Questions/Answers

Urban renewal projects implemented with the intention of reconstructing slum neighborhoods, in turn, can bring about gentrification through a resulting rapid increase in real estate prices. The ratio of self-employed people in Korea is 25.5% (OECD 2016 statistics), and commercial gentrification threatens to endanger the livelihood of them. In particular, while the rights of landlords are considerably overprotected, the survival rights of the self-employed (who rent the space of landlords) are being avoided, and still left in an environment where their rights are yet to be brought to social attention, placing law and system aside. Entering the 2010s, the Seongsu area of Seongdong-gu began to show signs of gentrification. The Seongdong-gu, local government thought it necessary to respond to gentrification in advance, and starting in August 2015, implemented policies to this end by preparing a general plan of action, enacting related ordinances, and establishing “The Sustainable City Development Bureau.” First, voluntary agreements were formed for the creation of a social consensus. The mutually beneficial voluntary agreement, made through trust between the three parties of Seongdong-gu, local landlords, and tenants on the basis of 1:1 matching of public officials with landlord was unprecedented in the world. Second, an institutional framework was prepared to restrict the entrance of large franchises to the area and provide support for incentives by establishing urban planning (plan for sustainable development). Third, public and commercial buildings are designed and operated through providing less expensive long-term lease of public property to small scale business people. As a result, the rate of increase for rent in the area fell to 3.7% in 2017, a 13.9% reduction from the 2016 value of 17.6%. This solidified the social consensus about the social sharing of land and buildings for inclusive benefit of all residents. Such performance is spreading not only throughout Korea, but also to countries in East Asia.

Seongdong-gu’s initiative to prevent gentrification aims to make an inclusive economic environment and create sustainable growth engines so that each and every person can maintain a sufficient level of livelihood, by resolving issues such as discrimination, alienation, and inequality, as opposed to increasing the size of the economy through indiscriminate development. First, the initiative calls for the creation of an institutional framework so that landlords, tenants and local residents can voluntarily share the elevated value of the region among themselves and reach a social agreement. Second, lead a policy of tolerance so that the creative workforce new to the region can work to settle down a system of co-existence among residents, together with those that have been working in the area for long periods of time such as aboriginal merchants, traditional manufacturers, etc. Third, through collaboration of regional community and preservation of cultural diversity, create a city regeneration policy that will lead to reinvigoration of social economy along with social corporations, social ventures, etc., making voluntary and self-regenerative development possible. Fourth, institutional frameworks and guides will be put in place in order to enable this local government policy to be implemented on a national scale by the central government.

Category 2 1. Innovative policy - The discussion of gentrification spawned from talks in October 2014 on “guaranteeing a stable industrial environment and living space without concerns about rent” in a meeting between the heads of the local government and local innovators, social venture firm owners, cultural artists, and young entrepreneurs. As a result, Korea’s first comprehensive countermeasures for gentrification at the government level were prepared. 2. Equality - The socio-economic problem resulting from capitalism which ignores innovative ideas and the dignity of labor can eventually be cured and lead to the improvement of communal relationship among landlords and tenants. 3. Legal framework - Korea’s first ordinance for the prevention of gentrification was enacted to prepare an institutional basis for future initiatives. 4. Participatory decision-making - The Residents’ Autonomy committee (composed of landlords, tenants, local residents, the occupation association, activists, and related experts) and The Advisory Committee for Public-Private Partnership are run for the purpose of implementing policies and reaching final decisions on matters. 5. Responsiveness - The comprehensive initiative of Seongdong-gu is spreading to other local governments and Korea’s central government, as well as to Japan, Taiwan, Hong Kong, and other countries which are faced with similar circumstances.

1. We established a Public-Private Partnership involving various stakeholders, such as landlords, tenants, local residents, and civic groups, and through this form a voluntary win-win atmosphere (SDGs 16) to reinforce the capabilities of socially vulnerable tenants and protect their rights (SDGs 4). 2. We solved inequities and conflicts between landlords and tenants (SDGs 10), restoring the spirit of the local community and spreading a sharing culture by fostering interest between the two parties (SDGs 11). 3. Small business owners, cultural artists, women and young entrepreneurs, and others are to be guaranteed high-quality jobs through our innovative ideas and productive employment for the improvement of their lives (SDGs 8), and local commercial supremacy is promoted and reinvigorated by the formation of a unique culture through the use of a creative space of their own (SDGs 12). 4. We created public and commercial buildings (SDGs 9) backed by corporate social contributions for the community (SDGs 12) to provide an environment for long-term, protected businesses, and by doing so encouraged the promotion of inclusive and sustainable industrialization (SDGs 11). 5. We transferred and promoted our initiative through ongoing cooperation with other local governments and the central government of Korea, as well as Southeast Asian countries experiencing similar circumstances (SDGs 17).

At first, there were objections to the initiative in the community due to conflicts of interest and unfamiliarity with the terminology introduced. But public officials met with local residents to consistently convince them on the necessity of the initiative and the importance of coexistence. Now, a social consensus and citizens’ autonomy have been realized through the formation of organizations for the joint governance of Public-Private Partnership. 1. Residents’ Autonomy Committee - The Residents’ Autonomy Committee was organized in Feb. 2016 with 20 members - 5 each from the occupation association, local activist, landlord, and tenant bodies – to restrict the qualifications of large franchises and determine which factors could lead to the gentrification and deterioration of the cultural level of the area. Its members requested a crackdown on real estate agencies which attempted to incite rent increases or collude on rent. 2. Advisory Committee for Public-Private Partnership - The Advisory Committee for Public-Private Partnership was formed in 2016 with 18 members from academic and civic groups, experts in each field, and public officials to review ordinances for the prevention of gentrification, develop policies, and coordinate various interests.

- Pursuing the sustainable development plan, Seongdong-gu has increased residents’ satisfaction and improved residents’ lives, preserving the unique community culture and stabilizing rents. - According to self-investigation of the ratio of increase in rent in 2017, the average cost of rents fell by 13.9% as compared to 2016 within sustainable development areas, and the average rent increase for buildings which had joined the win-win agreement system was shown to be 0.8% lower in comparison. - In 1:1 interviews with people related to the win-win agreement conducted in 2017, 86% of respondents felt very positively. - In addition, sharing its values of coexistence and sharing with Seongdong-gu, Tycoon P&H Co., Ltd. designed and provided public and commercial buildings (17 workshops, 855㎡) by signing an MOU with Seongdong-gu. - Through a documentary made by talent donation of a famous entertainer who participated in the win-win agreement, Seongdong-gu’s leading response has received heightened attention. As a result, our initiative has been mentioned in more than 650 press reports. - Moreover, initiative implementation guides have been published to help spread the local government initiative to Korea’s central government and to other countries. More than 50 local governments are adopting the initiative.

1. Our comprehensive initiative is the first in Korea implemented for the reinvigoration of local slums by improving the lives of local residents, and is the most active preemptive strategy conducted by a local government. 2. The initiative of our local government (enactment of ordinances, designation of an area for sustainable development, win-win agreement, etc.) was implemented in a “bottom-up” fashion, and this was followed by other local governments in Korea and included in the list of top 100 government projects. It is a fresh approach to provide a timely response to the problems occurring in today’s rapidly changing society. 3. Our initiative is based on Public-Private partnership or the creation of a social consensus. Public officials personally met with landlords to persuade them about the necessity of the initiative and the win-win relationship. The agreement stabilized rents by solidifying the community through instilling community members with social responsibility. 4. Korea’s first public and commercial buildings have been created to protect small business owners and, at the same time, provide guidelines for rent stabilization. In particular, to overcome budget problems in a local government with a low self-reliance ratio, we actively used social contributions from private enterprises.

- The heads of the local government and public officials benchmarked the policies of major cities in the U.K., France, Japan, and elsewhere and adjusted them to the environment in Korea after visiting Japan and other cities in Nov. 2015 and conducting research for private and public cooperation for urban regeneration in June 2016. - In particular, thinking that the prerequisite for a sustainable city was making a social consensus, we prepared a method unique to Seongdong-gu, the win-win agreement. The win-win agreement was signed voluntarily by three parties: Seongdong-gu, the landlords, and the tenants. Though the agreement does not carry legal binding force, it is a social contract made through mutual trust. According to the agreement, landlords will refrain from increasing rent or depositing money excessively, tenants will make an effort to promote the development of local commercial supremacy, and Seongdong-gu will actively support the landlords and tenants with the promotion of the local economy. In demonstration areas, 163 out of 255 people (64%) signed the agreement and will attach the “Win-Win Seongdong” signs on their buildings from Dec. 2017. Such efforts received a favorable response (86%) in the 2017 initiative evaluation, and local rents have stabilized.

1. Human resources Public officials worked for the approval of the win-win agreement through 1:1 pairing of public officials and landlords, and the Association of Local Governments, composed of 47 local governments across Korea, made an effort for the enactment and revision of related laws. In addition, the Advisory Committee on Public-Private Partnership, composed of experts in academic circles, civic groups, urban planning, etc., the Residents’ Association, and the area’s Merchants Association participates voluntarily to promote the prevention of gentrification and protection of commercial supremacy. 2. Material resources - Seongdong-gu set aside the budget to secure Korea’s first public and commercial buildings (4 malls, 132㎡). - We have also utilized corporate social contributions to operate the Seongdong public and commercial building (90 malls, 6,400㎡) and are planning to create 9 more additional buildings (1,568㎡). 3. Financial resources KRW 1.6 billion of the local government budget was spent in 2017 (KRW 1.2 billion on the purchase of land for the public and commercial buildings (Seoul Forest IT Castle), KRW 70 million for interior remodeling, KRW 300 million for benchmarking, forums, etc.) with KRW 26 billion being supported through corporate social contributions. The resources from social contributions will be expanded in the future.

Yes

- In June 2016, 37 local Korean governments organized the Local Governments Association to urge the enactment of a special law and strengthen their solidarity. - Also, we have made efforts to spread Seongdong-gu’s standpoint over the past 4 years through white papers, booklets, PR documentaries, SNS channels, etc. - As a result, 17 local governments have benchmarked Seongdong-gu’s initiative and are enacting ordinances. - In particular, our policies for prevention of gentrification including the creation of public and commercial buildings, signing of the win-win agreement, and proposal for revision of laws for the lease of commercial buildings among others, have contributed to establishing the top 100 central government policies, setting the direction of the 2018 economics initiative, and supporting measures for the Ministry of Strategy and Finance in 2018. In addition, the Enforcement Decree of the Commercial Building Lease Protection Act was revised in Jan. 2018 are being enforced. - Our initiative was presented at the East Asia Inclusive CITY NETWORK Workshop held in Seoul in 2016 and Osaka in Aug. 2017 as an exemplary case, and East Asian nations such as Taiwan, Hong Kong, and Japan have taken interest in the initiative as an opportunity for the establishment of a sustainable economy.

1. We are using urban planning tools for sustainable development. - We classified the areas of Seongsu-dong Seoulsup-gil, Bangsongdae-gil, and Sangwon-gil as districts for sustainable development according to the level of gentrification. This was done based on the results of academic services and research titled, “How to Prevent Gentrification through Big Data and GIS Analysis,” with customized public service policies implemented according to the characteristics of each area. At the entry level stage of gentrification, the “area of response” allows for a more active provision of public services including the restriction of opening franchise branches, and offering incentives to alleviate floor area ratio issues if a voluntary win-win agreement is signed. At the impending gentrification stage, the “border area” allows for preemptive public services that need to be provided, such as collecting residents’ opinions and mobilizing a community response. Lastly at the observation stage, the “potential zones” serves as a means to provide public services through market revitalization and other programs in order to prevent a balloon effect. This urban planning model is applicable to other regions. 2. We implement the strongest response strategy, asset strategy. With “public and commercial buildings,” we provide support to tenants under threat of being driven out by rent increases and influence real estate prices in the neighborhood to present long-term guidelines for stable rent. Presently, public and commercial buildings (total gross floor area of 8,100㎡) are being run for 100 malls. 3. We enact ordinances to support all policies. Ordinances were enacted to prepare a legal foundation for autonomous solutions to local problems by way of comprehensive agreements between local members of society. The bill was passed unanimously on Sep. 3, 2015 in the local national assembly.

1. We realize citizen autonomy through joint governance with the people. We are running legal and tax affair support groups, educating real estate agents, and opening the win-win academy (with more than 100 people participating in 11 sessions). Also, we enhance the capabilities of the community and activate the community by supporting the win-win agreement and running the Residents’ Autonomy committee, The Organization for Joint Governance with the People, and the Mutual Cooperation Committee of the Community. 2. We prepare systems and institutions. With these ordinances enacted for the first time in Korea, we made it obligatory for the heads of the local government and local residents to observe the ordinances to activate the local community and protect local commercial supremacy by stabilizing rent. Also, we established the department in charge by reforming local government organization, and as the chair of the Local Governments Association (composed of 46 local governments) share policies and spread social consensus. 3. We make efforts to spread our initiative. Seongdong-gu’s comprehensive response to prevent gentrification is being spread to other local governments. Also, as a result, the Enforcement Decree of the Commercial Building Lease Protection Act (enforced on Jan. 26, 2018) was revised, paving the way for the formulation of TF required for law revision. Moreover, our initiative was included in the top 100 government projects, and in the 2018 Direction of Economic Initiative (announced on Dec. 27, 2017), it was introduced in the national initiative under the Law of Local Commercial Supremacy in the area where win-win agreements among stakeholders are signed (for refraining from increasing rent, guaranteeing long-term leases, etc.). As the areas undergoing urban renewal continue to expand, the gentrification policies implemented in parallel with urban regeneration are expected to be implemented in the national initiative.

Yes

1. The press - The “Ordinance for Prevention of Gentrification” was ranked first in a poll of citizens by cell phone in 2015 in the Contest for Good Local Ordinances. - It was also selected as the best initiative by the Hankyoreh Daily in 2016, with 25 heads of the local government in Seoul voting for it, and was mentioned in 643 press reports. 2. Various organizations - It was selected as the best initiative in contests held by Seoul Metropolitan Government, the Ministry of Government Administration and Home Affairs, the Presidential Committee for National Cohesion, etc. - Seongdong-gu was ranked first in the “2017 Sustainability Index of Local Governments in Korea,” conducted by the Korea CSR Institute. 3. Monitoring and surveying of related people - In 1:1 interviews conducted in Nov. 2017 with people related to the win-win agreement, 86% of interviewees responded very positively about the prevention of gentrification in Seongdong-gu. 4. Civic groups - The Association of Merchants, working for the protection of tenants’ rights, drew a social consensus from civic groups, and the association was granted a plaque of appreciation for playing an important role in revising the Enforcement Decree of the Commercial Building Lease Protection Act.

- In a 2017 survey of the area, 86% of respondents agreed to the initiative, which had led to the stabilization of the increase rate of rents. (13.9% lower in 2017 than 2016) - Also, Seongdong-gu’s initiative played the role of locomotive for the “Comprehensive Measures” and the “Ordinance of the Commercial Building Lease Protection Act” of Seoul, and ordinances in 17 local cities. - In addition, it influenced the initiative-making of the central government, leading to the preservation of the livelihood of small business owners, enacting of the law for win-win agreements between stakeholders, etc. - Owing to such influence, the initiative received a positive evaluation, ranking first in the poll of citizens by cell phone in 2015 and selected as the best initiative by the Hankyoreh Daily. Seongdong-gu was also ranked first in the “2017 Sustainability Index of Local Governments in Korea” conducted by the Korea CSR Institute. - Also, the initiative received an award in Seoul Creativity Awards, and Seongdong-gu was selected as a “superior local government” for reforming local regulations. Moreover, our initiative received the grand prize in the Contest for Good Cases of National Cohesion and another grand prize in the Contest for Good Conflict Solutions.

Various organizations have evaluated the “Initiative of Seongdong-gu for the Prevention of Gentrification” with the following indexes. - Contribution to national cohesion: contribution to national cohesion between local government, residents, households, social classes, etc. - Transferability: The possibility of PR and transmission to other local governments, civic groups, etc. - Continuity: The possibility of continuing the same or similar cases - Participation: Active participation of local residents and civic groups - Creativity: Degree of creative approach for cooperation and conflict resolution - Effect: Solutions for the problem using cases, and possibility of continuous usage - Connection and Cooperation: Degree of cooperation among local governments for initiative implementation - Efforts among Local Governments: Interest from heads of the local government and private and public cooperation

- Even though landlords, tenants, and real estate agencies were not very welcoming of the initiative in the beginning, Seongdong-gu continued to persuade them through 1:1 pairing of public officials with landlords, and they became the most important source of assistance with the initiative by signing the win-win agreement and joining the Residents’ Association. They are also working to prevent gentrification together (destruction of cultural diversity in the locality). - Civic groups and related experts have coordinated various interests by presenting effective ways to execute the process of planning and implementing the initiative. - Local governments have benchmarked Seongdong-gu’s initiative and enacted related ordinances, and urged for the enactment and revision of related laws after signing an MOU. As a result of the joint effort, the initiative was reflected in central government initiative. - Professional organizations such as the Korea Appraisal Board continue to offer objective grounds for examination of the phenomenon of gentrification, and recommend preparation of national policies. - Departments in the central government, such as the Ministry of Land, Infrastructure and Transport, have adopted Seongdong-gu’s initiative as one of the Top 100 national projects and are preparing for its institutionalization at the national level. - Members of the National Assembly and District Council contributed to forming a social consensus by persuading local residents about the necessity of the initiative and are working in a partnership to urge the enactment and revision of related laws by holding forums, seminars, and press conferences. - Private companies are cooperating with the creation of public and commercial buildings through social contributions. The support of private companies is very important in overcoming the financial problems among local governments. - Countries participating in the East Asia Inclusive CITYNet Workshop, such as Japan, Taiwan, and Hong Kong, are circulating information about Seongdong-gu’s case throughout the rest of East Asia.

Don’t kill the goose that lays the golden eggs. The “Golden Goose” in Aesop’s Fables teaches us the lesson that seeking only immediate gains or being greedy may have unintended, negative consequences. The current gentrification phenomenon is not much different. If the value of a poor area increases through renewal of the region and commercial supremacy, the benefits should be shared by everyone responsible for creating the space. In doing so, we will be able to build a creative and sustainable city where we all can lead happy lives and coexist. Now, gentrification can be not an object of competition, but of mutual recovery. What is the most important matter for Seongdong-gu’s initiative to prevent gentrification and achieve the SDGs is to draw a social consensus by changing people’s recognition. The initiative will be able to be solidified after such consensus with the support of central government policies and systems (enactment and revision of related laws). Korea is now in a transitionary period. The initiative of Seongdong-gu is the most effective initiative to be applied to a nation without social consensus on weak institutional bases.