Gwangju Seo-gu Faces Astronomical Compensation Crisis Due to Suspension of Residential Environment Improvement Project

Residents of Hwajeong 2 District Win on Appeal and Supreme Court After Losing First Trial

Developer LH Seeks About 13 Billion KRW in Damages from District Office

Residents Seem to Plan Lawsuits Over Forced Land Expropriation and Building Dem

Seo-gu, Gwangju Metropolitan City, has been embroiled in an astronomical damage compensation lawsuit as the Hwajeong 2 District Residential Environment Improvement Project was halted due to negligent administrative procedures. The photo shows the current state of the construction site where work has been suspended. Photo by XXX

[Asia Economy Honam Reporting Headquarters, Reporter Yoon Jamin] Seo-gu, Gwangju Metropolitan City is facing a crisis where it must pay 13 billion KRW in damages to the project operator due to negligent administration related to the Residential Environment Improvement Project.

Moreover, as residents have also announced plans to file damage compensation lawsuits, the total amount of lawsuits is expected to reach at least several tens of billions of KRW.

According to Seo-gu and residents of Hwajeong 1-dong District 2 on the 21st, an area of 25,000㎡ around 120 Hwajeong-dong was designated as a Residential Environment Improvement Project zone in 2006, and LH (Korea Land and Housing Corporation, formerly Housing Corporation) was set to build rental apartments.

However, at that time, the Housing Corporation and Land Corporation were in a transitional phase of integration, and due to reasons such as low project feasibility, the project was neglected.

After more than ten years, the project resumed in 2015, with plans changed to constructing public sale apartments instead of rental apartments, and LH notified residents of compensation based on appraisals.

Although the compensation amounts were unreasonable to residents, forced expropriation proceeded because Seo-gu had obtained “consent forms” at the initial stage of the project.

Residents formed a residents’ council and reviewed the consent forms but claimed that required documents such as certified seals and copies of identification cards were not attached. There were even signs of forgery and proxy signatures.

Accordingly, the residents’ council filed a lawsuit to cancel the project operator designation. The first trial resulted in a loss, as the court judged that administrative procedures were conducted lawfully.

Given this ruling, LH proceeded with forced expropriation again. Residents explained that the appraisal price at that time was only about one-third of the market price.

Therefore, residents refusing to relocate were forcibly evicted, and houses were gradually demolished.

Some residents left due to legal demolitions and court-enforced evictions, but the residents’ council, suspicious of many aspects, did not give up and appealed.

As a result, in 2018, the second trial court ruled in favor of the residents. In December of the same year, the Supreme Court confirmed the second trial’s decision, canceling the designation of the Residential Environment Improvement Project zone, LH’s operator designation, and halting construction.

This was due to administrative shortcomings such as Seo-gu’s failure to properly secure documents like copies of identification cards and certified seals when obtaining residents’ consent.

LH judged at the end of last year that the project was halted due to administrative errors and filed a lawsuit against Seo-gu demanding compensation of about 13 billion KRW, covering land acquisition costs, excavation, and part of the project expenses incurred so far.

A bigger problem is that residents are discussing with lawyers claims for material and mental damages regarding the illegal demolition of about 90 buildings and forced expropriation of registrations.

Ultimately, if residents win compensation claims against LH’s 13 billion KRW claim, experts and residents explain that Seo-gu will have to pay an astronomical amount.

To make matters worse, Seo-gu issued local bonds in 2008 at the early stage of the project and paid LH 2.33 billion KRW as infrastructure development costs, but even after more than a year since the project was halted, there is no countermeasure, and suspicions have been raised that Seo-gu conducted appraisals on behalf of the project operator for compensation of land, buildings, and fixtures.

Seo-gu is largely taking a hands-off stance, claiming there is no significant problem.

They explained that LH’s claim for about 13 billion KRW in damages was a formal act done before the three-year statute of limitations for claims expires.

Also, since more than two-thirds of residents’ consent is required to designate a project operator, they believe that if 11 more households out of 72 agree, LH can take over the project again.

Regarding the absence of certified seals and other documents attached to the consent forms, Seo-gu argues that there were no regulations on attachment of documents at the time of obtaining consent, and such regulations were only established in 2009, so the procedure was not illegal.

A Seo-gu official stated, “We are not pushing the project to LH, but since it is designated as a Residential Environment Improvement Project zone, only public enterprises, not private operators, can proceed. Currently, about half of the residents support LH’s involvement. The project will proceed in the direction most desired by the residents.”

However, some residents are reportedly considering applying for cancellation of the Residential Environment Improvement Project zone designation (requiring consent of more than half of residents), so the conflict with Seo-gu is expected to deepen.

Meanwhile, related to this, Seo-gu council member Kim Oksu is known to have pointed out causes and countermeasures regarding ongoing or planned compensation lawsuits, uncollected local bonds, and proxy appraisals during the 281st extraordinary session’s urgent issue inquiry on the same day.

Councilor Kim said, “If the project had been promoted with residents as the priority, there would have been no astronomical lawsuits like now, and the project would have been completed in the shortest time. It is the role of the autonomous district not to stand by idly more than a year after the Supreme Court’s ruling but to quickly conclude the project through consultation with residents.”

This content was produced with the assistance of AI translation services.