Gyeonggi Province Expands 'New Town Exit Strategy'…Support for Sunken Costs in Unions

Gyeonggi Province has decided to support sunken costs—compensating for usage expenses when business is abandoned—for New Town unions.

Previously, sunken cost support was provided only when promotion committees, which exist at the stage before union establishment, voluntarily disbanded.

The province announced on the 27th that it has revised the subsidy standards for urban redevelopment project union promotion committee usage costs to this effect.

A province official stated, "We support sunken costs not only for New Towns but also for general redevelopment project unions including reconstruction and redevelopment. In addition to voluntary dissolution, we have included locations where authority was revoked as eligible for support. Gyeonggi Province is the first among metropolitan governments to extend sunken cost support to unions," the official said.

Previously, Governor Nam Kyung-pil had requested at a New Town status briefing last month that "many residents are suffering from the sunken cost problem related to New Towns. Consider ways to expand support for sunken costs."

When promotion committees or unions apply for sunken cost support, the amount of recognized costs (usage costs determined by the calculation committee) is decided through verification by city and county calculation committees.

Up to 70 percent of recognized costs are supported by the province and cities and counties, with the remainder being self-financed.

The Guri Inchang New Town E District received 171 million won in support, and currently approximately 30 New Town districts have applied for sunken cost support and are undergoing procedures.

The province has 52 New Town districts across 6 cities and 10 districts.

Of the 52 districts, 28 have established unions, 17 have promotion committees, and 7 are at the stage before promotion committee formation.

For general redevelopment projects including reconstruction and redevelopment, there are 181 districts across 22 cities. Of the 181 districts, 57 have established unions.