The Governance of Land Use in Korea

Assessment and Recommendations

Since the 1950s, national spatial planning has played a key role in the socio-economic development of Korea. During this time, the focus of spatial planning has evolved from the modernisation of the industrial structure in the 1950s and 1960s to prioritising and promoting globalisation and sustainable development in the 2000s. Currently, spatial policies aim to pursue sustainable and balanced development, improve quality of life and enhance regional competitiveness. In this context, land-use planning and urban regeneration with a citizens-oriented approach form the core of Korean urban policies. Land-use planning is a critical tool to manage the development of land in an efficient manner, whereas urban regeneration seeks to address inner city decline by improving the economic, physical, social and environmental conditions of degenerated areas.

Korea’s focus on urban regeneration needs to be understood in the context of significant shifts in the economy (i.e. globalisation) and society (i.e. population ageing) that often go well beyond the control of local governments. The result has been a deterioration of the urban fabric and urban centres in poor communities, and weak economic development in some areas, which accelerate the negative spiral of urban decline, urban sprawl, social exclusion and environmental degradation. The challenges in terms of land use and urban regeneration in Korea vary from one place to another and over time. Different cities, towns and villages have different opportunities and thus different strategies for change. Economic restructuring, unemployment, social exclusion, insufficient quality infrastructure, and a lack of adequate affordable housing often define the content of the regeneration process and its operation in Korea. This report aims at exploring opportunities for improving land-use planning and urban regeneration strategies in Korea. The report draws on evidence from Busan, Korea’s second largest city, as it has valuable experience in urban regeneration projects that build on the local context and allow for the extensive participation of citizens in the process.

The governance of land use

Demographic trends and geographic factors have triggered a focus on urban regeneration

Across Korea, demographic trends (ageing and shrinking population, internal migration), geographic factors (limited urbanised territory), and historical developments (Korean War in the 1950s) have influenced land-use policies and call for a more efficient management of cities. Cities are focusing on compact development and urban regeneration as the most suitable land-use strategy to meet long-term development goals. For instance, Busan is experiencing rapid population ageing and depopulation that are leading to a decrease in the demand for urban land (95% of its territory). The share of the population aged over 65 increased from 5.1% in 1993 to 15.7% in 2017 (the OECD average was 16.7% in 2017). At national level, the elderly population ratio increased from 6.4% in 1993 to 13.8% in 2017. The outflows of the younger population to other regions have driven the share of the economically active population down, from 74.2% in 1993 to 72.9% in 2017. As in the rest of Korea, the urban area of Busan had been growing for residential and industrial purposes until recently, but demand for land has decreased, partly due to low population growth. The elderly tend to return from suburbs to city centres to enjoy easier access to better medical and transport services. This creates pressure for an adequate supply of affordable and suitable housing for this population cohort. Moreover, Busan has a complicated geography, as more than half of the area has at least a 10-degree incline or above. This topography means that only 5.8% of the total land in Busan is developable.

Korea has a comprehensive planning framework for land-use management, but it lacks flexibility

The Korean government seeks to revitalise regional economies and create jobs, addressing urban decline and a shrinking population by promoting urban regeneration. Efficient and effective land-use management is an essential instrument for conducting urban regeneration projects that lead to inclusive and sustainable growth.

A hierarchical and well-structured land-use planning system…

To improve the effectiveness and efficiency of land management, Korean authorities have issued an extensive set of hierarchical plans that set out how land use should be decided and acted upon at different scales, ranging from national to neighbourhood levels. At the top of the hierarchy, the Comprehensive National Land Plan (CNLP) provides a general framework for land use and the long-term vision, generally 20 years, for socio-economic development, environmental protection, spatial planning, and well-being. The Framework Act on the National Land provides extensive guidelines, rules and planning processes for the provisions contained in the CNLP and the Do Comprehensive Plans (provincial level). The National Land Planning and Utilisation Act sets guidelines for the metropolitan and urban plans and the zoning system. National level regulations on land use seek to promote long-term economic growth, affordable housing, and climate change adaptation and mitigation.

At regional level, the Metropolitan Urban Plans (prepared jointly by cities in the metropolitan area) and the Do Comprehensive Plans (provincial) constitute the top of the planning framework. They contain the spatial vision and land-use demand forecast, as well as sectoral plans such as transport, housing, infrastructure provision and environmental protection measures. The Metropolitan Urban Plan can provide guidelines for the Urban Master Plan and the Urban Management Plan.

At the regional and local levels, the Urban Master Plan establishes the basic spatial structures and long-term directions for development within the jurisdiction of a special city, metropolitan city, or city. It provides guidelines on which the Urban Management Plan should be based. The Urban Management Plan is the implementation plan as it mainly handles the land-use zoning system and imposes legally binding restrictions on land use for landowners. The District Unit Plans are the lowest level of land-use plans, which steer the development of small neighbourhoods and individual blocks in densely populated areas.

… but highly restrictive zoning regulations

While Korea’s planning and zoning system is rather comprehensive, it is also restrictive and complex. Zoning regulation by land-use area is the basis of land-use control in Korea. A key drawback of the system is that it contains standardised zoning regulations, which specify the density, use or location of construction and apply to the entire national territory, without considering the specific contexts of each region or neighbourhood. By definition, land-use planning and zoning are place-based and highly context specific. Therefore, restrictive land-use regulations may constitute a barrier to urban regeneration and effective land-use management. Zoning is not flexible enough to give private actors leeway to shape development and to allow neighbourhoods to change over time. The current zoning system in Korea mostly permits single-uses and density into pre-determined zones. This results in uniform and strict land-use patterns across the country without strategic planning orientation and consideration of the specificities of the different areas in a city.

While tax policy includes several instruments for achieving spatial objectives, some remain underused

Like other OECD countries, Korea uses the fiscal system to pursue particular land-use policies such as property tax and capital gains tax. Moreover, the government levies a development impact fee from real estate developers to cover all or part of the costs of providing public services to new developed areas. Since 1992, local governments have used innovative financial resources, based on the principle that building owners should pay for the demands they will place on local infrastructure. A traffic impact fee has also been exacted from developments that induce more traffic in Seoul and other large cities. However, some instruments, such as development impact fees and betterment levies, which are included in the legal framework, are not used to their full potential.

Local governments depend largely on national transfers

Korea has a highly centralised revenue collection system that gives few fiscal incentives to local governments to pursue urban expansionary policies. The revenue of the Korean sub-national governments consists of taxes, grants and subsidies, tariffs and fees, property income, and social contributions. National transfers to local governments account for 58% of their total revenues, while the OECD average is 48.3%. Regional and local governments are responsible for securing and raising funds to implement their land-use plans based on the Urban Master Plans and Urban Management Plans. However, national grants and subsidies can be provided to regional and local governments to financially support the implementation of land-use planning. A national budget account, the Special Account for Regional Development, is specifically dedicated to regional development.

The land-use planning framework has evolved to promote urban regeneration

Urban improvement projects – such as reconstruction, redevelopment, and new town development – have contributed to upgrading housing conditions and urban infrastructure provision. At the same time, however, they have had some negative effects. For example, they have concentrated on physical improvement, and have weakened local communities in some areas by driving housing prices up and forcing people to move to other areas. In addition, the shrinking population, the emergence of new business districts around the central areas, and the decrease in the economically active population are leading to a commercial decline of city centres. Such is the case of Busan’s city centre. Therefore, the focus of land-use policies has shifted from expanding urban areas towards promoting urban regeneration. The land-use strategy of the Busan Metropolitan Urban Master Plan 2030 is to shift from urban expansion to revitalising old city centres and managing suburban areas in a sustainable manner. To revitalise old central areas through urban regeneration, the Master Plan proposes to: i) minimise new land supply around old city centres to improve the performance of urban regeneration, ii) establish comprehensive plans for unused and inefficiently used areas, and iii) deregulate and provide incentives to improve the built environment.

There is room to make the land-use planning system more dynamic

Korea has the necessary instruments to manage the use of land. Nevertheless, the land-use planning system could still be more flexible and dynamic to support the government’s urban regeneration goals in a more efficient manner. Korean authorities may wish to consider the following actions:

• Enhance flexibility and devolution in zoning regulations. Korea would need flexible zoning regulations as well as regional/local governments with more authority on zoning issues. This calls for enhancing the devolution of authority on land-use planning to regional and local governments for more customised urban regeneration strategies. More flexibility would allow local governments to react in a more timely and creative way to emerging challenges.

• Promote mixed land use. The current zoning regulations and planning system do not go far enough to encourage mixed land use, as they only implicitly permit and encourage partial mixed land use by minimising regulation. In 2015, Korea’s zoning system was reformed through the introduction of the Minimum Regulation Zone. However, local governments are not actively using this scheme because an area must meet strict criteria to be designated as a Minimum Regulation Zone. Mixed land use in urban areas could accommodate a variety of functions required for urban regeneration. For example, mixed-use developments could allow housing, cultural, commercial and office space in the same neighbourhood, which is not possible under the current system.

• Diversify the set of fiscal instruments to meet spatial objectives to provide local governments with an array of possibilities for managing land use more effectively and efficiently. For instance, Korea may introduce brownfield redevelopment incentives to motivate private developers to take on projects in areas that would otherwise be more expensive to develop due to existing structures, higher land costs and complex ownership rights. Transfer of development rights (TDR) could be a useful tool to steer development away from undesirable areas, such as those that are poorly linked to infrastructure and transport and lack services, towards areas where these amenities exist. Other possibilities include historic rehabilitation tax credit, use-value tax assessment, split-property tax, tap fees, special assessment tax, and land value tax.

• Improve monitoring and evaluation of land-use planning. The current lack of monitoring and evaluation tools makes it difficult to identify which policies work well at the local level and which do not. The aggregate effects of the land-use regulations on regions or the country are hard to estimate because no systematic information exists on the characteristics of regulations at the local level. For example, Busan Metropolitan City’s spatial strategy would benefit from the development of key indicators that can be monitored to assess whether spatial objectives are achieved. This may include indicators on changing land use, new investments and environmental protection.

Urban regeneration

Urban regeneration is an instrument to revitalise the economy and communities

To respond to the challenges of social inclusion, job creation and economic revitalisation, the Korean government issued the 2013 Special Act on the Promotion of and Support for Urban Regeneration. The Act marks a greater shift towards national and local governments working in partnership to create a more integrated framework for urban regeneration. The new framework comprises national guidance, strategic planning and implementation strategies focused on two thematic strands: economy and community.

Urban regeneration in Korea operates within a complex policy context influenced by over 40 different legal frameworks. However, through the Special Act on the Promotion of and Support for Urban Regeneration, the national government supports local governments to create their own urban regeneration strategic plan, as it sets the basic policy for national urban regeneration. The Special Act stipulates that regional governments have responsibility for the Urban Regeneration Strategic Plans, whereas local governments are responsible for the Urban Regeneration Master Plans.

The plethora of plans at different spatial scales creates co-ordination challenges

A major challenge for Korea is the co-ordination of many plans (spatial and sectoral) across levels of government and at different spatial scales. Korea has a history of weak co-operative relationships between local governments, who may see each other as competitors rather than as potential partners in development. Innovations such as the Presidential Committee for Regional Development (PCRD) and the Special Committee for Urban Regeneration create an opportunity to align activities within the national government and establish co-ordination mechanisms with other tiers of government.

Busan’s economy is reliant on efficient land use and urban regeneration

In the case of Busan, key economic sectors include shipbuilding and marine industries, machinery, steel, and tourism. Each of these sectors depends upon efficient land use and each has a direct relationship with urban regeneration. Urban regeneration has been a central feature of managing growth and development in Busan for the last decade. In 2013, Busan Metropolitan Government (BMG) adopted a Declaration on the Urban Regeneration of Busan, which outlines changes in its urban policy from “development” to “regeneration”. The city has taken bold steps to create regeneration strategies and projects that build on its strong identity as a port city, an open and inclusive city and, in recent years, a creative city. Through this initiative, BMG promotes creative urban regeneration through co-operation with civil society.

Busan seeks sustainable socio-economic development through physical renewal and culture-led urban regeneration

To meet housing demand in Busan, poor quality, unplanned settlements emerged in the hillsides in the 1950s and continued to develop during the 1970s and 1980s as low skilled workers moved to the city. These unplanned settlements have led to environmental degradation and social exclusion. One of the most significant factors undermining local confidence in these settlements is a strong sense of physical deterioration. Hence, many regeneration projects have concentrated on physical urban renewal.

In Korea, urban regeneration interventions have long appreciated the importance of culture as a catalyst to regenerate areas that have complex challenges. Two clear examples of the shift towards more people-centred, successful hillside urban regeneration are the Sanbokdoro Renaissance Project and the Gamcheon Culture Village, both in Busan. Both areas were characterised by poor accessibility, high unemployment, failing schools, and disenfranchised communities. From the outset, the projects were based on public, private and community collaboration. The vision for the projects emerged through an extensive process of community engagement and consultations. Residents co-own the vision to regenerate the physical environment, strengthen the local community, transform the economy and develop cultural programmes and assets. Each initiative highlights the value of culture-led regeneration in neighbourhood renewal. These cases are founded on integrated and inclusive principles that have led to positive outcomes in terms of physical renewal, local economic development and community cohesion, and have contributed to culture and tourism in Busan.

Infrastructure, brownfields and smart city initiatives may help catalyse urban regeneration and investment

Infrastructure and transport play a key role in urban development and urban regeneration. For instance, the re-organisation, expansion and adaptation of the Busan port to the global market constitutes an opportunity for urban regeneration. As one of the most competitive ports in the global maritime economy, Busan is retaining its competitive advantage by rationalising its sites and logistics. The North Port Redevelopment Project aims to establish Busan and its ports as a global shipping gateway to Eurasia.

The redevelopment of brownfield sites is an integral part of Busan’s approach to urban regeneration and sustainable urban development. This is an opportunity to realise sustainable urban development and a more environmentally sound, economically viable and socially equitable urban function. The sites also form part of the city’s investment portfolio. Through a series of coherent and aligned master plans and the overarching regeneration strategy, Busan Metropolitan Government is turning brownfield sites into economic assets and opportunities. Invest Busan is a critical element of the city’s marketing strategy and offers investors clear propositions by packaging site details, financial incentives, taxation and regulatory instruments under one body.

Sustainable urban development and urban regeneration initiatives in Busan include the U-City initiative. It aims to provide various ubiquitous city services and information to citizens anywhere and anytime by integrating urban infrastructure and ICT. The national government is aligning smart city and urban regeneration agendas through the Urban New Deal, launched in 2017. In this sense, local governments are encouraged to embed the smart city concept into their Urban Regeneration Master Plan and land use plans.

Busan is building capacity for urban regeneration through collaborative partnerships

In Korea, urban regeneration is becoming more of a partnership between tiers of government and broader coalitions from civil society and the private sector. For this purpose, the Ministry of Land, Infrastructure and Transport (MOLIT) has created an enabling framework to support urban regeneration through dedicated bodies such as the Urban Regeneration Assistance Organisations (URAO). In some cities, collaboration is mandated by state-driven processes, but in most cases, it is the interaction between a diverse set of institutions and actors. Busan has a strong track record of partnerships conducted with the national government, state actors, the private sector, and in recent years, with civil society. Busan has benefitted from strong local leadership that shaped the approach to regeneration in the city and led to people-centred initiatives. This approach is now embedded into national frameworks and is creating opportunities to build new coalitions in cities to drive projects forward.

To operationalise land-use planning and urban regeneration, Korea uses density, zoning and floor area ratios

Across OECD countries, the planning and zoning process functions differently and is controlled by different levels of authority. Korea uses urban regeneration plans to align land-use regulations and master plans. In Korea, the Urban Regeneration New Deal is using floor area ratios (FARs) to regenerate distressed urban areas, increasing density and supporting local economic development. The Urban Regeneration New Deal is a five-year programme that seeks a more flexible approach to zoning to realise optimal outcomes and to accelerate investment.

To maximise the investments potential, Korea needs to reinforce the urban regeneration strategy

Korea, and Busan in particular, could make the most of its urban regeneration investments through the following options:

• Reduce complexity and duplication of planning at national and sub-national levels. Korea has a complex planning legislation due to the large number of regulations and their interaction within and across administrative units at the national and sub-national levels. This can lead to inefficiencies and may require further reforms. Korea may wish to see urban regeneration as a part of growth strategies to ensure that all relevant policy interventions and expenditure at local and national levels are clearly mapped and both interlinkages and duplications are easily identified.

• Streamline the planning system. Land-use planning and urban regeneration are currently delivered through parallel, yet interdependent plan-led systems that can lead to overlapping and administrative inefficiencies. Both the Urban Master Plan and the Urban Regeneration Strategic Plan analyse socio-economic development, environmental protection and land use suitability in a given region, which may duplicate efforts and resources. Moreover, the committee oversight for plans and decision making can also present challenges. Resourcing the committees with appropriate experts can prove challenging and certain projects require approval from the Urban Planning Committee and the Special Committee for Urban Regeneration. The system could become more efficient and effective if joint meetings or committee mergers were allowed.

• Reinforce evaluation. Benchmarking and evaluating outcomes and impact from urban regeneration investments and programmes has long been considered challenging. Urban regeneration tackles multiple problems, ranging from the built environment, transport and housing, to culture, social inclusion, job creation and other factors. Understanding what works in urban regeneration requires quantitative and qualitative analysis. Korea may wish to consider strengthening evidence-based analysis by bringing together policy makers, academia and experts. The goal would be to change the way that local areas and national policy makers approach evaluation; the approach could enable Korea to measure the impact of urban regeneration and New Deal projects more effectively.

• Ensure investments are available for urban regeneration projects. A strategic plan should guide development and investment, including urban regeneration at the centre and growth management on the periphery of the functional region. The Busan Regeneration Strategy 2015 and the Regional Strategy clearly articulate the vision for the future and the interventions that BMG will support to regenerate the city. However, the strategies are not supported by explicit investment and funding strategies, which is likely to limit progress.

• Use urban regeneration as a catalyst for job creation. As a city with an increasingly ageing population and young people gravitating toward Seoul, Busan will need to support regeneration initiatives with evidence-based employment and skills policies. In Busan, this will require specific strategies that set measurable baselines, targets and indicators. The national government is a key partner in job creation and skills development. To realise job creation from urban regeneration and public investment, the national government will need to work in partnership with Busan by aligning policies and interventions across government departments and levels of government.

Citizen engagement

Citizen engagement is critical for land use and urban regeneration

Since the 1990s, Korea has been strengthening the relationship between the government and citizens. All levels of government in Korea now use an array of engagement strategies and mechanisms in the agenda setting, formulation, implementation and evaluation of policies. Involving citizens in land-use planning and urban regeneration is essential for gathering better quality information as a basis for plans and decisions and getting an overall picture of development needs and opportunities. People’s practical knowledge and experience add new aspects into the planning process. By involving the local community actively, it is possible to promote networks, a common identity and a sense of belonging. This can help ensure acceptance, involvement and ownership by local parties, freeing up time and resources for the next phases in the planning process.

Residents are increasingly at the centre of urban regeneration strategies

Korea is transitioning from a rigid and static form of public participation to a more dynamic process, where mediation becomes essential. The Special Act on the Promotion of and Support for Urban Regeneration aims to empower local residents to take the lead in resolving the issues of their neighbourhood and join the local participatory governance. Under the urban regeneration plans, residents and local governments jointly plan and implement projects. In addition, engagement and consultation take on greater relevance because: i) urban planning and regeneration projects are closer to the needs and priorities of citizens, and ii) it brings the right stakeholders on board. The central government provides support through means such as financial aid and system reforms as well as feasibility studies of the investments. For instance, Busan is implementing a community-based approach to its urban regeneration projects at neighbourhood level. This interaction is based on a partnership between citizens and the city government. The rationale for the partnership is that planners may have a limited knowledge of local problems, and statistical data on urban issues cannot express exactly how local people feel about them or how the suggested solutions fit into their cultural traditions.

Local governments encourage residents to play a more active role in urban regeneration

Under community-based activation plans, Korean citizens can propose policy options or urban regeneration projects to local governments. These plans take a neighbourhood-level approach, encourage the participation of diverse groups and individuals, and create a long-term community vision. The national government subsidises selected urban regeneration projects proposed by local governments, and one of the criteria for selection is that citizens have participated in their elaboration. Citizens’ proposals shape the dialogue with the local authorities, although the final decision rests with the local government.

The participatory process brings together three main types of actors: residents (including the private sector), the public administration, and experts (the head of the Urban Regeneration Support Centres, and local activists). Their degree of involvement depends on the type of project and the circumstances. Some activists also facilitate communication between government and residents, provide direction and ideas to citizens, and have an overarching vision of the project. At the moment, the land-use planning and urban regeneration processes are progressively changing towards resident-driven, bottom-up processes. In the future, the process of participation is expected to evolve towards horizontal multi-directional communication in decision making.

Busan has a wide range of tools to foster citizen participation in land-use planning and urban regeneration, but their effectiveness is not assessed

By nature, land-use planning and urban regeneration projects generally seek to solve problems that usually concern only a part of the city. However, even at neighbourhood level, the government needs to design and adopt specific tools to incentivise citizen participation in planning and urban regeneration, as population is diverse with different socio-economic backgrounds, needs and priorities.

Busan authorities currently have a number of tools to promote and facilitate citizen engagement in urban development. The use of such tools depends on the objectives pursued and the target group. For instance, when BMG engages in the active provision of information, it produces reports, brochures and leaflets. It may also use different delivery mechanisms that may be either direct (e.g. information centres) or indirect (e.g. media coverage, civil society organisations as intermediaries). When BMG seeks feedback from a broad range of citizens on specific policy issues or urban development projects, it uses tools for consultation that allow for a greater level of interaction, such as public hearings, citizens’ panels, workshops, etc. However, there seems to be an imbalance between the amount of time, money and energy that authorities invest in engaging with citizens and civil society organisations and the level of attention they pay to evaluating the effectiveness and impact of such efforts. Moreover, public participation is hampered by the insufficient skills and capabilities of the public sector compared with the importance of engaging with citizens.

Korea should revitalise the mechanisms for enhancing citizen participation in urban regeneration

Korean citizens are increasingly seeking opportunities to participate actively in shaping the future of their city and their neighbourhoods. To revamp the mechanisms for promoting citizen participation in urban regeneration, Korean authorities may wish to consider the following points:

• Conduct ex ante planning to engage citizens in policy making. Improving communication at the early stages of planning by bringing relevant stakeholders into the process is essential so that urban projects or development programmes do not reach the “threat” stage. Busan needs to connect existing local knowledge with scientific evidence for land-use planning and urban regeneration. Local knowledge could be used as a valuable input for an interactive participative planning process, where conflicts, if they exist, are resolved in a communicative and consensual way. The challenge is to establish a common language between citizens and planners.

• Invest in evaluating the outcomes of citizen engagement strategies. Local governments need to: i) evaluate, in a systematic way, the effectiveness of public participation exercises; and ii) develop the tools and capacity to evaluate their performance in providing information, conducting consultation and engaging citizens in order to adapt to new requirements and changing conditions. Having an understanding, through better data, of who participates (e.g. willing and able, willing and unable, and unwilling) and what factors may be influencing participation is essential for the evaluation of urban regeneration outcomes.

• Clarify accountability issues in urban regeneration plans. Engaging citizens in urban regeneration and land-use planning has real implications for accountability. Local governments need to avoid being seen as abdicating their responsibilities or increasing the burden on citizens, especially in relation to the tax regimes that finance public services. People involved in the urban regeneration projects need to be representative of the community or neighbourhood where the project is taking place.

• Improve the environment for effective citizen participation by: i) increasing opportunities for engagement, ii) gaining a better understanding of who participates, iii) focusing on evaluating the quality of outputs and outcomes (i.e. cost benefit analysis), iv) explaining to citizens the pros and cons of different decisions and the consequences of different proposals, and v) broadening the scope and scale of engagement efforts. The national government may provide guidelines on promoting citizen participation in urban development projects.

• Boost the local public sector’s capacities and skills for engaging with citizens by: i) allocating more resources to support general and project-specific information and involvement; ii) making training in communication and process management mandatory for officials and managers, and allocating the necessary resources to support such training; iii) developing programmes, structures, strategies and feedback mechanisms to increase communication and information sharing among agencies, organisations and communities; iv) engaging NGOs in providing and delivering training programmes; and v) exploiting the opportunities of digitalisation and new ICT for enhancing citizen participation in urban regeneration and land-use planning.