[The Editors' Verdict] Will the Incheon Underground Shopping Mall Amendment Head to Court?

Incheon City Council Repasses Decision... Incheon City "Violation of the Act on the Management of Public Property and Goods"

Bupyeong Underground Shopping Center
[Photo provided by Bupyeong-gu, Incheon]

[Asia Economy Reporter Park Hyesook] The ordinance, which sparked controversy over its violation of higher laws, was passed by the Incheon City Council, ultimately leading to a legal battle to settle the dispute.

On the 14th, the Incheon City Council held the 275th 2nd regular session plenary meeting and re-approved the 'Incheon Underground Shopping Mall Management and Operation Amendment Ordinance,' which Incheon City had requested to be reconsidered. In the vote, all 30 council members present voted in favor. Although situations warranting reconsideration requests are rare, the voting results alone show the sharp conflict between the city administration and the city council.

For Incheon City, the only remaining option is to file a lawsuit with the Supreme Court as a last resort. According to the Local Autonomy Act, the head of a local government may file a lawsuit with the Supreme Court within 20 days of the re-approval if they judge the re-approved matter to violate laws.

The controversial amendment mainly extends the transfer, acquisition, and sublease (re-leasing) grace period of Incheon’s underground shopping malls up to five years and abolishes the designation of underground shopping malls classified as administrative property, allowing them to be sold. In 2019, the related ordinance was amended to suspend the ban on subleasing underground shopping malls for two years (until January 31, 2022), and this time the city council passed an amendment extending the grace period by an additional three years.

However, the amendment is embroiled in controversy over violating higher laws. Incheon City received a response from the Ministry of the Interior and Safety stating that the amendment violates the Act on the Management of Public Property and Goods, which stipulates that administrative property cannot be leased, sold, exchanged, transferred, or entrusted, nor can individual rights be established on it. Furthermore, underground shopping malls are classified as 'underground roads' under relevant laws, which are urban planning facilities classified as administrative property. To change them into general property that can be sold, the related law must be amended by the National Assembly.

The city requested reconsideration of the amendment from the city council for these reasons, but the city council insisted on passing the amendment through re-approval, arguing that the survival rights of approximately 3,400 store merchants depend on it and that the legality should be determined by the courts. Since the city’s request for reconsideration was ignored, Incheon City plans to resolve the legality through a Supreme Court lawsuit. The forthcoming ruling is expected to finally settle the long-standing issue of 'illegal subleasing' in the underground shopping malls.

This issue originally stemmed from management loopholes in Incheon City’s underground shopping malls. When the city established the underground shopping mall management ordinance in 2002, it approved private entities such as shopping mall operating corporations to renovate facilities and allowed contract extensions and subleasing based on the investment amount. Among metropolitan local governments nationwide, Incheon City was the only one to permit subleasing of underground shopping malls.

However, in 2006, the Act on the Management of Public Property and Goods was enacted, prohibiting subleasing of administrative property. Although Incheon City needed to amend its ordinance, it delayed the process due to merchants’ opposition and the city council’s reluctance. It was only after an audit by the Board of Audit and Inspection in 2019 that the ordinance amendment began.

The audit revealed that among 3,579 stores in 14 underground shopping malls in Incheon, 74% (2,653 stores) were subleased. Additionally, merchants charged rent twelve times higher than the annual usage fee paid to the city (1.98 million KRW), earning an average key money of over 400 million KRW per store.

The Incheon Underground Shopping Mall Association demands partial protection of vested rights, arguing that merchants have borne renovation costs, management fees, and facility modernization expenses, differentiating them from underground shopping malls in other regions. However, it seems difficult for Incheon City to extend the sublease grace period twice more while violating higher laws.

Moreover, the 'Incheon Underground Shopping Mall Win-Win Council,' composed of Incheon City, the city council, and experts, operated for a year but disbanded without significant achievements. If the Supreme Court rules the amendment illegal, concerns arise about how merchants can be persuaded then.

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