Gazette
Urban Competitiveness Front and Center
T
he twin forces of globalization and regionalization in today’s world have put the spotlight on urban competitiveness as an integral part of national competitiveness. Managing the economy, society, and culture of a city in a healthy and sustainable manner is crucial not only to lay the foundation for citizen well-being but also to drive a nation’s economic growth. With over 90 percent of Korea’s population living in cities, it follows that industrial infrastructure, information, and jobs are concentrated in cities, and that enhancing the competitiveness of cities and achieving national economic development go hand in hand.As the significance and role of cities grows, urban policies are undergoing a transition. Until now, urban policies were focused on growth. But the rapid industrialization and urbanization of the past half century has given way to a low- growth phase today, and urban expansion aimed at growth has reached its limit. In the past, urban expansion policies pursued development by pushing the city limits further outward, which led to an increase in urban management costs and social inefficiency among other negative side effects. With rising demand to address these issues, the call to replace such indiscriminate expansion into the suburbs with policies for improving the conditions within the city is gaining traction.
Moreover, quality of life has become a key issue these days, and it is important to pay more attention to living conditions in existing urban areas than to development of new areas outside cities. Focus should be given to urban regeneration policies that have a real, direct impact on residents’ lives. Such a policy shift does not pertain only to Korea. Most advanced countries experienced such a shift when their per capita GDP level was between $20,000 to $30,000 and their urbanization rate around 70 to 80 percent. Urban regeneration did not draw attention in the process of pursuing growth-oriented policies. However, as advances in economic development have evolved, more emphasis has been put on improving the quality of life, and urban
National Guidance to
Promote Korean Urban Regeneration
Park Jung-eun
SPACE &
ENVIRONMENT
Space & Environment is an English magazine published quarterly by KRIHS. Its purpose is to introduce current issues on territorial planning in Korea and disseminate research conclusions and international activities of KRIHS and other Korean institutes.
KRIHS (The Korea Research Institute for Human Settlements) was established in 1978 in order to contribute to the balanced development of national territory and the improvement of the quality of life of people by conducting comprehensive policy-oriented research in the efficient use, development, and conservation of territorial resources.
Since its inception, KRIHS has been com- mitted to fulfilling its mission of the creation of a beautiful territory and pleasant living environment. In order to achieve this mission, KRIHS has carried out various studies on sustainable territorial development, balancing development and conservation, and the provision of housing and infrastructure.
ISSUES & TRENDS National Guidance to
Promote Korean Urban Regeneration 01 Urban Regeneration:
Two-Pronged Project 06
Financing Urban Regeneration:
Challenge and Opportunity 11
IN-DEPTH LOOK
Sustainable Urban Regeneration
Built on Cultural Heritage 14 GLOBAL PARTNERSHIP NEWS 19
ISSUES & TRENDS 01
Vol. 60 October 2014
02
October 2014regeneration is being regarded as an important tool for enhancing living conditions and reinforcing urban competitiveness.
From the perspective of state management, urban regeneration is also a crucial area where creative economy can be implemented spatially. At present, the Korean government is focusing on creativity as the core value in its efforts to overcome the structural limitations of the low-growth trend. This focus is mirrored in the shift in the national economy system toward a creative economy of new added values, jobs, and growth engines. Cities are places where the human talent, capital, and information necessary for such a creative economy come together and where innovation and ideas are bred. In particular, existing urban districts that hold historical and cultural values and where people with diverse backgrounds and talents gather are ideal places where creative economy can be fully realized through convergence.
However, most cities in Korea are now experiencing stunted population growth and a rapidly aging population. Having pursued urban expansion policies for a long time and with weakening industrial competitiveness, these cities are showing signs of serious deterioration. Living conditions in old and deteriorating downtown sectors, where the low-income population usually resides, are particularly precarious due to defective housing and insufficient infrastructure. These areas are also vulnerable to crime, natural disasters, and many other problems.
Despite these conditions, policy response to the issue of urban deterioration has been lacking. Systematic support to combat urban deterioration from the public sector has never been sufficient. Although there are physical renewal projects that rely on private sector investment, they are profit-based and confined to Seoul and major cities; and even major cities where such projects take place are plagued with post-development problems such as low residential resettlement rates and community dissolution.
National-level policy measures are urgently needed to support comprehensive urban regeneration covering not only physical but also economic, social, and cultural aspects. At the same time, the central and local governments, residents, and businesses must arrive at consensus and cooperate to push the reset button from physical expansion into the suburbs to upgrading deteriorating downtown areas. The firm commitment of all stakeholders is the first step toward successful national urban regeneration.
In recognition of this urgent situation, in 2013 the government enacted the Special Act on the Promotion and Support for Urban Regeneration. Based on this Source
Government of Korea (Ministry of Land, Infrastructure and Transport et al.).
(2013, November 18).
National Policy Guidance on Urban Regeneration.
Table 1. Socio-Economic Indices at Time of Transition to Urban Regeneration Policies
Indices UK
(1977) Japan
(1998) US
(1974) Germany
(1996) Korea
(2012)
GDP per capita ($) 20,248 33,394 22,662 30,129 23,679
Economic growth
(%) 2.36 -2.0 -0.1 0.79 2.0
Urbanization rate
(%) 78.0 78.4 73.6 73.2 91.0
03
ISSUES & TRENDS
03
ISSUES & TRENDS
03
ISSUES & TRENDS
Source
Government of Korea (Ministry of Land, Infrastructure and Transport et al.).
(2013, November 18).
National Policy Guidance on Urban Regeneration.
law, the National Policy Guidance on Urban Regeneration was established to outline and introduce the national strategy for a comprehensive, systematic, and efficient pursuit of urban regeneration during the following decade (2014–2023). The details of the National Policy Guidance on Urban Regeneration include promotion methods, vision and goals, and policies.
Promotion Methods
Urban regeneration planning can be divided into strategic planning, which covers the basic direction, and activation planning, which deals with the actual implementation.
Both plans are established by the head of local governments based on resident participation. The head of the local government can then request the Minister of Land, Infrastructure and Transport (MOLIT) to determine government support for matters such as finance and legislation included in the urban regeneration activation plan. Upon receiving such request, MOLIT submits the proposal to the Urban Regeneration Special Commission headed by the Prime Minister. Thus, projects being implemented by separate government agencies in relevant fields can be reviewed and pursued comprehensively on matters decided by the commission.
Figure 1. Structure of Urban Regeneration Implementation National Policy Guidance on Urban Regeneration
Strategic Plan on Urban Regeneration
Activation Plan on Urban Regeneration
Implementation of Urban Regeneration Projects
Economy-Based Activation Plan Community-Based Activation Plan
Creating new urban functions and employment opportunities through links with core national
infrastructure such as industrial complexes, ports, and railroads, etc.
Pursuing community invigoration through smaller-scale improvements to living conditions, providing basic living infrastructure,
and promoting local small businesses, etc.
Urban regeneration activation plans, or the implementation plans, can be divided into economy-based activation plans and community-based activation plans depending on the regional conditions and traits.
The objective of economy-based urban regeneration activation plans is to introduce new economic functions to expand employment opportunities, and distribute economic recovery effects to surrounding areas. Candidate project areas would be where job creation can take place through comprehensive development
04
October 2014projects and linkage with the upgrading and development of core infrastructure such as industrial complexes, ports, railroads, and airports. Examples could include: regeneration of decrepit industrial complexes and their surrounding areas, revitalization of ports and their hinterlands, renewal of areas near subway stations, redevelopment of sites where government office buildings or army bases are relocating from, and regeneration projects using regional cultural and tourism assets.
By contrast, the objective of community-based urban regeneration activation plans is to promote local businesses and traits to revive sluggish downtowns and commercial areas and to maintain local communities by improving poor living conditions of deteriorating residential areas. Project examples could include infrastructure building and cultural, arts, and tourism projects for reviving the local economy, infrastructure renewal in substandard residential areas, and community- based profit-generating business projects. Based on the community-based activation plans, regeneration projects will receive policy support for building infrastructure such as parks, parking lots, and public libraries and small-scale investment and loans as well as education, consulting, and technical support for local residents.
Vision and Goals
The vision of urban regeneration as stated in the National Policy Guidance on Urban Regeneration is “creation of competitive cities for the well-being of the people.”
Under this vision, the following goals have been established: 1) expand employment opportunities and increase income by introducing a new function to the city, using local assets, and advancing the industrial structure; 2) provide an adequate level of basic infrastructure for residential areas of low-income and elderly households and ensure a minimum quality of life for the residents; 3) create an environmentally- friendly and healthy environment safe from crime and disasters; 4) create quality spaces and expand cultural services by utilizing historical and cultural assets of old downtown areas; and 5) empower local residents so that they can take the lead in resolving the issues of their neighborhood and join in participatory local governance.
The promotion strategies for these goals are as follows: 1) avoid indiscriminate development of new urban areas to prevent the hollowing out of existing downtown areas; 2) place the residents and local governments in charge of planning and implementing the projects and confine the central government’s role to providing support through means such as financial aid and system reforms; 3) pursue collaboration among the relevant central and local government departments in supporting the regeneration of deteriorating urban areas; 4) provide customized support for target areas by combining various policy measures such as special ordinances, financial assistance, and tax benefits based on consideration of local characteristics; and 5) prioritize and improve the environments of the areas undergoing the greatest deterioration to revive their local economy and increase income for local citizens.
05
ISSUES & TRENDS
Table 2. Vision, Goals, and Strategies for Urban Regeneration Vision Creation of Competitive Cities for Citizen Well-Being
5 main goals
1. Create jobs and strengthen urban competitiveness based on creative economy 2. Improve the quality of life and achieve healthy living conditions
3. Create a pleasant and safe residential environment
4. Reestablish cultural values and improve urban landscape based on local identity 5. Empower local residents and reinvigorate local communities
Promotion strategies
1. Shift urban policy toward regenerating and maintaining old city sectors 2. Encourage projects based on voluntary engagement and creativity of lower level
governments and local citizens
3. Pursue interdepartmental cooperation in providing targeted support for areas in most urgent need of regeneration
4. Use various policy means such as special ordinances and financial and tax benefits to provide customized support
5. Advocate local sustainable support rather than state-dispensed assistance
Focus
1-1. Establish urban and spatial plans centered on old urban sectors 1-2. Develop land for multipurpose use in existing urban areas 1-3. Enhance the living conditions and attractiveness of old cities
2-1. Provide efficient fiscal support through interdepartmental cooperation 2-2. Support pilot projects to stimulate overall urban regeneration 2-3. Increase and secure funding
3-1. Provide tax benefits and financing methods 3-2. Enact special ordinances
3-3. Develop suitable public land
4-1. Create social capital based on the capabilities of residents and local governments
4-2. Link urban regeneration with cutting-edge technology 1. Regeneration-focused urban policy
2. Expand fiscal assistance
3. Financial support and deregulation for attracting private participation
4. Local empowerment and community invigoration
Source
Government of Korea (Ministry of Land, Infrastructure and Transport et al.).
(2013, November 18).
National Policy Guidance on Urban Regeneration.
Government Focus on Urban Regeneration Policies
The government will pursue a four-pronged approach of regeneration first, fiscal support, financial assistance and deregulation for private sector participation, and regional strengths.
First, reforms to the urban planning system and a redirection of the profits from urban expansion to urban regeneration will promote a much-needed focus shift from areas outside city limits to those within city limits. In addition, regeneration projects should pursue development of multi-purpose areas by accommodating various land use demands in a district, and also should take advantage of local cultural assets to create an attractive Cultural City. Reinforcing welfare and social services as well as basic living infrastructure will fully enhance the living conditions and attractiveness of existing city areas.
Second, the guidance recommends increased fiscal support for urban regeneration
06
October 2014projects. Through the support of location-based intra-agency cooperation that transcends interdepartmental barriers and the Urban Regeneration Special Commission, the government must use its budget more efficiently. Also, initial fiscal support from the central government will facilitate attracting early private sector participation in an urban regeneration project led by a local government. Overall, more fiscal resources should be allocated to support the stable pursuit of urban regeneration projects.
Third, financial assistance and deregulation are required to encourage the participation of the private sector. Financial support for urban regeneration projects could take the form of tax and levy cuts as well as investment and loans through the Housing Fund. Specific examples could include reducing building regulations, the introduction of a proposal system for city planning, and special ordinances on regional cultural assets including Hanok (Korean traditional house)-concentrated areas. In particular, special ordinances for public properties need to be established in order to facilitate urban regeneration by developing public land.
Fourth, the government must make efforts to reinforce regional capabilities and revitalize communities. The government can empower local governments and residents to build social capital by promoting social economy and with more urban regeneration experts. In addition, it is necessary to link urban regeneration with state-of-the-art technologies. Researchers should develop and disseminate new technologies and techniques related to urban regeneration, and implementers need to apply the latest smart city technologies to old downtown area regeneration.
References Ministry of Land, Infrastructure and Transport.
(2014).
Study on Establishing the National Policy Guidance on Urban Regeneration.
Park Jung-eun, Kim Sang-jo, Kim Jae-cheol, Jung So-yang. (2012).
Improvement of Urban Management System for Effective Urban Regeneration in Built-up Areas.
Park Jung-eun Associate Research Fellow, KRIHS jepark@krihs.re.kr
Urban Regeneration:
Two-Pronged Project
Lee Wang-geun
Legal Basis and Details
U
nder Article 2 Clause 6 of the Special Act on the Promotion and Support for Urban Regeneration (hereinafter referred to as “Special Act”) that went into effect in December 2013, urban regeneration activation plans can be divided into economy-based activation plans and community-based activationISSUES & TRENDS 02
07
ISSUES & TRENDS
07
ISSUES & TRENDS
Source
The Special Act on the Promotion and Support for Urban Regeneration, Act No. 11868 (2013).
Economy-Based Activation Plans Community-Based Activation Plans
Legal objectives and characteristics
•Linking with renewal and development of urban core infrastructure related to the most essential functions of the nation such as industrial complexes, ports, airports, railroads, roads, and riverfronts
•Introducing a new function to the city
•Expanding employment opportunities
•Improving living conditions of neighborhood units
•Securing and expanding basic living infrastructure
•Promoting local communities
•Supporting small-scale local economies
Legal considerations
•Linking with urban core infrastructure renewal and development projects must take into account the ripple effects on the urban economy and industry
None
Table 1. Legal Objectives and Considerations of Urban Regeneration Activation Plans plans according to their main objectives and characteristics. The Special Act defines economy-based activation plans as those that 1) link to the renewal and development of urban core infrastructure involving the most essential functions of the nation such as industrial complexes, ports, airports, railroads, roads, and riverfronts; 2) introduce a new function to the city; and 3) expand employment opportunites. Community- based activation plans focus on improving the living conditions of neighborhood units, securing and expanding basic living infrastructure, promoting communities, and supporting small-scale local economies.
When establishing economy-based activation plans, the Special Act not only calls for linkage with urban core infrastructure renewal and development projects but also stipulates foremost consideration of the ripple effects of such plans on the urban economy and industry. No such special legal considerations appertain to community- based activation plans
Characteristics of Each Category
As outlined in Table 2, understanding the differences between economy-based and community-based urban regeneration activation plans entails study and analysis of seven considerations: 1) target businesses, 2) main participants, 3) local government’s support divisions, 4) target areas, 5) approach, 6) final objectives, and 7) legal support methods.
Specifically, economy-based activation plans have five objectives: 1) raise the asset value of private sector real estate, 2) increase national and local tax revenues, 3) create good-quality jobs, 4) revitalize the local economy of stagnating areas, and 5) establish a sustainable economic structure. By contrast, community-based activation plans prioritize two objectives: 1) improve the living conditions and environment of local residents and 2) support local merchants.
08
October 2014Source The Special Act on the Promotion and Support for
Urban Regeneration, Act No. 11868 (2013).
Economy-Based Activation Plans Community-Based Activation Plans
Target businesses
•Venture businesses, private start-ups
•Large private companies
•Local businesses, community- oriented businesses, cooperatives, and other social economic entities
Main participants
•Local economy, culture, and art industry experts
•Local merchant federations, local branches of Federation of Korean Industries (FKI), local chambers of commerce, local headquarters of Korea Federation of SMEs, and other local economic entities
•Real estate developers, private investors
•Real estate financing institution experts
•State-owned companies (port authorities, Korea Rail Network Authority)
•Government agencies (Ministry of Strategy and Finance, Ministry of Land, Infrastructure and Transport, port administrations, etc.)
•Upper and Lower level local governing bodies
•Residents, community groups, local activists
•Local groups of small business owners within the target area
•Groups of traditional marketplace merchants
•Civic groups
•Urban regeneration school for the public (urban regeneration education program)
•Lower level local governing bodies
Local government’s support division
•Economy and Industry Executive Divisions
•Creative City Executive Divisions
•Creative City Executive Divisions
Target areas
•Areas falling behind, declining, and experiencing severe social issues
•Areas with a high probability of success in investment
•Areas deteriorating in physical environment, declining in revenue, and experiencing severe social issues
Approach
•Introduce a new function to the entire city or to a particular area and provide foundation for growth
•Design from a public welfare dimension of improving basic living condition
Final objectives
•Establish a sustainable economic structure
•Raise the asset value of private sector real estate
• ncrease the national and local tax bases
•Revitalize the local economy of the entire city
•Create quality jobs by attracting businesses and merchants and supporting start-ups
•Improve living conditions and environment
•Support local small business owners
Legal support methods
•Introduce and implement new system measures such as minimum regulation zoning for businesses
•Deregulate land use
•Provide tax benefits
•Support infrastructure renewal
•Support infrastructure renewal
•Promote citizen education on urban regeneration
Table 2. Differences between Economy-Based and Community-Based Activation Plans
09
ISSUES & TRENDS
How to Conduct a Successful Economy-Based Activation Plan
Connect to Cities’ Long-Term Economic Development Plans
The priority pilot areas in urban regeneration strategy and activation plans need to be developed first. These areas will become the strategic centers for sustainable development. The goal is to achieve balanced development of all regions on the national level and economic regeneration on the city level. To this end, it is important for many stakeholders to discuss and create a viable vision that everyone can agree on.
Link with Large-Scale Urban Infrastructure Renewal and Development The economy-based activation plans will be carried out in areas where local economies are stagnating and difficulties preclude creating business value that attracts private investment. Therefore, because it would be difficult for such plans to secure their own growth engines, full use should be made of large-scale government- funded projects such as port, railroad, airport, and riverfront undertakings as opportunities to implement the economy-based activation plans.
Review Finances Thoroughly
Through the creation of employment opportunities and an increase in tax revenue, the economy-based activation plans aim to achieve local economic growth and job creation. In some cases, public projects receiving financial support from the central government have fallen into situations where they are not able to generate even the minimum profit needed to fund facilities maintenance. In case of local governments that have a low fiscal self-reliance ratio, the maintenance costs potentially worsen the chronic fiscal deficit. The finances must be reviewed thoroughly and efforts to attract private sector investment must be made in order to prevent such aforementioned scenarios and create desirable economic outcomes.
Create Direct Ripple Effects on Surrounding Areas
The economy-based activation plans led by the public sector with private sector participation should have direct ripple effects on surrounding areas. It is important to approach such plans from a macro and long-term perspective characterized by flexible and continuous implementation responsive to situational changes. Such an approach will ensure that the investment promotion efforts of both public and private entities continue to yield a series of investment promotion effects on the targeted area and the surrounding areas both mid- and long-term.
Minimize Development Risks
Strategies for minimizing development risks must be provided. The economy-based activation plans are sensitive to changes in the business cycle and have a high level of inherent risk.
Measures to minimize the investment costs should be explored such as remodeling of existing facilities for reuse and partial upgrading of infrastructure. Also, sufficient time must be allocated for planning and gathering public opinion and the construction period should be minimized. Through these efforts, costs and risks are managed methodically.
10
October 2014How to Create a Successful Community-Based Activation Plan
Take a Neighborhood-Level Approach
Rapid urbanization and industrialization has weakened location-based, traditional communities in cities. As society advances, urban life tends to become more callous.
In this context, local communities become more important because they provide members a sense of belonging and identity. Such communities provide channels for residents’ participation and governance. They are the most efficient unit that has the potential to contribute to enhancing the quality of people’s lives to the point where people can actually feel the positive changes.
Encourage Participation of Diverse Groups and Individuals
The active participation of the various stakeholders in a community makes it possible to comprehensively diagnose the problems in the community. Their concerns and understanding of their community are the basis for identifying the current issues and envisioning the future of the neighborhood. It is also important to ensure that no particular stakeholder is excluded from this participation process. This is a task that requires much time and effort but it is essential for enhancing the viability of the project and the sustainability of the community.
Make Comprehensive Improvements to Both Soft and Hard Framework A community-based activation plan is based on the premise of creating a favorable
“soft“ framework. It is important to create an environment in which the residents possess a sense of ownership and participate fully in solving the problems within the community. In order to do so, a “soft” framework consisting of an operational organization, financing system, cooperation system, and a set of ordinances must be established. At the same time, improvements must be made to the quality of the
"hard" framework — the physical environment such as roads, parks, houses, and commercial buildings.
Take a Long-Term Approach
A community’s vision constantly evolves according to changes in society and community characteristics. For a community-based activation plan to succeed, it is crucial to establish a long-term vision shared by all community members and to conduct individual action plans continuously and in stages from a macro perspective.
Such action plans must be implemented based on mutual understanding and cooperation among different stakeholders.
Lee Wang-geun Research Fellow, KRIHS wglee@krihs.re.kr
11
ISSUES & TRENDS
Need for Public Support to Finance Urban Regeneration
U
nlike existing urban renewal policies, the focus of the Special Act on the Promotion and Support for Urban Regeneration differs in four distinct ways: 1) renovation of existing inner city areas takes precedence over new town development; 2) a gradual approach to local revival honors community values by using not only physical but also potentially unrecognized historical, cultural, and social assets; 3) a big-picture focus and an integrated approach to several project areas involving central as well as local government stakeholders go beyond the limits of fragmented approaches and dispersed pursuits to prevent and address urban deterioration; and 4) public officials and experts encourage private citizens to take the lead by helping local residents establish and implement urban regeneration plans for their city.This fourfold thrust puts the emphasis squarely on the public nature of urban regeneration, and such an emphasis goes hand in hand with seeking the public good. Achieving this objective involves acknowledging that past projects have been implemented based on profitability rather than their potential for enhancing the public good. This explains their being concentrated only in certain parts of the Seoul metropolitan area and not in inner city areas outside of Seoul.
Implementing a successful urban regeneration project in areas where it is needed most necessitates public participation, and this calls for the preparation of public financial resources. Considering the financial situation of local governments outside the Seoul metropolitan area, financial support from the central government is essential, and flagship projects spearheaded by the central government should have the effect of priming the pump and inducing private investment. By foregoing a large-scale physical approach that could cause financial burdens, the central government as well as local governments can achieve fiscal soundness.
In advanced nations, central governments are actively supporting urban regeneration projects and their financial support is mostly provided based on integrating funds of different departments or sectors. Britain has combined the urban development subsidy, the urban redevelopment subsidy, and the city grant into the Single Regeneration Budget (SRB). Part of this fund, along with private investment attracted by government efforts, is being allocated first to the most deteriorated areas. Japan has established the Social Capital Maintenance Synthesis Grant that integrates all individual project support funds including the fund for the Machizukuri (“town building” in Japanese) movement. Financial support for urban regeneration is
ISSUES & TRENDS 03
Financing Urban Regeneration:
Challenge and Opportunity
Yoo Jae-yoon Jung So-yang
12
October 2014being implemented through this single distribution channel.
Public financial support for urban regeneration in Korea is insufficient. Budgetary support that could act as seed money is first allocated to urban regeneration pilot areas designated in April, 2014. These pilot projects are divided into economy-based urban regeneration and community-based urban regeneration, with two projects in the former and eleven in the latter category. A maximum of 25 billion won for four years is given to economy-based urban regeneration projects while community- based urban regeneration projects are again divided into general and small-scale projects with a maximum to be given of 20 billion won and 10 billion won for four years, respectively. A budget of 30 billion won was set for the year 2014. The budget will be gradually increased but it is still insufficient to lead the invigoration of urban regeneration projects across the country.
Housing and Urban Fund Aims for Stable Funding
The government will pursue urban regeneration projects in a total of 116 areas by 2018. In order to provide stable financial resources, measures are being prepared to change the existing Housing Fund to the Housing and Urban Fund (HUF) and to link urban regeneration with the Urban Revitalization Area Development Projects supported by the Special Account for Region-Wide Area Development.
In February 2014, the Ministry of Land, Infrastructure and Transport (MOLIT) announced that the Housing Fund, which has supported only the housing sector since its establishment in 1981, would be changed to become the Housing and Urban Fund. As can be inferred from the new title, the purpose of this change was to expand the targets of financial support to include not only construction of rental housing, housing purchase, and rent subsidies but also urban regeneration.
Source Ministry of Land, Infrastructure and Transport.
(2014, February 26). Press Release.
Table 1. Development of the Housing and Urban Fund
Changing conditions
Macroeconomics High growth Slow growth
Housing market Insufficient supply Insufficient demand
Financial
environment High
interest rate Low interest rate,
ample liquidity
Government response to changing conditions
Reestablish- ment of functions
Subject of support
Method of support
Perspective
Housing
Housing Fund Housing and Urban Fund
Loans
From financial institution’s perspective
Housing, urban projects
Loans, investment, surety, etc.
From financial consumer’s perspective
Operation Contract out to
private commercial banks
Establish dedicated operating institution
13
ISSUES & TRENDS
In response to changes in the economy and housing market, MOLIT will overhaul the function and operation of the Housing Fund. Instead of merely supporting construction of rental housing and providing simple loans, the fund will be used for investment, surety, and other purposes and support projects through diverse methods and systems in manners most fitting the project.
HUF is expected to reduce the risks of urban regeneration projects and provide opportunities to take advantage of the ample liquidity available in the financial market. If there is a demand for investment or financing for a project, it will pass through a two-step process. First, it must be deemed to be highly beneficial to the public and the region, which will be determined based on a review by the Urban Regeneration Special Commission under the Special Act on the Promotion and Support for Urban Regeneration. Then, HUF can provide relevant financial support after a rigorous review process.
Seeking Diverse Financing Methods for Urban Regeneration
In addition to HUF, other financial efforts that could attract private capital must be considered. Benefits for corporate bodies that participated in and contributed to urban regeneration projects should be provided in forms such as preferential interest rates and debt guarantee. Interest rates on loans for urban regeneration projects led by the private sector could be lowered if public agencies invest in these projects.
Another method that can be reviewed is providing financial support for private entities based on the premise of sharing the profits from the development with the public.
Also, new financing methods such as mezzanine financing can be used to attract diverse funding sources. Mezzanine investment refers to a hybrid of debt and equity financing in the form of subordinated bonds.1) Mezzanine financing in urban regeneration projects could be considered if 1) project risks are too high or 2) difficulties preclude securing financing, a condition that makes it impossible to implement the project with owner and borrowed capital.
Because urban regeneration projects are hard to finance by nature and usually long term, obtaining senior financing requires efforts to enhance the stability of the projects. As is the case with the urban regeneration fund of the Development Bank
Source
Ministry of Land, Infrastructure and Transport.
(2014, February 26). Press Release.
Table 2. Urban Regeneration Financing in Japan
Project Type Financial Support Method Case Example
Low-risk projects
High-risk projects
Investment Direct investment Mezzanine Debt guarantee
Hot springs tourism village, cancer treatment center Renewal projects on large-scale complex facilities
For-profit projects
Redeemable projects
Irredeemable projects
Loan
(low interest rates or no interest)
Subsidy
(general account subsidies)
Roads, parks
Neighborhood crime prevention facilities Not-for-
profit/
low profit projects
1)
Mezzanine financing is a financing method that provides unsecured funding to facilitate the financing of middle-risk projects. In addition to the interest, it gives the investors additional financial returns concerning the stock of the company if the project is successful.
14
October 2014of Japan, the public sector should use mezzanine financing to support the projects and enhance their stability.
Furthermore, the application of Tax Increment Financing (TIF) to urban regeneration projects should be reviewed in more depth than it has been so far. TIF is a public financing method where the local government issues revenue bonds to pay for the project, based on future increases in tax revenue that will be generated from the improvements. Also, tax benefits including lowering the real estate transfer tax could be an efficient measure for urban regeneration.
Lastly, if citizens can buy bonds as a way to fund urban regeneration projects, they can participate in financing urban regeneration of their own cities.
Yoo Jae-yoon Director of the Center for Urban Regeneration Policy, KRIHS jyyu@krihs.re.kr
Jung So-yang Associate Research Fellow, KRIHS jungsy@krihs.re.kr
Sustainable Urban Regeneration Built on Cultural Heritage
Kim Hyo-jeong
Introduction
R
ecently, much attention has been given to using culture and the arts, in particular cultural heritage, as a means of urban regeneration in Korea.This phenomenon is closely related to the cultural cities projects that began in Europe in the late 1980s. In most such cases, deteriorated downtown sectors of historic cities were regenerated by linking them with cultural heritage and culture and arts programs, albeit with different goals. The success of these projects sent ripple effects to many cities around the world and efforts were made to analyze and learn from their methods. Many Korean researchers also have introduced these examples, which in turn have led to successful results in some Korean cities.
An important condition for urban regeneration projects using cultural heritage concerns what kind of cultural heritage is being used for this purpose. Is it a cultural heritage designated and protected by the government? Or is it a cultural heritage in the wider sense that it has historical value? If it is the former, the projects could be more aptly described as “regeneration of cities with cultural heritage” rather than
IN-DEPTH LOOK
15
IN-DEPTH LOOK
“urban regeneration using cultural heritage.” In this case, the underlying principle would be the conservation and protection of the cultural heritage, and urban regeneration projects would seek to revive the functions of the city based on this principle. Many European as well as Korean cities have encoded certain regulations to ensure that while they make efforts to revive urban functions in deteriorated areas, the surrounding places of cultural heritage are kept in harmony with the heritage itself. These city planning regulations include restrictions on heights and colors of buildings and other landscape elements. That is to say, urban regeneration projects are undertaken under a set of strict regulations and a systematic framework. These projects call for a more program-based approach using tourism, storytelling, and education and experience programs rather than focusing much on the physical approach to cultural heritage. In fact, many urban regeneration projects take this approach.
In the case of cultural heritage not protected by the government, urban regeneration projects can make greater use of such cultural assets that include both modern-era and industrial cultural legacies. Even if the modern-era cultural legacies are officially registered, they can be used more widely than designated general cultural heritage. If they are unregistered, they can be transformed into various arrangements based on their historicity. Most industrial legacies recognized as such are past industrial facilities situated in regionally important locations, with this recognition usually closely correlated to regional decline. Because the regulatory and systematic frameworks for this kind of heritage are not so strict but such legacies hold great regional and economic importance, their potential value in urban regeneration is high. That is why many cities today are centering their regeneration efforts on these industrial cultural legacies with some notable successes. These projects, unlike projects utilizing cultural heritage under government protection, put greater emphasis on the physical approach to the structure in question.
This paper will introduce various cases of urban regeneration using cultural heritage by looking first at projects undertaken in historic cities with cultural legacies designated and protected by the government. Then the paper will consider examples of urban regeneration using more widely defined cultural heritage such as modern- era cultural heritage and industrial cultural heritage. A review of these examples aims to demonstrate how each type of cultural heritage is actually being used in urban regeneration projects.
Regeneration of Cities Using Government-Designated Cultural Heritage
Iconic examples of this type of regeneration project are found among the Historical and Cultural City Projects promoted by the Ministry of Culture, Sports and Tourism of Korea. Most of the projects were conducted in the cities of Gyeongju, Jeonju, Gongju, and Buyeo and centered on the restoration and conservation of cultural legacies. They included tourism projects and maintenance projects for areas surrounding the cultural heritage such as residential areas and roads, and a few of these projects required a major overhaul of certain areas for cultural heritage
16
October 2014A View of the Jeonju Hanok Village in North Jeolla Province
restoration works. It is important and appropriate to acknowledge that these projects did not “use” cultural heritage but that they have been implemented “for the sake of” cultural heritage. For this reason, some projects were met with the challenge of winning the cooperation of local residents. This type of urban generation uses cultural heritage to promote tourism campaigns or to create cultural content and does not change the appearance of the city drastically. However, using cultural heritage in this way enhances the level of public interest in the city and thus encourages the kind of civic invigoration that ultimately leads to changes in the urban environment.
A good example is Jeonju. (Although the hanok [Korean traditional house]
village in Jeonju was home to Gyeonggijeon [No. 1578 Treasure, a shrine that holds the portrait of King Taejo, the founder of the Joseon dynasty], Jeonju may not be defined as a city with many government-designated cultural legacies.) Through physical renovation works on cultural and historical assets of the area in synch with various cultural programs, Jeonju was able to carry out a very successful project.
Tourism programs that included staying in hanok dwellings and other cultural experience programs within the hanok village were introduced and today over five million tourists visit the village every year, making it one of the most popular tourist sites in Korea. However, this success came with challenges that included the area's commercial establishments soaring from 83 in 2005 to 366 last year, which led to traffic congestion, lack of parking spaces, abrupt changes in local lifestyles, environmental pollution, and damages to cultural heritage. It is obvious that the supply of tourism services has not met rising demand. Also, some have criticized the Jeonju government for concentrating too many resources on the hanok village only.
Many other cities have started similar projects including the hanok village project in Gangneung and the hanok museum construction in Suwon in which two projects 5.5 billion won is being invested. Another project is the hanok lifestyle experience center that is being built in Andong as part of the city’s campaign to promote itself as the “capital city of Korea’s spiritual culture.” But in many cases, the sense of identity, appropriateness, and sustainability of the project remain untested.
Jeonju Hanok Village
As part of the Jeonju Traditional Cultural City Project in 2005, the Jeonju hanok village was developed. This village was first created in the city’s Pungnap-dong area in the 1930s as a gesture of opposition to the Japanese colonial rule expanding in the region. Today, it is the site of various cultural events such as the Jeonju Film Festival, the Jeonju Sound Festival, international cultural exchange events, and art markets. It has become an iconic example of creative urban regeneration and a top tourist destination hosting over five million visitors every year.
Urban Regeneration Using Other Types of Cultural Heritage
These types of projects make use of either modern-era cultural heritage or industrial cultural heritage and are intended for areas with a single complex or multiple similar structures.
In the case of industrial cultural heritage, the projects usually revolve around a
17
IN-DEPTH LOOK
A View of the Landscape Park Duisburg-Nord in Germany
A View of the Incheon Art Platform
single complex of facilities because the complex tends to be large in size and include multiple buildings. Depending on the size and location of these facilities, they can either be used as a public park or cultural and leisure facilities. The facilities usually become landmarks or attractions of the area and are given the role of catalyst in regional regeneration. Large-scale industrial facilities such as power plants and factories often become multipurpose parks that also act as cultural and leisure facilities. Storage spaces including agricultural or port warehouses are transformed into spaces for exhibition, residences, local community meetings, and commercial zones where the residents and artists can come together to communicate and create.
Abandoned school buildings are turned into facilities for rural experiences or studios to create and exhibit art as well as accommodation facilities.
These efforts have only begun to take place recently in Korea so it is yet too early to analyze what effects they could have on urban regeneration and invigoration.
However, cities around the world are seeing various positive results in the functional, economic, and quality of life dimensions through such efforts, and it would be safe to say that the same results will occur in Korea.
Before After
Factory office Youth hostel
Boiler room Event Hall (classical music concert hall)
Wind power generators Generating energy source for stream water circulation Raw material stone warehouse Mini-garden
Unused railroad track Pathway through the park Water purification system Outdoor stage
Part of the factory building Seminar rooms, theater troupe practice rooms Large gas tank Scuba diving pool
Steel warehouse Artificial rock climbing zone, playground, filming set, outdoor cinema, Iron Plaza, etc.
Germany’s Landscape Park Duisburg Nord (1997)
After the decline of its major industry, steelmaking, the city of Duisburg experienced a serious unemployment situation. In order to change its image as an industrial city and to overcome economic stagnation, Duisburg transformed its steel mill into a park based on public consensus.
With the creation of the park, Duisburg was able to change its gloomy image as an industrial city into a cleaner, brighter one and now attracts over 500,000 tourists a year. Parts of the former steel mill were transformed into the following facilities.
Incheon Art Platform (2005)
A warehouse complex in Incheon City has been turned into spaces for art creation, exhibition, residences, and community activities. It is also being used as a venue for international exchange programs. The warehouse is contributing greatly to the regeneration of the Jung-gu area of Incheon.
18
October 2014References Kim Hyang-ja. (2014).
Urban Cultural Regeneration and Modern Architectural Assets.
Presented at 2014 Institut Francais Forum:
Public Art & Architecture.
Kim Hyo-jeong. (2007).
Case Study of Regional Development using Cultural Resources.
Korea Culture and Tourism Institute.
Kim Hyo-jeong. (2013).
Cultivating Cultural Heritage Happy Villages.
Korea Cultural Heritage Foundation.
Daegu Modern History Culture Street Project (2001–present)
In 2001, Daegu City's Modern History Culture Street Project began with efforts led by the private sector to uncover regional tourism assets. In 2007, it was designated as a project supported by the government and taken to the next step. Going beyond simply renovating historical and cultural assets, the project has developed storytelling and marketing plans to boost public interest in the area and has since been expanded to become a comprehensive renovation program for the entire urban environment.
Kim Hyo-jeong Associate Research Fellow, Korea Culture and Tourism Institute hyojeong@kcti.re.kr
Conclusion
Urban regeneration using cultural heritage is seen to hold high value from a cultural standpoint. However, it is difficult to turn those expectations into practical applications. This is because, in essence, cultural heritage is the subject of conservation and protection. In some cases, regions with much cultural heritage have experienced decline because of the various restrictions imposed due to such heritage.
Therefore, although the idea of using cultural heritage for urban regeneration is innovative, for a regeneration project to succeed, due consideration must be given to the issue of conservation including potential damage to cultural assets.
Compared to government-designated cultural heritage, urban regeneration using modern-era cultural heritage or industrial cultural heritage has more leeway because of relatively loose regulations. However, limits do remain because projects still need to stay within certain boundaries of restoration and conservation when it comes to physical maintenance and meet the challenge of linking a region’s historical and cultural traits with its much-needed urban functions.
The mere use of cultural heritage is not sufficient to guarantee the success of urban regeneration. However, if successful, urban regeneration using cultural heritage has the advantage of having far higher levels of satisfaction for citizens and visitors than other forms of regeneration projects. This is why we need to make continuous efforts to seek and explore various new ways to improve such projects.
In many cases of modern-era cultural heritage, entire streets or districts are developed for a project rather than a single complex or facility. Along with a certain degree of physical renovation work, the projects involve storytelling, story-based product development, and connection with the surrounding areas. Usually the projects take the form of renovating a certain street with a specific theme using historical and cultural assets. These efforts often lead to programs for exploring the area’s distinctive alleys or historical spots.
Entrance of the Modern History Culture Street in Daegu
19
GLOBAL PARTNERSHIP NEWS
President Kim Kyung-Hwan delivers the opening address at the KRIHS 36th Anniversary Seminar.
Speakers and panels hold discussions at the 7th Overseas Development Financing Forum.
GLOBAL PARTNERSHIP NEWS
KRIHS 36th Anniversary Seminar Tackles Population Aging and Housing Welfare Issues
The KRIHS 36th Anniversary International Seminar was held at Ferrum Tower, Seoul on October 7th. This year’s seminar addressed two of the biggest issues the present day Korea faces: population aging and housing welfare system.
The first session focused on population aging. Presentations included “National Grand Design and Spatial Policy” by Dr. Hiroshi Kaneko from Japan, “Demographic Change and Impact on Spatial Planning” by Dr. Andreas Otto from Germany, and
“Korea’s Spatial Policy and Strategies in an Aging Era” by Dr. Lee Wang-geun of KRIHS. The issues related to housing allowance system were addressed in the afternoon session where Prof. Stephen Malpezzi from the US spoke on “The Design and Implementation of Housing Subsidies,” Prof. Hugo Priemus from the Netherlands
“Housing Allowances and Rent Rebates,” and Dr. Kim Hye-seung of KRIHS “Korea’s Housing Allowance Scheme and Implementation Issues.”
KRIHS Shares Its Experience in Geospatial Information Policy and Planning
From August 25 to September 5, at its third geospatial information policy and planning course for government officials from developing countries, KRIHS shared Korea’s experience and expertise in establishing the national geospatial information system and introduced major projects on big data, the spatial information open platform, and open source GIS software.
Participants consisted of thirteen officials in charge of geospatial information policy of Kazakhstan, Kyrgyzstan, Uzbekistan, Mongolia, Bangladesh, Indonesia, and Sri Lanka. They also attended the Smart Geospatial Expo 2014 hosted by the Ministry of Land, Infrastructure and Transport of Korea to experience firsthand the latest geospatial information technologies; and they presented the policy trends of their respective countries at an international seminar on geospatial information policy. The four Eurasian countries—Kazakhstan, Kyrgyzstan, Uzbekistan, and Mongolia—agreed with KRIHS to conduct joint research for establishing the Eurasian Spatial Data Infrastructure initiative.
KRIHS-ICAK Host the 7th Overseas Development Financing Forum
The 7th Overseas Development Financing Forum on August 18 hosted by the Global Development Partnership Center (GDPC) of KRIHS and the International Contractors Association of Korea (ICAK) was attended by some 150 participants including eight Korean legislators as well as KRIHS President Kim Kyung-Hwan and GDPC Director Moon Jeong-ho.
Presentations concerning project financing and private-public overseas ventures were given by Kim Hyo-jong, general manager at Korea Electric Power Corporation;
Jeon Si-deok, team head of the Export-Import Bank of Korea; Jo Jin-cheol, KRIHS
Participants pose after
the 2014 Information Policy and Planning Course.
20
October 2014Ainar Ospanova (left) and Dodi Nurdian (right) pose after their wedding.
TEL 82-31-380-0599 FAX 82-31-380-0480 E-Mail gazette@krihs.re.kr Website www.krihs.re.kr Publisher Kim Kyung-Hwan Editor Moon Jeong-ho Assistant Editor Park Ji-woo
Editorial Committee Cho Chun-man, Han Woo-suk, Jung Hee-nam, Kang Ho-je, Kim Eun-jung, Kim Jong-hak, Lee Jae-yong, Nam Ki-chan, Park Kyung-hyun, Park Soon-up, Wang Kwang-ik
Copyright © October 2014
Korea Research Institute for Human Settlements 254 Simin-daero Dongan-gu Anyang-si Gyeonggi-do, 431-712, Korea
Research Fellow; and Jung Cheol-han, representative of BNP Paribas Seoul.
In the discussion session that followed, presider Park Dong-gyu, professor at Hanyang University and panels including Lee Gi-bong, manager of the Ministry of Land, Infrastructure and Transport; Kim Sang-jin, general manager of the Korea Trade Insurance Corporation; and Jung Chang-gu, chief of ICAK shared their views on the present state and future of overseas development financing.
GDPC Capacity Building Program Participants Married
A pair of participants who attended the GDPC National and Regional Planning &
Policy Course together from April to June in 2012 married on August 17, 2014, in Florence, Italy. The groom is 32-year-old Dodi Nurdian of Indonesia’s Ministry of National Planning and the bride is 28-year-old Ainar Ospanova of Kazakhstan’s Ministry of Construction and Housing. The two met and grew close during the six weeks of the course and continued their relationship after returning to their respective home countries. The GDPC sent their best wishes to the newlyweds along with a Korean traditional mandarin duck set that symbolized marital happiness and a congratulations card. KRIHS wishes the new couple happiness in their new start.
24th EAROPH World Congress: Toward Resilient and Smart Cities
The Global Development Partnership Center (GDPC) at KRIHS participated in the 24th Eastern Regional Organization for Planning & Human Settlements (EAROPH) World Congress held August 10–12 in Jakarta, Indonesia. EAROPH, a non- governmental organization, fosters exchange of insight and experience on human settlements among its member countries. The World Congress addressed the themes of the inclusivity, resiliency, and sustainability of cities, information communication technology in today’s cities, urban infrastructure challenges, and smart cities.
As current president of KRIHS and of EAROPH since 2012, Dr. Kim Kyung- Hwan presided over the 45th EAROPH Executive Committee meeting and the 24th EAROPH council meeting that preceded the World Congress. Thirty-some participants attended these meetings including the Lieutenant Governor of Jakarta, the Secretary General of EAROPH, and the president of EAROPH Indonesia. The meetings included reports of the activities and financial status of EAROPH for 2013 and 2014 and regional development in EAROPH member countries.
During the opening ceremony of the World Congress, President Kim was appointed an honorary president of EAROPH after passing the medal of the EAROPH presidency to Hermanto Dardak.
The next EAROPH regional conference is planned for June 2015 in Japan.
President Kim Kyung-Hwan receives a memorial trophy at the 24th Earoph World Congress.
