Money Today Reporter Kim Pyeong-hwa | 2023.12.20 18:00
The construction of the housing redevelopment project Daejo District 1 (Daejo District 1), Eunpyeong-gu, Seoul, with a project cost of 580.7 billion won, will be suspended. Although more than a year has passed since the construction company, Hyundai Engineering & Construction, broke ground, they have yet to receive any construction costs and have decided that they cannot proceed with the construction work any further. According to the construction industry on the 20th, Hyundai Engineering & Construction is said to have sent an official letter to the Daejo District 1 union this afternoon stating that it will stop construction in Daejo District 1 and exercise its lien starting from the 1st of next month.
Hyundai Engineering & Construction invested about 180 billion won in unclaimed construction costs at the site after construction began in October last year, and provided a credit extension (joint guarantee) worth 300 billion won, but he has not received any construction costs even after one year. Hyundai Engineering & Construction sent several official letters to the executive branch of the union urging payment of construction costs, but to no avail. Even after management’s disposal was approved last May, the timetable for sales to union members and general sales has not been confirmed due to internal problems within the union. As a result, construction ended with a progress rate of around 22% (at the end of November).
In order for the union to pay for construction costs, it must hold a general sale. In order to sell, a union general meeting must be held, but the position of Daejo District 1 union president has been vacant for ten months since last February. Although the court appointed a temporary representative, it is difficult to hold the general meeting itself due to the emergency response committee’s appeal. There is a ‘zero clock’ as to when construction costs can be paid. Hyundai Engineering & Construction decided that it could not invest more construction costs.
In the construction industry, there is an assessment that the current situation in Daejo District 1 is worse than during the Dunchon Jugong (Olympic Park Foreon) event in Gangdong-gu, Seoul, which suffered a construction suspension for six months. Dunchon Building Society delayed paying construction costs to the construction project group, and the project group ultimately suspended construction between April and October 2022. Financial costs increased due to delays in completion. What makes the situation in Daejo District 1 more difficult is that the parties the construction company can negotiate with are ambiguous.
Before that, the union held an extraordinary general meeting to elect a union president last September and re-elect former union president Mr A, who had been suspended from his duties in February, as union president. The new executive branch planned to hold an extraordinary general meeting on November 3, but union member B applied to the court for a temporary injunction to ban the general meeting, and the court accepted the request, canceling the general meeting.
If construction is halted, union members will bear the brunt of the damage, including increased financial costs and the extension of the construction period. The additional contribution per household due to construction suspension is approximately 150 million won (estimated on site).
A Hyundai Engineering & Construction official said, “Since the executive branch of the union remains absent, we have no choice but to stop the project, so it is impossible to proceed with business as usual, such as confirming the schedule sold to raise funds for the project. .” “We will do our best to allow it to resume,” he said.
Meanwhile, the redevelopment of Daejo District 1 is a project to create 2,451 homes and ancillary welfare facilities in 28 buildings with 4 underground floors and 25 floors above ground on a 112,000㎡ site at 88 Daejo-dong, Eunpyeong-gu, Seoul. In 2017, Hyundai Engineering & Construction was selected as the construction company. The construction cost at the time of the contract was about 580 billion won.
[저작권자 @머니투데이, 무단전재 및 재배포 금지]
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