The traffic problems of new towns are all about money

Seoul Subway Line 9 trains run with a full load of passengers. By Taehyung Cho

Around 15 years have passed since houses were built in the Second New Town areas on the outskirts of Seoul, but the residents are still suffering from traffic problems. This is because project operators, local governments, and the central government have been conflicting on sharing costs of constructing a metropolitan transportation system worth tens of billions of won, disrupting the expansion of the new town’s transportation network. Experts point out that it will be difficult to establish a transportation network before residents move in for the Third New Town project if who to take charge of the financial burden of building a transportation network is not clear enough.

On December 5, the government announced the “Plan for Rapid Construction of Metropolitan Transportation Networks in New Cities,” which aims to shorten and simplify the administrative procedures for metropolitan transportation projects. The plan includes advancing the time for establishing metropolitan transportation measures from “before the approval of district plans” to “within a year after the designation of districts,” which is before district plans are made. And road projects will be directly conducted by the Metropolitan Area Transportation Committee under the Ministry of Land, Infrastructure, and Transport.

In the case of the Second New Town whose residents are still suffering from traffic problems, however, even if it passes the preliminary feasibility study after twists and turns, many projects were delayed over who will take charge of the increased business cost.

The construction of the Wirye Shrine Line, the key transportation measure for the Wirye New Town, has not been started around 15 years after the residents moved in. In September, it was put on the agenda of the Private Investment Project Review Committee of the Ministry of Economy and Finance, but it failed to make headway due to disagreements over the project cost. The construction delay was triggered by an opinion of GS E&C Consortium, the contractor, that it is difficult to conduct the project with the cost of 31 billion won funded by Seoul Housing & Communities Corporation (SH), the developer, including 23 billion won paid by the buyers of houses in 2009.

"The business environment has deteriorated sharply because the project has been delayed for more than 10 years, and prices have risen so much due to the coronavirus pandemic and the war in Ukraine," said Kim Young-hwan, chairman of the Wirye Common Issues Emergency Committee. He added, "The law related to private investment projects only has a declarative clause saying ‘The total project cost can be changed,’ but it does not specify how to do so in detail, which causes problems.”

Following complaints from the residents in Wirye, the Ministry of Economy and Finance revised its guidelines to state that "If the construction cost applied with the total production deflator of construction investment exceeds 7% of the original construction cost reflecting the inflation rate during the construction period, the total project cost can be adjusted at around 50% of the difference." Although negotiations on the project cost between the Seoul Metropolitan Government and the GS Consortium are currently underway, the residents say that the government's restriction on increasing the total project cost could prolong the project.

A case in point is the Gimpo Gold Line, which is notorious for its “overcrowding” subway trains during rush hours as it rushed to complete the construction without receiving any government or provincial support to skip the preliminary feasibility study and built “mini-sized platforms” that can only accommodate two-car subway trains. The construction of the Wondang-Taeri Expressway, which was planned for the Gumdan New Town in Incheon, was also delayed as Gimpo and Incheon have been in dispute for years over its project cost.

Currently, the project cost for the construction of metropolitan transportation networks is shared by the government, local governments, and project developers, which is because it is difficult to afford the cost with contribution fees that the developers of new towns, such as Korea Land and Housing Corporation (LH), collect from the buyers of houses. The problem is that there is no clear cost-sharing ratio stipulated in the Metropolitan Transportation Act.

Experts pointed out that disputes often arise as the government, local governments, and project developers negotiate and arbitrarily make decisions on a case-by-case basis.

"The general process is to determine the project cost and cost-sharing ratios after the results of a preliminary feasibility study prove the project to have validity,” said Kim Hwang-bae, a professor of drone space information department at Namseoul University. "However, there are frequent project failures or delays for the construction of metropolitan transportation, which passes through more than one city or province, because related laws do not specify who and how to share the business costs.”

※This article has undergone review by a professional translator after being translated by an AI translation tool.