sector

Range of market intervention Price control, size mixture, FAR Relocation of tenants

Effective measures

Impacts of socio-cultural factors Reconstruction vs. Renovation

When (age), where, how (criteria)?

Why public intervention? How? Who are winners and losers? Is renovation an ultimate alternative? What about the lowest income class? What is the relationship between

market forces and reconstruction? Capitalist vs. Planners vs.

Environmentalists and NGO’s What are their roles? Is higher density without environmental

deterioration possible?