An Urban Renewal Project: Clean–Up System
An urban renewal project is a private project for which the public administration determines urban planning to refurbish areas that need to recover their urban functions or where living conditions are poor in a systematic way. Within the limits of the planning, an association consisting of more than 400 owners, on average, promotes the refurbishment project through consent among residents. It usually takes over nine years for residents to form an association and enter their new residences. A refurbishment project progresses through the following steps: ①Designating a prearranged target ②Designating a refurbishing target ③Setting up a committee ④Setting up an association ⑤Authorizing implementation ⑥Authorizing management and disposal ⑦Removal & starting construction ⑧Completion (①~②: Implementaion by Public sector, ③~⑦: by Private sector i.e. actual owners).
The major problems involved in the renewal projects before the implementation of the initiative included the following:
(1) Monopoly of information by the association leadership.
Information on renewal projects was monopolized by a small number of people including association leaders. The project progress was not disclosed to ordinary association members, who had to make crucial decisions based on insufficient or distorted information fed by the association leadership. Lawsuits ensued, thereby delaying project completion and increasing members’ financial burdens in the end.
(2) Blind decisions on the project launch without information on each member’s share of costs/benefits.
On the average, it took three years for association members to be informed of the exact amount of money they had to pay for the renewal project after they agreed to join the project. Residents were often divided between continuation and cancellation of the project. Even when the project sometimes resumed after a couple of years, residents suffered from increased costs.
(3) Public administration hardly played any role in resolving serious conflicts among residents.
For the reason that it is a private business, public administration hardly played any constructive role in the attempts to resolve the numerous irregularities and conflicts involved in each renewal project. Even for civil appeals, it used to order solutions between the parties concerned, take transitory solutions, or impose sanctions on one of or both parties involved in a conflict. It never really tried to intervene in the operation of the associations through wise systematic arrangements.
(4) Urban development plans finalized without citizen engagement.
Previously, when SMG was about to determine the scope of urban development or renewal plans, it called on residents to make decisions based on a project overview instead of information on the estimated costs and benefits, giving them no opportunity to engage in its policymaking processes.
(1) Formation of a task force team including outside experts for the increased roles of public administration in urban renewal projects.
In 2008, SMG came up with a proposition to resolve the numerous chronic irregularities and conflicts involved in the operation of associations designed to promote urban renewal projects in the city for more than 40 years. A task force team consisting of public servants and outside academic and business experts worked on the proposal for a year.
(2) Transparency secured, irregularities eliminated in the association operations through real-time information disclosure on a public website.
In January 2010, SMG launched the Clean-up System and forced all of the 685 urban renewal associations in the city to register all the details of their project information with it, got district offices to monitor information disclosure by associations twice a month, and imposed administrative sanctions on associations that failed to fulfill their obligation to provide their members with full information on time according to the relevant regulations.
(3) Resident interest, engagement enhanced through the online disclosure of full project information.
Since 2010, the Clean-up System has offered around 220,000 pieces of diverse and useful information ranging from monthly payment statements to minutes of meetings as well as various service contracts and each landowner’s estimated share of costs upon project completion. So far, more than ten million citizens have visited the website since they now have access to all the details of renewal projects crucial to their livelihood anytime, anywhere. Virtually all of them oversee the operations of the associations 24/7, filing reports on irregularities with government agencies based on the information available on the website.
(4) Supply of information on an individual landowner’s share of costs enabling reasonable decision making at the outset of renewal projects or for associations currently suffering from serious conflicts.
The improvement has enabled residents to make informed decisions on whether to proceed with a project or not at its outset through the presentation of the individual association member’s estimated share of the costs in advance. Such has reduced conflicts among residents and risks of additional financial burden caused by project delays.
Through the enactment of an ordinance, SMG has made it mandatory for anyone willing to form an association to post the estimated costs and expenses to be borne by each household on the Clean-up System before obtaining the consent of the residents concerned. It has also arranged for every district office to establish a Verification Committee that reviews and validates the estimation prior to its online disclosure. SMG has not recognized an association that has failed to meet the requirement.
For areas wherein associations have already been established but projects have not actually progressed due to conflicts among residents, SMG has arranged for more than 10% of the association membership to ask public administration for the calculation of the individual landowner's estimated share of costs, with residents making decisions on the future of the project in question.
Creativity and Innovation
Public administration has figured out a legitimate means to protect citizens’ properties and resolve social conflicts in private business.
Through the establishment of a transparent information disclosure system for private ventures, public administration has ensured that information is shared by all residents concerned so that association operations are disclosed to the public and residents engage in constructive monitoring and oversight activities.
Prior to the implementation of the Clean-up System in 2010, urban redevelopment and reconstruction projects in Seoul remained outside of the administration’s attention for four decades. Currently, SMG intervenes to make sure that associations are run transparently and all the necessary project information is provided to citizens so that they can make very reasonable decisions on their future at the earliest while fully respecting the integrity of the associations. As overseer of various urban projects in the city, SMG has found a fundamental solution to one of its most serious chronic problems.
Execution and Implementation
(1) April 2008: Launch of the Policy Consulting Group for urban renewal projects.
SMG launched a policy consulting group consisting of public servants and outside experts to figure out fundamental solutions to irregularities committed by associations and conflicts arising between residents with respect to urban renewal projects for more than four decades.
(2) July 2009: Announcement of new policies based on the consulting group’s research results.
In June 2009, the consulting group delivered the results of its 14-month research to SMG. On July 1, SMG announced its new policies regarding the establishment of a transparent information disclosure system and the mandatory presentation of the individual household’s estimated share of the final costs before approval for an association can be issued.
(3) January 2010: Announcement of the Clean-up System.
SMG announced its Clean-up System in January 2010, six months after beginning to work on the development of the system (July 2009). Since the system was not yet backed by legislation, SMG focused on the introduction of the system to the public through briefing sessions and press releases. Association leaders vehemently objected to SMG’s move.
(4) July 2010: Legislation of the Clean-up System and disclosure of the individual household’s estimated share of costs before the establishment of an association is approved.
Legislation eventually resolved the objections of those with vested rights. All of the city’s 685 renewal project associations have now joined the Clean-up System.
(5) June 2011: Launch of the calculation program of the individual household’s estimated share of costs.
The estimated share of costs by the individual landowner is crucial information for his/her decision on whether to join an association or not. A reliable system needed to be established. Following a pilot program to correct any program error, SMG launched the calculation program in June 2011. A total of 146 renewal projects have used the program and disclosed information on the individual participant’s share of costs before associations were formally established.
(6) January 2012: Shift of focus to urban renewal centered on current residents instead of landowners for new and existing controversial projects.
SMG shifted the focus of its urban renewal projects and decided to protect the interests of the current residents of the areas to be redeveloped given the numerous problems associated with the previous landowner-centered development approaches, which depended on the bulldozing of the entire areas to be developed and led to the national frenzy in real estate speculation, demolition of communities, loss of livelihood by mom-and-pop store owners, simmering social conflicts, and infringement of residential tenants’ rights.
(7) May 2012: Pilot survey conducted on the future of an urban renewal project that has stalled for a long time due to conflicts over the directions of the project.
In May 2012, SMG conducted a pilot survey among residents regarding the future directions of an urban renewal project that had stalled for a long time, providing them with information on the individual household’s estimated share of costs.
On July 30, 2012, SMG had the relevant ordinance revised so that the new ordinance would contain specific methods and procedures of the abovementioned survey.
So far, the survey has been carried out for 324 urban renewal sites among approximately 74,000 citizens. Specifically, SMG formed an organization composed of residents supporting and opposing each renewal project, had the estimated project costs calculated by experts, dispatched experts to the sites to deliver precise information to residents and resolve conflicts among residents, held briefing sessions, and ran counseling booths to respond to residents’ inquiries.
Stakeholders and participants
Fully aware that stakeholder engagement is key to the success of urban renewal projects, SMG arranged for all stakeholders to participate in the design and implementation of the initiative.
The initiative has become a success due to the engagement of residents, associations, design and construction contractors, civil society, experts in the areas of urban planning, accounting, real estate assessment, and conflict resolution, and public servants of SMG and district offices of the city.
To break the vicious cycle of irregularities and conflicts involved in urban renewal projects for more than 40 years, SMG determined to expand the roles of public administration through the design and implementation of a Clean-up System worked out by a consulting group joined by outside experts, among others.
Public officials took the lead in designing the Clean-up System.
Public servants of SMG and district offices of the city joined forces to organize the details of the Clean-up System and the monitoring methods at the implementation stage.
Public administration set up organizations exclusive for the verification of the estimated project costs and monitoring of information disclosure practices.
SMG as well as the city’s 25 district offices set up organizations to realize the completely transparent disclosure of information on renewal projects.
Operation by each district office of the Verification Committee, which is composed of experts in various fields, to determine the validity of the calculation of the estimated financial burden on each household prior to the official establishment of associations.
To secure the reliability of the information offered to residents, SMG has ensured that each district office sets up an organization made up of experts in renewal planning, development, assessment, and residential marketing to verify the calculation of the estimated project costs by persons wishing to set up an association.
Joint long-term commitment by residents, experts, and public servants to the entire course of actions ranging from the calculation of costs to the final decision on the direction of projects.
Residents set up a resident council that will decide on the future of a given renewal project in areas where the promotion of renewal projects is strongly contested. Public servants and experts join hands to provide the resident organization with all the necessary information including the estimated personal financial burden on the part of the participating residents.
SMG fully pays the expenses incurred for the implementation of the initiative.
SMG has paid the fees required for the setup of the Clean-up System, development of a program designed for the calculation of the estimated personal financial burden, and charges for experts’ services.
Participation of all the city’s 685 associations in the initiative including a number of organizations not legally required to do so.
The participating associations include those that are not required to join the initiative or groups that vehemently opposed the implementation of the initiative at the outset. They fully disclose all of their information to the public through the support of public administration.
More than 10 million citizens have visited the Clean-up System and obtained access to more than 220,000 pieces of information on it.
Since the system launch in 2010, more than 10 million visitors have used over 220,000 pieces of information on the Clean-up System conveniently without going through the procedure for information disclosure application. Such has enhanced the public’s oversight of operations of the associations, boosting the transparency of the urban renewal projects.
A total of 148associations have reached reasonable conclusions on whether to continue their proposed renewal projects with information on the estimated financial burden on project participants.
Through SMG’s implementation of the Clean-up System and disclosure of financial information on the individual landowner’s share of costs, a total of 148associations have reached conclusions on whether to proceed with their original plans or not; thus reducing the risk of various projects being halted halfway due to conflicts among residents.
324 renewal projects that had remained at a standstill for a long time due to disagreement among residents have reached conclusions through the service of public administration regarding the individual participant’s estimated share of costs.
The Seoul Metropolitan Government suffered from the problem of hundreds of communities being torn apart owing to conflicts and confrontations among residents over whether to proceed with urban renewal projects. The individual resident’s share of costs kept rising.
Public administration had the representatives of both camps meet, calculated the estimated financial burden per household, and held a referendum among residents. A total of 19 areas decided to apply for revocation of renewal projects, and 131 associations decided to dissolve; the rest voted to go on with their renewal plans. A number of social conflicts have been resolved through residents’ own decisions.
District offices as the primary overseer of associations monitor the associations’ performance in terms of the disclosure of information twice a month. Immediate corrective actions are demanded of associations that have failed to fulfill their obligations.
In addition, the monitoring results are posted on the Clean-up System. Residents can lodge complaints regarding their own associations’ negligence. Public administration, associations, and residents can check one another and post the results on the system 24/7.
Resident engagement and implementation of verification procedures to determine the credibility of the calculation of each household’s estimated share of costs.
Those wishing to form an association and push through with a project are tempted to lower the estimated financial burden of each participating household. Thus, information on the cost estimation must undergo reviews by the Verification Committee at the relevant district office.
Public administration can calculate the estimated costs for projects for which associations have already been established. The representatives of both camps meet to review the calculation including the calculation methods. Finally, the calculation is verified by the Seoul Institute.
Previously, association leaders, construction companies, and many others enjoyed vested rights to renewal projects through monopolized information on renewal projects. They strongly opposed the implementation of the initiative on the grounds that such would infringe residents’ right to self-rule. They obstructed the progress of public hearings and protested against the legislative campaigns.
On the part of the public servants of district offices, they were reluctant to cooperate with SMG in both education and implementation of the initiative on the grounds that things went well for more than four decades without the initiative, and that they could not afford to take on extra workload. Such hindered the progress of the initiative remarkably.
Slander and false accusations between two camps obstructed ordinary residents’ reasonable decision making.
In areas where public administration delivers information on the project cost estimation for residents to make the final decision on a given project, opposing camps hurled false accusations against each other despite the administration’s briefing sessions with them. Attempts by such residents to induce mistrust in public service have ended up obstructing residents’ rational decision making.
To overcome such obstacles, public administration enhanced communication with citizens and stabilized the initiative through legislation.
Despite strong protests from some residents, SMG continued to hold briefing sessions with residents while underscoring the importance of the initiative on mass media. As a result, citizens have shown absolute support for the initiative.
Agreeing to the necessity of making improvements in the process of urban renewal projects as per the proposal of SMG, the National Assembly amended the relevant law on Apr. 15, 2010. Other local governments in Korea are preparing to use the improvements made in Seoul as a benchmark.
To stop the spread of disinformation at the source, SMG dispatched public servants and conflict experts to the sites.
SMG has set up counseling booths in areas that are agonizing over their future. It dispatched seasoned public servants and conflict experts to the booths to curb any disinformation spread among residents and ensure that both camps will not engage in any form of illegality acts.
Impact and Benefit
Residents can obtain precise information on the progress of renewal projects on time at home or at work without visiting public agencies or association offices.
Previously, residents had to spend time and effort to get information. They were not sure of the accuracy of the information on their hands, either.
The Clean-up System makes sure that all the information on it is accurate through regular monitoring by public administration. Residents can access the online information conveniently at home or at work.
Elimination of the potential for irregularities committed by the association through the transparent disclosure of information.
The Clean-up System ensures that information monopolized by the association leadership is shared by all residents through the mechanism of transparent disclosure of information; check and control have become possible as to the operations of associations, unilateral decision making by associations is blocked altogether, and renewal projects are promoted in a completely transparent manner. Residents can also make informed decisions based on precise information.
Reduction of risks of conflicts among residents or suspension of projects through the implementation of residents’ decision making based on the individual household’s estimated share of costs
Previously, there were too many cases wherein a small number of people established an association for a renewal project by luring other residents into signing documents with distorted information particularly in the financial aspects. Aware that they had been manipulated, conscious residents stood up and opposed the implementation of the project.
Since public administration is now deeply involved in the verification of financial information, residents can make decisions based on reliable information, with risks of conflicts down the road greatly reduced.
Transferability and Sustainability
For more than 40 years, each household’s financial burden for a given urban redevelopment/reconstruction project was something that could be discussed only around four years after the residents’ association for the project was established. Citizens signed up for association membership without any information on how much they should pay before they could actually possess their share of residence.
In July 2010, for the first time in the country, SMG required the disclosure of the estimated financial commitment of each household before asking it to sign up for membership in an association, followed by its development and dissemination of a calculation software program. To date, 145 renewal projects have used the program and disclosed information on their estimated share of costs per household before residents were asked to agree to a given renewal project and apply for membership in its association.
Seeing the positive outcome of the initiative, citizens of other local governments in the country petitioned for legislation by the National Assembly, which did so on February 1, 2012 by amending the relevant laws. In addition to the application of the regulation to new urban renewal projects across the country, the initiative also contributed to the legislation of the obligation of public administration to provide information on the estimated financial burden of each household when petitioned by more than 10% of association members so that residents can vote on whether to proceed with their stalled urban renewal projects or not.
Upholding residents’ rights to know through the transparent disclosure of information with relatively little financial commitment.
SMG set up the Clean-up System with KRW 2 billion. Other local governments anywhere in the world can replicate it. Since the implementation of the system can be constantly monitored with their existing personnel, it is highly sustainable. The effects are considerable compared to all the costs involved, be they financial or human.
A number of other local governments in the country have come to SMG to learn about the initiative and use it as their benchmark. On Sept. 17, 2014, Busan Metropolitan City, the second largest city in the country, revised its ordinance to support fully the application of the initiative to the city.
Lessons and Implication
Policies determined unilaterally by public administration or through its perfunctory collection of citizens’ opinions end up causing huge social conflicts and financial losses.
Public administration is tempted to make unilateral decisions on urban planning or go through the perfunctory collection of opinions to reach predetermined conclusions, which could cost residents dearly and cause longstanding social conflicts.
Efforts to solve problems at such stage require tremendous amounts of money and time. Citizens’ trust in public administration is critically damaged in the process.
Information sharing and citizen engagement are keys to the eradication of all corrupt practices in urban renewal projects and are the fastest, most efficient way of completing all urban redevelopment/reconstruction projects.
Public administration must make sure that all the information on urban renewal projects, including policy setup processes and construction work progress, is disclosed to all the stakeholders in a perfectly transparent manner. The disclosed information must go beyond the level of business plans and should include all the data that potential participants in urban renewal projects need to know to make highly informed decisions before committing themselves at the very outset. In that sense, the mandatory supply of information on the estimated financial burden per household − before an association can be officially formed for each renewal project − is very critical.
Such helps residents have a sense of ownership regarding urban renewal projects and actively engage in the undertakings. That is the only way public administration can expect to achieve its policy goals most efficiently and maximize the effects of any urban renewal project.