After a Reconstruction Levy 'Bolt From the Blue,' Reconstruction Association Heads Gather

[Financial News] Amid growing controversy over the Reconstruction Excess Profit Recovery System at reconstruction project sites across the country, the heads of the associations involved have agreed to gather in one place and put their heads together. They are set to review the situation so far and discuss how to respond going forward. Attendees are understood to include association heads from across the country, not just Seoul, including Gyeonggi, Daegu and Busan, which are affected by the system.
■Around 20 reconstruction association heads from across the country to meet
According to Financial News reporting on the 15th, association heads representing around 20 apartment complexes nationwide have agreed to meet on the 19th at an undisclosed location in Seocho-gu, Seoul.
The reason for their gathering is the system. Under the Reconstruction Excess Profit Recovery System, if the gains association members make from reconstruction exceed a certain level, part of the excess is recovered as a “reconstruction charge.” No charge is due if the average excess profit per member is 80 million won or less. If it exceeds that amount, rates of up to 50% are applied in tiers according to the amount of excess profit. This is the first time association heads from across the country have gathered over this issue.
The areas represented range from Seoul and Gyeonggi to Daejeon, Daegu and Busan. Even within Seoul, attendees are expected from various areas, including Gangnam and Gangbuk.
Those expected to attend include the head of the Banpo Hyundai association, which was recently notified by Seocho-gu of a 17.9 billion won charge under the system, as well as representatives from Shinbanpo 21st, Shinbanpo 18th, Cheolsan Jugong Complexes 8 and 9, Daegu Beomeo Woobang 1st, Daejeon Yongmun-dong District 123 and Busan Daeyeon District 4. The total number of attendees is estimated at around 20.
They are set to discuss various aspects of how to respond to issues related to the system, including whether they can respond legally. They say they may take concrete steps, such as holding a press conference, within the year once preparations are complete.
■District offices and associations already calling for “abolition of the system”
District offices and major reconstruction associations in Seoul are already calling for the system to be abolished. Seocho-gu is a prominent example.
On the 9th, Seocho-gu submitted a petition to the Ministry of Land, Infrastructure and Transport, backed by a total of 10 associations, including nine local reconstruction associations and the Eunhasu Reconstruction Association in Yeoksam-dong, Gangnam-gu. A total of 6,936 residents signed it. Earlier, on the 4th, the district submitted its first petition, with signatures from 1,286 residents.
When it submitted the second petition, the district also asked for an authoritative interpretation by the 13th, but has yet to receive one. Seocho-gu is now considering resending an official letter to the ministry urging it to provide an authoritative interpretation.
The controversy over the system, which had subsided, reignited this year when Banpo Hyundai received an estimate of the charge it would actually face. Interest appears to be growing after Eungma Apartment in Gangnam-gu was also notified of an estimated charge averaging around 460 million won per association member. At least 57 reconstruction and redevelopment projects are currently underway in Gangnam-gu.
The system was established in 2006, when the Roh Moo-hyun administration enacted the Act on the Restitution of Excess Profits from Reconstruction. However, no complex has yet been assessed a charge as the “first case.” According to data titled “Status of Reconstruction Excess Profit Charges” from the office of Jo Eun-hee, a People Power Party lawmaker, as of August this year, charges under the system are expected to be imposed on 46 complexes in Seoul, with a projected total of 2,169,050,990,000 won.
[email protected] Kwon Jun-ho Reporter