Gyeonggi Province Eyeing Development Profits from Gwanggyo New City

Gyeonggi Province is facing controversy for repeatedly seeking to change the original accord regarding development profits from Gwanggyo New City, which was supposed to be used within the project, citing various reasons. <See Suwon Ilbo, October 16>

Particularly, the province is criticized for abusing its authority as a higher-level government by attempting to pass on financial difficulties of Gyeonggi Urban Development Corporation and school site burden payments that should be borne by the province and Provincial Office of Education to basic local governments.

According to Gyeonggi Province and Suwon City as of the 28th, the joint implementers of Gwanggyo New City—Gyeonggi Province, Gyeonggi Province Office of Education, Suwon City, and Yongin City—are currently discussing the school site issue within the new city. This is because the Provincial Office of Education declared it would not undertake school construction, making it difficult to open schools by the time residents move in.

Earlier, the Provincial Office of Education abandoned school construction, claiming that the province had failed to pay outstanding school site burden payments (96 billion won), making it difficult to secure funds for school site purchases within Gwanggyo. In response, the province promised to provide land free of charge as a last resort. The province estimates that approximately 280 billion won (estimated supply value) will be needed for the establishment of 14 schools (6 elementary, 4 middle, 4 high schools) in Gwanggyo, and is appealing to financial constraints.

However, the province declared through some media outlets that it had confirmed 'free provision' without prior consultation with Suwon and Yongin cities, the joint implementers, drawing backlash from local governments. Suwon and Yongin cities view it as incomprehensible that the province and the Provincial Office of Education are passing the school site issue, which they should bear, on to local governments.

Furthermore, in June, Gyeonggi Province requested changes to the accord to allow part of the Gwanggyo New City development profits to be used for compensation for Dongtan 2 New City or Godeok New City in order to increase the capital of Gyeonggi Urban Development Corporation.

The province conveyed these requests to each local government, concerned about financial difficulties as the Urban Development Corporation's debt ratio reached 499% as of the end of June, and the government announced a policy to reduce the issuance limit of corporate bonds by public enterprises.

As such, criticism is mounting that the province, after concluding an accord under the condition of not taking development profits, is repeatedly eyeing Gwanggyo New City development profits under the pretext of financial difficulties.

One local government official said, "Substantial budgets are required to provide necessary welfare facilities within the new city," criticizing, "It does not make sense for Suwon and Yongin cities to bear the development damage while Gyeonggi Province takes the profits."

However, the province merely repeats the statement that "consultations for changes to the business contract are underway."