Joint agency inspections to cover 16 associations
The government will conduct special inspections through November of 16 reconstruction and redevelopment associations that excessively inflated construction costs or failed to carry out mandatory cost verification procedures.
The Ministry of Land, Infrastructure and Transport announced Wednesday that it will launch joint special on-site inspections starting Monday to eliminate illegal and improper practices related to construction cost calculation and association management in redevelopment and reconstruction projects, and to prevent harm to association members.
The inspections will involve the Korea Real Estate Board, local governments and outside experts, who will examine the appropriateness of construction cost breakdowns, the validity of cost increases and their calculation details, and compliance with relevant laws and association bylaws.
The ministry said it launched the special inspections because cases of excessive construction cost estimates and increases have been occurring, and because failures to follow the legally required cost verification process have been raising the financial burden on association members and causing project delays.
Ahead of the special inspections, the ministry conducted a comprehensive survey in August and September of construction cost increase rates, verification requirements and compliance across redevelopment and reconstruction projects. It identified 138 sites subject to cost verification under Article 29-2 of the Act on the Improvement of Urban Areas and Residential Environments that had not undergone the required verification.
Of those, 16 associations were selected for the joint special on-site inspections to be held this month and next, including large-scale redevelopment and reconstruction sites in Seoul. The selection focused on sites where local governments had identified problems with the cost verification process or where association members had filed a high volume of complaints.
If violations of relevant laws are confirmed through the inspections, the ministry plans to issue corrective orders and administrative guidance. Cases involving serious criminal charges such as embezzlement, breach of fiduciary duty or fraud will be referred for investigation.
The ministry also plans to share inspection results with association members and distribute a compilation of major violation cases by type to associations nationwide, to be used as training material for association officers.
For the 138 sites subject to cost verification that were not selected for the special inspections, the ministry and local governments will issue administrative guidance to individual associations directing them to complete the required verification.
Yun Young-jung, the ministry's housing improvement policy director, said disputes over construction costs between associations and contractors have been causing project delays. "We expect this special on-site inspection to prevent harm to association members, enhance the appropriateness and transparency of the construction cost contracting process, and allow redevelopment and reconstruction projects to proceed more swiftly," he said.
smh@heraldcorp.com
