Since 1972 when the Housing Construction Promotion Act was enacted and the Housing Rebuilding Project was introduced, city centers were mainly focused on development-oriented rehabilitation projects. However, development-oriented rehabilitation projec...
Since 1972 when the Housing Construction Promotion Act was enacted and the Housing Rebuilding Project was introduced, city centers were mainly focused on development-oriented rehabilitation projects. However, development-oriented rehabilitation projects have caused many problems such as a hollowing out phenomenon, fragmentation of urban space, demolition of community, uniformity of residential type. Moreover the profit-oriented business promotion system used in those projects is not suitable as a solution to improve the declined areas. For this reason, the paradigm for urban regeneration is shifting from development-oriented planning to management-oriented planning.
The purpose of this study is to find out how to finance a urban regeneration project in Cheonan city as a way of securing the financial resources of the local government to cover the urban regeneration project in the urban regeneration revitalization area by the 「Special Act on Urban Regeneration Activation and Support」, and to analyze its applicability to the city.
Firstly, there is no case where TIF is applied in Korea. Therefore, we examined the process, and the structure of TIF, the funding method, the utilization of resources and the volume of taxation through the analysis of precedent researches and overseas cases. Secondly, the tax scope and a business scenario were set up to apply TIF, and it was applied to the Urban Regeneration Revitalization Area in Cheonan city. As a result of the analysis, it was predicted that it would be possible to procure funding resources in advance corresponding to 16.4~20.7% of the infrastructure cost of the Urban Regeneration Revitalization Area. even to 47.3% at the maximum depending on the project contents. In addition, according to the research by Kim Young-ho, who analyzed the fact that if all of the funds raised by TIF were used for infrastructure installation, 11.4% of the sale price can be reduced, it is expected that the sale price in other housing redevelopment and reconstruction projects in the revitalization area can also be decreased if the advance funding resources utilized for infrastructure.
However, there are problems to be solved when applying TIF in Korea. There are two institutional issues. Firstly, it is necessary to agree on the spatial extent of applying TIF because of the feature of TIF which reinvests and collects the increased amount of tax from infrastructure installation. Secondly, a dedicated organization composed of professional personnel is needed. This is because TIF projects are usually long-term projects requiring 20 years of time, are needed integration, coordination and periodic evaluation of each project, and look for expertise in financing through the bond issue and investment.
There are two more issues in terms of policy. Firstly, in order to enhance the effectiveness of TIF, a tax system should be reorganized from the transaction tax base to the property tax base, and local governments should improve the efficiency and the authority of budget execution. Secondly, urban regeneration related projects and policies should be operated within a single institutional framework. It is necessary to integrate and manage the projects under the individual laws into the Special Act on Promotion of and Support for Urban Regeneration.
In this study, it is meaningful to address that TIF confirms the possibility as a new means of financing, even though it is not enough to procure all infrastructure installation cost for urban regeneration. In the future, TIF legislation should be launched in order for TIF to be used as a tool for the local government in Korea to raise the finance and more deepened-studies needed for this in terms of legal and institutional aspects. After the introduction of TIF, it is necessary to continue to supplement and improve the system, and empirical studies should be continued based on a TIF project actually implemented.