Diagnostic Study of Country Safeguards Systems in the ...krihs.re.kr/data/info_report/Workshop...

December 1-2, 2010

Asian Development Bank

Hee-Nam Jung

[email protected]

Diagnostic Study of Country Safeguards Systems

in the Legal and Regulatory Framework

for Land Acquisition and Resettlement

in the Republic of Korea

Director, Center for Land Policy

Korea Research Institute for Human Settlements

mailto:[email protected]

2

I. Background of Korean LAR

II. Legal, Regulatory and Institutional Systems for

Urban Development

III. Land Acquisition and Compensation for Urban

Development

IV. Land Acquisition and Resettlements for Urban

Development

V. Consultation, Information Disclosure and Resolution

of Grievances

VI. Comparative Analysis of Korean LAR and ADB’s SPS

VII. Policy Implication to Developing Countries in Asia

Contents

3

Purpose of the Study

Ⅰ. Background of Korean LAR

i. describing a detailed understanding of the evolution of the legal,

regulatory, institutional system for Korean LAR over past 60 years

ii. reviewing recent practice and experience with the legal framework

for LAR in the context of urban development

iii. conducting a comparative analysis of key LAR provisions in the

legal framework in Korea and the involuntary resettlement

safeguard requirements of ADB’ safeguard policy statements

iv. providing recommendations to developing Asian countries, such as

Mongolia, and identifying key challenges to establish and

implement such a proposed system

4

<Location of the Republic of Korea>


5

Industrialization


◦ Being liberated in 1945, Korean War (1950-1953) followed

◦ Military Coup in 1961 to escape the absolute poverty

◦ Since 1960s: industrial policy for labor-intensive manufacturing

◦ Since 1970s: industrial policy to promote heavy and chemical industries

◦ Since 2000s: techno parks or urban hi-tech industrial parks

<Trend of Industrial Estates Development (1965-2008)>

NationalIndustrial Estate

Regional Industrial Estate

AgriculturalIndustrial Estate

6

Urbanization


◦ Rapid urban growth by rapid industrialization

◦ Accelerating rural to urban migration to find jobs

◦ Requiring a lot of housings:

- number of homes : 3.3 million in 1950 13.8 million by 2007

- housing supply ratio : 82.4%(1962) 69.2%(1987) 100%(2000) 108%(2007)

<Trend of Population Distribution (1960-2005)>

<50,000 50,000-150,000 150,000-250,000250,000-500,000 500,000-1,000,000 >1,000,000

7

Urban infrastructure


◦ To accommodate the need for rapid urbanization and industrialization

- installing infrastructure including extensive network of roads, expressways,

subways, the high-speed KTX, harbor, airport etc.

<Trend of Infrastructure Development (1960-2008)>

Highway HarborRailway Airport

8

Since the early 1960s, rapid urbanization followed by rapid

industrialization◦ Urbanization rate : 37.0% in 1960 → 89.3% in 2008

◦ Industrialization rate : 36.8% in 1963 → 92.8% in 2008

◦ GDP per capita : 79$ in 1960 → 19,106$ in 2008

<Urbanization and Industrialization in Korea, 1960-2007>


0

10

20

30

40

50

60

70

80

90

100

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2006 2007 2008

(%)

Urbanization rate

Industrialization rate

9

Mis-match of demand and supply of urban land◦ because of rapid urbanization and industrialization

◦ causing the chronical appearance of land and housing speculation


-20

-10

0

10

20

30

40

50

60

1975 1980 1985 1990 1995 2000 05 06 07 08

(%)

Changes of Land prices Changes of Housing prices

<Changes in Land and Housing Prices>

10


Need for urban development

◦ Limitation of the role of private sector at least at the initial stage

-private development market was not established yet

-financial resources of private sector were very limited

-urban infrastructure was not supplied sufficiently because of public goods,

etc.

◦ Government had to involve in urban development

-drawing up development plans, imposing regulations, investing in

infrastructure, etc.

-providing land for residential, industrial, infrastructure through conversion

from non-urban used land

11

< Supply of urban land and urbanization ratio >

Urban Land

Land for housing, industry, school, road, railroad, ditch, water supply, park,

gymnastics, parking lot, gas station, warehouse & religion


0

10

20

30

40

50

60

70

80

90

100

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1975 1980 1985 1990 1995 2000 2005 2006 2007 2008

(%)(km²)

Urban land

Urbanization rate

<Supply of Urban Land and Urbanization Rate in Korea>

12

Legal Basis for Urban Development

Ⅱ. Legal, Regulatory and Institutional Systems for

Urban Development

Name of Laws Duration

Choson (Korea) Urban Planning Decree

Urban Planning Act

Land Rearrangement Act

Housing Site Development Promotion Act

Urban Development Act

1934-1962

1962------------------------------------------2002

1966-----------------------------2000

1980--------------------------------------

2000------------

Name of Laws Duration

Act on Comprehensive Plan for Construction

in the National Territory

Framework Act on the National Land

Act on Industrial Park Development for

Export Industries

Local Industrial Development Act

Industrial Base Development Promotion Act

Industrial Place Management Act

Industrial Site Location Act

Industrial Site and Development Act

Industrial Cluster Development and Factory

Establishment Act

1963--------------------------------- --------2003

2003 ------

1964 -----------------------1990

1970 ------------------ 1990

1973 ---------------- 1990

1975 -------------- 1990

1976 ------------ 1990

1990 ------------------

1990 ------------------

Legal Basis for Industrial Park Development

Development schemes

◦ Land Rearrangement Project : 1940s~1980s~ (suspended) ~ 2000~

◦ Public-managed Development Project : 1980s~ present

Land Rearrangement project (LR Act in 1966)

◦ Land assembly process (land pooling, land readjustment…)

- landowners make their land available for development and

receive in return either serviced land or money

in proportion to the value of the land they contributed to the project

◦ Historic characteristic

- self financing: substitute land + land for development costs

+ land for infrastructure

- no land acquisition and compensation, resettlement by themselves

- institutional structure: share development gains with landowner & public

developer

13


Urban Development

A B C

D

E

FG

A B C

D

E F

G

Park

14


Urban Development

<Concept of Land Rearrangement Projects>

Before After

Preserved

Land

Korean characteristics

◦ Implemented by both the pubic and private sector

◦ Land pooling and substitution project

-30% for infrastructure

-20% for development costs recovery

-50% for substitution to original land owners

◦ Benefits to public sector

- saving costs for infrastructure provision

- saving costs for development due to self-financing

◦ Benefits to landowner

- due to increase in land prices after the project

◦ LR Act was separately enacted (1966) from Urban Planning Act (1962)

15


Urban Development

<LR Project : Example>

Before After

16


Urban Development

Achievements

◦ LR project was mostly used for urban development until the early 1980s

- public sector : 75.2% of project site, 86.2% of project areas

◦ Most of existing inner area of big cities had been developed through LR projects

<Land Rearrangement Projects by Period>

17

8.11 5.76

59.65

164.91 165.19

65.39

26.78 15.38

0

20

40

60

80

100

120

140

160

180

Before 1950

51-60 61-70 71-80 81-90 91-95 96-00 2001-09

(㎢)


Urban Development

Evaluation : some negative effects of LR project

◦ Development gains allocation and social conflicts

-development gains were solely returned to private landowners,

mostly because of the lack of a relevant mechanism to collect capital gains

-a severe inequality in allocating development gains,

between landowners and landless, between landowners and first home buyers

◦ Inefficient use of serviced land

-substituted land was mostly used for detached housing,

not accommodate the increasing need for more housings in urban areas

◦ A long duration because of a series of procedures

◦ Prohibition of LR project within big cities (1984)

-PMD projects become prevalent since the 1980s

◦ Enactment of Urban Development Act (2000)

-the LR project is revisited again

18


Urban Development

Public-managed Development (PMD) projects

◦ Background

-During the late 1970s, land speculation prevailed due to mis-match of

demand and supply of urban land → need to increase urban land & housing

- Housing Site Development Promotion Act (1980)

◦ Main contents and characteristics

-Developing Comprehensive Housing Construction Plan

-Consulting with the central and local governments regarding the Plan

-Designating Housing Site Development Planned Zone

-Choosing developers from the central/local governments, public enterprises

• After 2000, private sector can joint the PMD project with the limitation

of 49.9% of share holds.

-Implementing project plans financed with the developer's own funds

-Reselling the serviced land in the private market

-Simplifying administrative process

• other administrative approvals and permits from the concerned department

(33 development Acts) are regarded as be obtained

19


Urban Development

20

<Before> <After>

<Master plan><PMD Project : Example of Bundang New Town>


Urban Development

21

<Before> <After>

<Master plan>

<PMD Project : Example of Pyeongchon New Town>


Urban Development

<Achievements of Public-managed Development >

22


Urban Development

0

50

100

150

200

250

300

350

400

450

Before'50 50's 60's 70's 80's 90's 01-09

(㎢)

Rearrangement Project Public-managed Development Project Total

23


Urban Development

Role of operators and regional distribution of PMD project

◦ Project operator

-only public sector : Korea Land and Housing Corporation, local government

◦ Regional distribution

-Larger cities where the need for supply of housing is urgent

<Roles of Operators and Regional Distribution of PMD Project>

Local Government

21%

Housing Corporation

26%

Land Corporation

53%

Local cities29%

Other metropolitan

area18%

Seoul metropolitan

area53%

24

<Trend of Housing Supply Ratio >

◦ Contribute to raise housing supply rate up to 100% for the relatively short period

78.274.4

71.2 69.872.4

86

96.2 98.3 100.6 101.2 102.2105.9 107.1 108.1 109.9

64.5 62.1 60.2 59.7 63.3

76.7

86.1 88.6 91.6 92.8 93.996.8 96.9 96.9 98

56.8 56.3 56.1 55.357.9

68

77.4 79.782.4

86.3 89.2 89.791.3 91.8 94

0

20

40

60

80

100

120

70 75 80 85 90 95 00 01 02 03 04 05 06 07 08

(%)

National-wide Capital area Seoul


Urban Development

Division of labor between land (public) and housing supply (private)◦ After 1980s, most urban land for housing were developed by PMD project

◦ Since then, division of labor in urban development is established

-land development is the role of public sector

-housing construction is the role of private sector

<Achievement of Housing Supply by Suppliers>

25


Urban Development

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

62-6

667-7

172-7

677-8

11982

1985

1990

1995

2000

2005

2008

Private sector Public sector

Public sector

Private sector

0

10

20

30

40

50

60

70

80

90

100

62-6

667-7

172-7

677-8

1

1985

1990

1995

2000

2005

2008

(%)

26


Urban Development

◦ Landowners are excluded from sharing development profits (compared to LR)

- development gains are used to lower the sales prices of land for low income

groups and the public

<Supplying Prices of Land Developed by PMD Projects>

PurposesLocation

Seoul, Busan Big cities Others

Lower than development costs

Rental housing under 60㎡ 60% 60% 60%

Rental housing of 60-85㎡ 85% 70% 60%

Public housing under 60㎡Seoul : 95%

Busan : 90%90% 80%

School 20-30% of development costs/free since 2009

Equivalent to development costs

Land to the original land owner100% of development costs

Public facilities

Market prices

Detached housingAppraisal prices

Other housing larger than 85㎡

Commercial Bidding prices

27


Urban Development

◦ As PMD becomes a dominant device to conduct urban development,

LAR becomes more important

- because most land in Korea is owned by private individuals

◦ Government had to purchase land from private landowners

- if the land is unable to be acquired by mutual agreement

then subject to compulsorily purchase according to expropriation procedure

0

5

10

15

20

25

30

35

40

1975 1980 1985 1990 1995 2000 2005 2006 2007 2008

(%)

Korea Japan

<Ratio of Land Owned by Government>

Ⅲ. Land Acquisition and Compensation for Urban Development

28

◦ The Constitution (1948)

-stipulating the principle of due process of law and just compensation

◦ Land Expropriation Act (1962)

-Public Works that allow the exercise of eminent domain

-the subjects and standards of compensation

-compensation and resettlement procedure

-expropriation process

-filing formal objections, etc.

◦ Act on Special Cases concerning the Acquisition of Lands for Public Use and

the Compensation for their Loss (Special Compensation Act, 1975)

-general rule for negotiated purchase

◦ Act on the Acquisition of Land etc. for Public Works and the Compensation

(Land Compensation Act, 2002).

Legal basis for land expropriation and compensation


29

Definition

◦ Eminent Domain

The right of a government to take private property for public use with

compensation to the owner.

◦ Expropriate

Acquiring ownership for a public purpose, under the right of eminent domain.

◦ Compensation

The act of compensating or the state of being compensated. Something, such

as money, is given or received as payment or reparation for damage, loss, or

injury suffered

Land Compensation Act Purpose of this Act is to ensure a promotion of

public welfare and a pertinent protection of

property rights through an efficient

implementation of the “public works”,

by prescribing matters for indemnity of any loss

incurred by the acquisition or use of the land,

etc. required for the public works through

consultations or expropriation.

Land Compensation Act

Development Concerned Acts

Farm land, etc.New Town Project

30


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31

Scope of Eminent Domain: Public works


1. Projects for national defense and military affairs

2. Projects for infrastructure (railroads, roads, airports, dams, etc.)

3. Projects for public facilities (office buildings, plants, research institutes, etc. )

4. Projects for education and arts (schools, libraries, museums, etc.)

5. Projects with respect to the erection of housing, or creation of housing lots for the purpose of a rent or transfer, which are to be implemented by the state, local governments, government-invested institutions, local public corporations, or any persons designated by the state or local governments.

Quasi Eminent Domain powers to private developer◦ To force minority owner to sell their land to a major owners

if the project has a public accountability

◦ When the landowner possesses more than 2/3 of the project area or

obtains consent from more than 2/3 of all other landholders

under Urban Development Act (2000)0

32

Performance of land acquisition and compensation

◦ Total land acquisition (1980~2009) 4,768 km2; annually 160 km2

◦ Purpose of acquisition (by acreage)

- road (34.0%), housing sites (13.9%), industrial park (7.1%), dam (7.5%),

- national defense and military (13.6%), flood-control rivers (5.7%),

agricultural water (2.4%), research and academic purpose (1.6%),

waterworks and drainage (1.5%), parks (1.4%), and railroad (1.2%) etc

◦ Total compensation (1980~2009) 236.6 trillion won; annually 7.9 trillion won

◦ Purpose of acquisition (by amount )

- housing sites (45.2%), roads (24.4%), industrial (5.5%),

- dam construction (0.8%), research and academic purpose (4.7%), parks

(2.0%), flood-control river (1.8%), railroads (1.8%), national defense and

military purpose (1.5%), waterworks and drainage (0.9%) and agricultural

water (0.3%)


33

Performance of land acquisition and compensation◦ Acreage of acquisition : roads account for the largest portion (34.0%)

◦ Amount of compensation : housing site development (45.2%)

<Actual Record on Acquisition and Compensation for Public Works (1980-2009)>

Acquired Area Amount of Compensation

Road34%

Housing14%

Industrial7%

Dam7%

Others38%

Road24.4%

Housing45.2%

Industrial5.5%

Dam0.8%

Others24.1%


34


<Changes in Acquired Land

by Purpose >

< Changes in Amount of Compensation

by Purpose >

0

50

100

150

200

250

300

350

400

79 81 83 85 87 89 91 93 95 97 99 01 03 05 07

(㎢)

Road Housing Industrial

Dam Others

0

5

10

15

20

25

30

35

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

(trillion won)

Road Housing Industrial

Dam Others

35


<Unit Price of Compensation by Purpose of Public Works>

0

50

100

150

200

250

300

350

808182838485868788899091929394959697989900010203040506070809

(thousand won /㎡)

Road Housing Industrial Dam Others

Note: Unit Price = total amount of compensation / total area of acquired land

36


Freehold ownership in Korea (compared to leasehold in HK)◦ Government shall contact landowners in advance

and negotiates the conditions for land acquisition

◦ If the agreement fails to reach,

then compulsory acquisition by exercising the power of eminent domain

◦ During the last 30 years

93% of the total areas were acquired through mutual agreements

7% were compulsorily acquired through expropriation process

<Changes in Adjudications on Expropriation and Objections>

0

50

100

150

200

250

300

0

5

10

15

20

25

30

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

(㎢)(㎢)

Adjudication Objection Total Acquired Land

37


Eligibility for Compensation

◦ All affected persons are eligible to receive compensation

- if they own their property, reside/ lease in a house, run business including

farming in project areas

- on or before the date a compensation plan is published

◦ Tenants are subject to the same rules and conditions as land and housing owners

◦ “Speculation in compensation” occurred in the late 1980s

- as resettlement measures become very profitable

◦ Speculation in compensation intends

- to acquire qualifications eligible for resettlement and livelihood measures

- typical speculative act are to file a false move-in report or to file a business

registration to receive compensation for business loss

◦ Government clarified the criteria for eligible buildings for compensation (1989).

- since then any unpermitted buildings constructed after development activity is

restricted shall not subject to compensation for expropriation

- unpermitted buildings constructed on or before Jan. 24, 1989 shall be deemed

legitimate buildings

- thus their relocation costs etc. shall be compensated accordingly

38


Principle of Compensation

◦ Indemnity by project operators

The Project operator shall indemnify the landowner or person concerned for any losses

incurred by the acquisition or use of the land, etc. required for the public works.

◦ Prior indemnity

Any project operator shall pay the full amount of indemnity to the landowner and person

concerned before undertaking his works for the relevant public works.

◦ Indemnity in cashThe indemnity for losses shall be paid in cash (if the landowner desires, the indemnity may

be paid with the bonds issued by the relevant project operator or serviced land developed

within project site.)

◦ Indemnity by individual

The indemnity shall be paid individually to the landowner, etc.

◦ Lump Sum indemnityIn case where there exist several lands under the same ownership but with the different

indemnity period, the project operator shall ensure to make a lump sum payment of

indemnity.

Computation of indemnity amount

Point of time for price of indemnity amount

◦ Consultation case : at the time of yielding an agreement

◦ Expropriation case : at the time of adjudicating on the expropriation

◦ Compensation shall be the open market value base on the existing land use, not on the potential value for future development

◦ Project operator shall entrust the appraisal of the lands, etc. to

more than two appraisal business operators.

◦ In case where any land owner makes a request, one more appraisal

business operator may be selected.

◦ Indemnity value is a arithmetic average of above two or three appraisal

results.

39


40


Officially-assessed prices of real estate System

◦ By the mid 1970s, the need for land expropriation was comparatively very low- most urban development was carried out by LR scheme that did not require land acquisition

from landowners

- land prices were assessed by local government (tax) officials

◦ The situation changed when industrial policy was switched to promoting HCI (1973)- HCI required much larger amount of land than light industries, but it was not easy to provide

just compensation

- as land prices increased very rapidly after the 1st land boom (1968-1969),

and most financial resources had to be channeled into HCI

◦ Introducing Basic Land Prices (BLP) system based on Act on the Utilization and

Management of the National Territory (1972)- to assess the BLP, Certified Public Appraisals were introduced (1973)

- since then land and housing values have been assessed by the certified civil appraisals,

not by the government officials

◦ BLP system developed toward officially-assessed prices of land system

by enacting Public Notice of Values and Appraisal of Lands, etc. Act (1989)- evolved to the officially-assessed prices of real estate system

by enacting Public Notice of Values and Appraisal of Real Estate (2005)

41


Improving the level of compensation

◦ At the initial stage of implementing the Basic Land Prices system (1973-1989) and

the Officially-assessed Prices of Land system (1989-2005)

- those prices were significantly lower than market prices

- those prices were utilized as criteria in providing compensation for the land

expropriated for public works

◦ This situation has changed over time

- on the one hand, appraisal techniques have developed along with the spread of

computerizing mass appraisal

- on the other, after the success of the Democratization Movement (1987) both

the government and society paid greater attention to just and fair compensation

◦ Since then market levels of compensation have been achieved

◦ Particularly since the 2000s, compensation prices increase very fast and much

higher than the prices of general land market

- higher compensations raised sale prices of developed land, and this, in turn,

resulted in an increase of housing prices.

- therefore, LR method with no land purchase costs is being re-appreciated to

stabilize real estate market.

42


<Changes in Increase Rates of Land Price, Consumer Price and Unit Compensation>

-10

-5

0

5

10

15

20

25

30

35

1981~1985 1986~1990 1991~1995 1996~2000 2001~2005

(%)

Land price Consumer price Unit Price of Compensation

43


<Comparison of Increased Rates of Land Compensation Prices>

0

10

20

30

40

50

2003 2004 2005 2006 2007

(%)

Nation Average OPRL OPRL in Project site

Note: OPRL = Officially-assessed price of Reference Land

44


◦ The indemnity shall be made based on the officially-assessed prices of land

under Public Notice of Value and Appraisal of Real Estate Act (2005).

◦ Appraisals shall take as benchmark the officially announced price of the

reference land * deemed to have the similar usefulness to the land in

question.

- the price of unit area of reference land, which government has surveyed,

assessed and made public every year.

◦ Appraisals shall compare the various factors such as location, topography,

surroundings, etc. which affect the objective value of the land, of more than

one or two pieces of reference land to the land being the object of

assessment.

◦ Appraisals shall conduct appraisal so as to maintain balance between the

price of the land to be assessed and the officially announced price of

reference land

Indemnity subjects and standards

Land

45


Goods (Include : Buildings, Standing trees, Structures and Other goods

fixed to the land, farm crops, graves, etc.)

◦ Buildings and structure shall be made in the amount of costs necessary for

their transfer (=“transfer cost”) except following cases ( such indemnity shall

be made at the market price of the relevant goods)

① Where it is difficult to transfer the buildings, etc.

② Where the transfer costs are in excess of the structure price.

③ Where project operator acquires them for the direct use for the project

◦ Farm crops shall be indemnified by taking comprehensive account of their

types and the extent of their growth, etc.

◦ Graves shall be made by computing the expenses required for changing their

burial sites.

46


◦ Rights indemnity (mining concession, fishing right, right to use water, etc.)

Shall be made at the proper price assessed by taking account of the

investment costs, expected gains. etc.

◦ Business losses (incurred by the discontinuation or suspension of business)

Shall be made by taking account of the business profits, the transfer

expenses, for facilities, etc.

◦ Farm losses

Shall be made by taking account of the revenues per unit area of the farmland.

◦ Wage losses (suffered by the workers temporarily laid off or unemployed)

Shall be made by taking account of the average wage under the “Labor

Standards Act”.

Others

47


◦ Land : 84.9% of the total amount of compensation (increases year by year)

◦ Goods (housing and structure) : 10.6%

◦ Agricultural loss : 1.3% (decreasing mirroring changes in industrial structure)

◦ Business loss : 1.1%

◦ Resettlement measures : 0.3

Loss compensation by subject (1998 to 2009)

<Changes in the Amount of Loss Compensation by Subject of Compensation>

0

5

10

15

20

25

30

35

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

(billion won)

Land GoodsBusiness Loss Farm LossFishery Loss ResettlementsOthers

Ⅳ. Land Acquisition and Resettlements for Urban Development

48

Resettlement measures before the mid-1970s

◦ From the beginning of urbanization and industrialization, LAR system has evolved

which composes of two major parts; compensation and resettlement- Compensation focuses on matters for indemnity of any loss incurred by the acquisition or

use of the land, etc.

- Resettlement is a part of living compensation policy which is designed to help restore the

original status of the damaged living conditions for a person who has lost the basis of living

by providing land, etc.

◦ However, resettlement did not receive much attention until the mid-1970s.- because most urban development projects were executed through LR scheme

- LR is a joint project with public sector and landowners and thus does not need to acquire

land or other structure for the urban development project

- landowners and concerned persons including tenants discuss and decide resettlement

issues by themselves.

◦ Even if land was forced to sell for installing infrastructure or building industrial estate, - those project areas were relatively small and located within agricultural zone

- massive movement for houses was not required much

Policy issue on resettlement was mainly the compensation for moving expenses,

relocation expenses of movable, relocation expenses of agricultural land, etc.


49

Resettlement measures during the mid-1970s ~ late 1980s

◦ Resettlement becomes important in earnest since the mid-1970s, when the

government switched industrial policy toward fostering HCI- creation of a large-scaled industrial complex for HCI necessitated the creation of a

resettlement place

- Industrial Complex Development Promotion Act (1973) : 1st Act governed the

resettlement measures

◦ Special Compensation Act (1975)- institutionalize an explicit resettlement measure necessary for urban development

- stipulating that the creation of a resettlement place shall include basic living facilities

such as roads or water sewage

- costs incurred in the establishment of these infrastructural facilities shall be borne by the

project operator

◦ Resettlement became wider - from covering compensation for moving expenses

- to providing resettlement estate to the involuntary movers.


50

Resettlement measures since the 1990s

◦ Major factor to make the scopes of resettlement measure diverse- appearance of the 3rd real estate speculation (1988)

- comprehensive real estate measures to reduce land speculation deals and to increase

the housing supply (August 1988)

◦ To suppress speculative demand for land and housing, the Public Concept of Land

Ownership policy was introduced (1989)- limiting on the ownership of housing lots (660 m2 in larger cities)

- Imposing a tax on excessive profits earned from land sales

- Introducing development charges

- Adopting a composite land tax, etc.

◦ To drastically increase in the supply of houses - announce a plan for the construction of 2 million housing units (1988~1992)

- to implement the Plan, five new cities were developed in 1992.

◦ To facilitate the smooth acquisition of land for creating new towns, the nature of

resettlement measures changed- from maintaining or improving the quality of living life of an affected person

- to providing a new opportunity for upgrading income generation capacity of the affected

- the so-called the concept of “land for livelihood measure” emerged


51

Two factors playing a key role in producing “for livelihood measure”

◦ One is a learning effect from past experience

◦ Urban development through PMD scheme reshapes real estate market- large-scale housing complex in large cities, establishing a pleasant living environment

fully equipped with various urban infrastructures

- services land and housing within those new towns increased very fast after the

completion of project

◦ The prices of commercial land increased faster than that of residential use- accordingly there was a hot competition for bidding for buying commercial land

→ The affected person requested to give them the qualification for buying land

for commercial use without passing the bidding process

→ The commercial land supplied to them is now called as “land for livelihood

measure”


52

◦ Other factor is a result of democratization after 1987

- some civil groups sought to protect the rights of involuntarily resettled persons

- the affected persons also asked measures for improving livelihood protection in

addition to just compensation for real rights on land and housing,

which might increase the opportunity of their income and profit sources.

- the affected persons were gradually able to organize their own organization to

deliver their voices to the public urban developer

through the deliberation at the Indemnity Council (established since the 1990s)

- finally agreed to introduce the livelihood measures,

even if it was not explicitly conceptualized in the positive law,

Land Expropriation Act


53

Appearance of “speculation in compensation” against resettlement

and livelihood measure

◦ Change in patter of real estate speculation

- before the early 1990s, speculation against the land nearby the urban

development project site

- since then, speculation against the housing and land supplied within the

project sites

◦ Policy measure to crack down on such speculation

- to obligate to use the land within three years after being supplied

- to prohibit from re-selling the land to another person without use of the land

◦ Benefits of land for resettlement and livelihood measure

- such regulations are not applied to land for resettlement and livelihood

measure

- supply price of the land for resettlers is lower than market prices

(80% of development costs in metropolitan area and 70% in other regions)

→ land provided as part of the resettlement and livelihood measures are

resold out within a short period


54

◦ Being an eligible resettler itself guaranteed to earn a lot of profits

- speculation in compensation intends to acquire qualifications eligible for

resettlement and livelihood measures

- typical speculative act are to file a false move-in report or to file a business

registration to receive compensation for business loss

→ Thus, recent policy task is how to prevent such speculation,

emphasizing the tight application for eligible criteria for those measures


55

<Fluctuation of Population in the Project District in Case Area>

130

135

140

145

150

155

160

165

170

175

180

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

2 6 10 2 6 10 2 6 10 2 6 10 2 6

2004 2005 2006 2007 2008

Po

pu

latio

n

oth

er

tha

n t

he

pro

ject

dis

tiri

ct

( th

ousand

)

Pop

ula

tion in t

he p

roje

ct

dis

tirict(

thou

sand

)

In the project area Other than the project area

Public NoticeDesignation of the

district

Approval of

execution plan

Approval of

Develop.Plan


56

<Changes in Development Permission in Case Area>

0

40

80

120

160

200

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10

2003 2004

(No.)

In the project area Other than project area

Public NoticeDesignation of

the district


57

<Changes in Permission and Report of Construction in Case Area>

0

20

40

60

80

100

120

140

0

2

4

6

8

10

12

14

16

18

20

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

2003 2004

(NO

. of oth

er

than p

roje

ct

dis

tric

t)

(NO

. of In

the p

roje

ct

dis

tric

t)

In the project area Other than project area

Public Notice Designation of the district


58

Resettlement measures for tenants

◦ Hot debates on whether resettlement measures for the tenants were necessary

◦ No group- resettlement for the tenant was regarded as an issue that has to be resolved between

owners and tenants, not an issue to be settled between public developer and tenants

- tenant uses the building as a temporary residence for the contracted period

very short, such as for six months or for one year before 1990

extended to for two years by Housing Lease Protection Act (1992)

- thus, difference between owner and tenant with respect to the loss of the living

foundation : the owner permanently lost his/her living foundation

◦ Yes group- NGOs’ activities focused on the resident rights of tenants

- tenants are vulnerable because they have difficulty in finding new living foundation

◦ Conciliation reached to an agreement- Land Expropriation Act was amended (1989)

to allow the tenants displaced by urban development being entitled to compensation for

costs for relocation and moving expenses

- tenant also shall be subject to special supply of rental housing as part of resettlement

measures


59

Current resettlement measures : Four major components

◦ Compensation for moving expenses since 1960s

◦ Providing residential land and housing within the development site (resettlement

measure) since the mid 1970s

◦ Providing the privilege for buying the commercial land (livelihood measure)

◦ Providing resettlement measure to tenants (compensation for moving expenses

and providing rental housing) since the 1990s

- most of resettlement measures are designed to help restore and improve the

original status of living conditions

- livelihood measure are designed to safeguards the income generation

capacity of affected persons


60

Eligibility for resettlement and livelihood measures

◦ Resettlement measures

- those who has owned a legitimate building within a project district and

continued living in the building

from before the base date for compensation

◦ Livelihood measures

- those who have performed business (including agricultural and livestock

business) in a project district

from before the date for compensation

◦ Resettlement measures for tenants

- tenant who is a head of a household

and has resided in a house subject to removal


61

Resettlement schemes

◦ Developing and supplying separate resettlement sites

◦ Supplying sites

-land for detached houses for a multiple use of stores (less than 265 m2)

-land for detached houses for an exclusive residential purpose (less than 330 m2)

◦ Supplying housing of which is less than 85 m2

◦ Granting resettlement funds

-which shall be an amount equivalent to 30% of the appraised value of a

residential building for which an indemnity shall be made

◦ Moving expenses of a residential housing for temporary residence

-to house owner, two months of the average monthly household expenditure

-to tenants, four months of the average monthly household expenditure


62

Livelihood schemes

◦ Provide sites for commercial buildings or stores in commercial buildings

-the area for the sites shall not exceed 27 m2 for each one household

-the number of stores in a commercial building shall not be more than two

◦ Other livelihood measures

-vocation training (superficial)

-preferential hiring (temporarily workable during the project implementation)

-preferential provision of the National Housing Fund (workable)

-provision of alternative land and houses owned by the government (superficial)

-tax cuts for compensations (workable)

V. Consultation, Information Disclosure and Resolution of

Grievances

63

Process of LAR

◦ Should follow due procedures based upon legal foundations

- consultations are key issues in LAR process

◦ First step : Project preparation

- verify the public work, prepare the project,

carry out basic survey for identifying the affected property and persons

◦ Second step : process of reaching an agreement

- negotiate the terms and conditions of compensation with stakeholders

- reconciliation between project operator and affected persons must be made

◦ Last step : resolution of grievance

- moving to adjudication on expropriation, the appeal, administrative litigation for

compulsory expropriation

Consultation

Procedure

PROCEDURE REMARKS

Preparation of Land &

Goods Protocols

Publication & Perusal of Indemnity

Plan

Holding an Indemnity Council

Appraisal & Computation of

Indemnity Amount

Demand for the Indemnity

Consultation

Conclusion of Contract (Transfer of ownership)

Application for Adjudication &

Raising Objections(When consultation failed)

Institution of Administrative

Litigation

(When Adjudication

dissatisfied)

Expropriation

Procedure

64


Grievances


Grievances

65

Information disclosure

◦ Before deciding the district boundary for the scheduled project

- the details and methods of compensation and resettlement measures shall be

notified to the affected persons

◦ All the affected persons shall be examined before and after the notice date

- the examination shall be made with the cooperation of residents or the

Residents’ Committee

- the result of on-site examination shall be accompanied with the signs of

witnesses to prevent any future dispute

◦ The content and methods of resettlement measures shall be individually notified

- at the same time the content and methods shall be publicly notified through

newspapers, etc. and posted at the office.


Grievances

66

Consultation

◦ At the initial stage, the affected persons organize the Residents’ Committee for


- the affected persons may file a lawsuit to require the nullity or cancellation of

the project designation

- request a certain level of compensation

- require establishing measures for supporting residents

◦ In addition, consult through the Indemnity Council

- the affected persons consult on the content, methods, implementation plans of

resettlement measures with project operator through Indemnity Council

- the chairperson of Indemnity Council shall notify the matters consulted on

resettlement measures to the project operator

- upon receiving the consulted matters,

the project operator shall reflect them if deemed justifiable


Grievances

67

Indemnity council (IC)

◦ It appeared in the late 1980s when the 2 million unit housing construction plan

was implemented: It was not a statutory institution at that time

◦ To invite the affected more actively in preparing compensation and resettlement

plan, Land Compensation Act was revised to institutionalize IC (2007)

- IC plays a role as a discretionary advisory agency

◦ To collect opinions from the affected persons and resolve complaints,

- the head of a relevant local authority shall establish the IC within 30 days from

the date the compensation plans expires

- members of the IC shall be composed of judges, lawyers, notary publics,

professors, and public officials of the relevant local government

- at least 1/3 of the members shall be the land owners and related persons

- the IC consults on the matters such as opinions for the assessment of

indemnity amount, the scope of remaining land and the formulation of

resettlement plan, the relocation of public facilities within the relevant project

area, and others requested by the landowner or person concerned.


Grievances

68

Resolution of grievances

◦ Adjudication is a last procedure for expropriation that in cases of the failure of

consultation- adjudication shall be made following a strict form and procedure

- adjudication is a formative, administrative disposition to decide details of the authority for

expropriation granted to the project operator

◦ Where the each party is dissatisfied with the adjudication of the Land

Expropriation Committee, an objection or administrative litigation may be raised

or filed- raising objection is one form of typical administrative litigation

- raising objection is a means of appeals against any unlawful or unjust decision of the

Land Expropriation Committee

- it is an administrative litigation procedure to request cancellation or modification of the

decision

◦ When a project operator, a land owner, or any person concerned raises an

objection, - such person may commence an administrative litigation within 60 days after receiving

the written decision on adjudication or within 30 days after receiving a written decision on

an appeal


Grievances

69

Land Expropriation Committee

◦ To make judgments, in a fair and neutral way, on disputes on land expropriation

or indemnity for losses between a project operator and an affected person

◦ Nature of Land Expropriation Committee (LEC)- a quasi-judicial authority, an independent and representative administrative agency, and

a special agency to adjudicate the expropriation and use of land and fixture necessary

for public works

- established at the central government and also at the each local authority

◦ Member of LEC - compose of specialists with neutral stance,

such as judges, prosecutors, lawyers, professors and senior public officials

◦ Function of LEC - make a decision on the districts of land to be expropriated or used

- methods of use

- compensation for losses

- the commencement date of expropriation or use and its period

- other matters under the Land Compensation Act.

70

<Changes in Rates of Adjudication

on Expropriation and Objections>

<Changes in Rates of Objections

and Administrative Litigations>

0

2

4

6

8

10

12

14

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

(%)

Adjudication on Expropriation Objection

0

20

40

60

80

100

120

140

160

80 82 84 86 88 90 92 94 96 98 00 02 04 06 08

(%)

Objection Administrative Litigation


Grievances

71


Policy 1: Screen the Project Early

◦ At the stage of the preliminary examination for urban development project, all the

houses, buildings and structures within the scheduled project area are examined

◦ To minimize involuntary resettlement- collective community within the boundary of the project area is usually excluded

- collective community within the project district shall be preserved

- maintenance charges shall be borne by the owner to resolve the free-rider issue on using

infrastructure installed by the project

Policy 2: Carry Out the Meaningful Consultation

◦ Before determining the boundary for the scheduled project- the details and methods of compensation and resettlement measures are notified to the

affected persons

- the affected persons organize the Residents’ Committee

- the affected persons consult on the content, methods, and plans of resettlement and

livelihood measures through Indemnity Council (IC)

- project operator shall reflect the matters consulted if deemed justifiable

◦ The vulnerable persons are not specifically considered in the consultation process- various other social security systems are used for helping those vulnerable persons

- being separately applied from the establishment of resettlement measures

72


Policy 3: Improve the Livelihood of All Resettlers

◦ To support for improving the livelihood of all displaced persons, various measures

for resettlement are implemented

- the creation of resettlement complex or settlement sites

- supply of housing sites

- preferential supply of housing

- support for settlement fund

◦ To share additional revenue generated from urban development projects with

persons subject to resettlement

- sites for commercial buildings or stores in commercial buildings are provided as

livelihood measures

Policy 4: Provide Resettlers with Needed Assistance

◦ In addition to provide resettlement and livelihood measures

- National Housing Fund is preferentially provided to resettlers (low interest rate)

- Compensation for business loss, compensation for agriculture, livestock, and

fishery loss, moving costs for farming and moving expenses are paid.

73


Policy 5: Improve the Standards of Living of Vulnerable Persons

◦ Various social security systems are run

-being separately implemented from resettlement measures

◦ Preferentially hire them during the implementation of the project

◦ Rental housing is specially supplied for persons who do not own a house

Policy 6: Develop Procedures in a Transparent, Consistent, and

Equitable Manner

◦ All the procedures are posted on website of relevant agencies

◦ The procedures for consultation and expropriation are notified to the affected

persons

- publicly announced through newspapers and posted at the office

◦ Indemnity council is operated for the purpose of a fair consultation

◦ If any objection is raised against the results of consultation

- according to just procedures, adjudication on expropriation, filing for raising

objection and administrative lawsuit may be filed

74


Policy 7: Ensure that the Vulnerable Persons Are Eligible for

Resettlement Assistance and Compensation for Loss of Non-land

assets

◦ Resettlement assistance and compensation for losses of non-land assets are

applied equally to the owner and non-owner of land

Policy 8: Prepare a Resettlement Plan Elaborating on Resettlers’

Situation

◦ Resettlement measures include supply of housing sites, preferential supply of

housing, support for settlement fund

◦ Through the consultation at the Indemnity Council, the affected persons may select

proper methods to their situation

◦ The schedule, budget, and statue of resettlement measures are re-examined in the

process of project approval from relevant agencies

◦ The adequacy of supply price for resettlers is reviewed at the Deliberation

Committee for Costs for the Creation of Housing Site

75


Policy 9: Disclose a Draft Resettlement Plan◦ The draft resettlement plan is disclosed fully in the consultation process

◦ The resettlement measures are established by reflecting the demand and request

of persons subject to resettlement through the consultation process and the

Indemnity Council

◦ The confirmed resettlement plan is individually notified, publicly announced through

newspapers and posted at the office

Policy 10: Executive Involuntary Resettlement as Part of

a Development Project

◦ Any urban development project should reflect resettlement measures in the land

use planning of the project

◦ The supply price of the land should be calculated based on the costs for

resettlement

◦ The Deliberation Committee for Costs for the Creation of Housing Site verifies

whether the costs for resettlement are calculated in a proper way

- the result of deliberation on the costs should be open via the Internet

76


Policy 11: Pay Compensation before Resettlement

◦ The compensation shall be paid before the residents actually move out

◦ The entitlement of rights to resettlement measures is confirmed before the approval

of the execution plan of the urban development project

Policy 12: Monitor Resettlement Outcomes and Disclose Monitoring

Reports

◦ Any urban development project should reflect resettlement measures in the land

use planning of the project

◦ Whether the resettlement measures are implemented as planned is verified at the

time of the completion inspection of the urban development project

- the result of the completion inspection shall be disclosed immediately

◦ Process and procedure for monitoring the implementation of resettlement

measures with respect to the effect on the living conditions of the affected persons

and the accomplishment of the initial goals of the resettlement measures are not

established in Korea

- if necessary, post monitoring and evaluation are conducted

77


Wrap Up

◦ In general saying, Korea’s resettlement measures reflect policies recommended

by the ADB relatively well

◦ Except that the post monitoring and evaluation process for the effects of

resettlement measures is not conducted for all the development projects

78


Land Problems and LAR

◦ Rapid urbanization and industrialization caused various problems in land

market

- high land price, real estate speculation, privatization of development gains,

and reckless development, and those problems are intertwined with each

other

- these problems are also intertwined with LAR

◦ It is necessary to prepare ways to resolve the land-related problems

- from the early stage of urbanization and industrialization

79


pursuing regionally

balanced development

strategies

restructuring betterment

recapture system

establishment of

rational land use

planning system

expansion of

urban property supply

correlated

Real estate problems

disorderly

development

Causes

speculationencroachment

of agrarian land & foresthigh prices

inadequate land

use planning system

improper betterment

recapture system

over-concentration

in Capital Region

insufficient

urban property

Policy Tasks

80


Freehold land ownership system and LAR

◦ As most land in Korea is owned by individuals, expropriation of private land and

compensation thereof are inevitable in the process of urban development

- Korean laws have been mainly focused on the compensation for lands as

ownership system is based on freehold rather than leasehold

- 85% of total compensation is for land, 10.6% for buildings, and 0.3% for


◦ Many developing countries and even Hong Kong’s ownership is based on

leasehold

- compensation is made for rights to use not for land ownership

- thus compensation for buildings and resettlement measures will be regarded

more importantly

81


Need for social consensus on LAR

◦ LAR system has been continuously modified in line with the changes in the

political, social and economic environments

- as there is some trade-off relationship between the level of compensation and

the quality of resettlement measures

◦ To keep on feasibility for urban development project, its overall costs including

compensation shall be minimized

- while compensation and resettlement shall be fully reflected to protect the

livelihood of re-settlers

◦ There is a need for forming a social consensus on the level of compensation

- level of compensation was relatively low during the early period of urbanization

and industrialization because of a limited government budget as well as an

authoritarian rule

- while that becomes relatively higher during the latter period of urbanization and

industrialization because of increase in income, increase in real estate prices, as

well as a result of democratization

82


Need for contemplating the reasons for conflicts over LAR

◦ The social conflicts over LAR were inevitable in the process of urban development

and compensation- there are four main reasons in Korean case

◦ The first : urban development schemes (conflict between project operator and

affected persons)- before the 1980s, urban development was conducted through LR, where compensation

was not necessary and resettlement measures were prepared through a conciliation

decided by affected persons

- since then, PMD scheme was prevailed, where land is compulsory acquired, conflicts over

LAR cannot be resolved fundamentally

- recently a need for applying the combined approach of LR and PMD is suggested as an

alternative to PMD

◦ The second : speculation in compensation (conflict between complied person and

speculator)- speculation in compensation is generated in an attempt to obtain the right to receive the

benefits of resettlement and livelihood measures

- recently a measure of using aerial photograph is suggested to oversee a fake move-in and

illegal/unapproved development activities

83


◦ The third : market stabilization (conflict between landowners inside and outside the

project sites)- compensation is paid based on the existing use value

- but the prices of the lands near the project site increase very fast

- there is a need to stabilize the property market of regions nearby project sites.

◦ The last : efficiency of LAR (conflict between urban development and the general

public)- since the expenditure for urban development is procured from the taxes of the general

public, an increase in compensation and resettlement expenses will lead to an additional

tax burden

- government needs to seek measures to improve the fairness and confidence of the

appraisal of compensation

- Korean government is now trying to improve appraisal process; applying GIS system to

appraisal, developing a database of transactions and compensations, systematizing

compensation standards and processes, creating a appraisal manual, etc.

84


Imbalance of demand-supply of land/ Abundant cash liquidity/ Low interest rate/ Portfolio

Conflict 3

Inside the project area

Complied

compensation

Conflict 2

Speculation in

compensation

Outside project area

Increase in

land prices

Increase in cash due to

compensation

Demand for alternative

land purchase

Improved infrastructure

Urban development project

Difference of development gains

Compensation PriceConflict 1

(Land owner)Conflict 4

General People

<Land market>

85


Capacity building for institutional arrangements

◦ Establishment of neutral organization for conflict coordination

- needed to make fair and neutral judgments on conflicts over LAR between

urban development project operators and landowners

- a semi-judiciary, independent, and special public agency to arbitrate the

expropriation and use of lands needed for public projects

- composes of specialists with neutral stance, such as judges, prosecutors,

lawyers, professors and senior public officials

◦ Establishment of dialogue organization

- in many cases, urban development operators hold prominent positions than

general landowners and affected persons

- Indemnity Council where project operators, landowners, and third-party experts

can participate to sufficiently receive and incorporate opinions of the affected

residents

- most resettlement planning are discussed, prepared, revised, and implemented

through Indemnity Council in Korea

86


◦ Establishment of experts for compensation appraisal

- need for fostering neutral experts who are in charge of appraising the level of

compensation and resettlement expenses accrued by urban development

- mostly public officials appraised compensation prices before 1972

- since the time, Certified Public Appraiser system is introduced to minimize

conflicts over compensation prices

◦ Establishment of specialized research institute

- compensations and resettlement measures of urban development projects are

very specialized areas

- specialized research institute is required to theoretically and practically support

the public officials to enable the efficient implementation of compensation and

resettlement systems

- Korean government is seeking ways to study these issues and improve related

systems through independent research institutes, such as the Korea Research

Institute for Human Settlements and the Korea Legislation Research Institute

87

Thank You

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