Optimal Provision of Service Facilities for Large-scale Land Development Projects: A Loan Scheme and a Consortium Approach

택지개발에 따른 기반시설 적기공급을 위한 유관기관 협조융자와 민간참여 방안

One of the problems associated with the current system of land development projects implemented by the public sector in Korea is that various service facilities are not ready in time for the occupation of residential dwelling. A major cause of the problem is the lack of financial arrangements which would smooth the cash-flow of the suppliers of the facilities during the project period. In this paper we present two schemes which will contribute to the optimal provision of service facilities by easing the financial constraint facing the land developers and suppliers of the facilities. The first scheme involves channeling a fraction of profits from a land development project and of the proceeds of mandatory sales of Type II National Housing Bonds as a loan to the suppliers of the service facilities. The second scheme considers the participation of the private sector in the project as a member of a consortium comprising the Korea Land development Corporation, the National Housing Fund, and private developers. It is proved that each scheme is superior to the current system. as well as entailing a very small cost.