Incheon says lawsuit withdrawal marks 'meaningful change' — but stops short of ordering restart
Timeline and conditions for resuming contractor selection remain unclear
Policy decision now rests with Incheon City
IGCD left bearing the full cost of delays it did not cause
The controversy over the suspension of contractor selection for Phase 3 of the Songdo Global Town project in Incheon's Free Economic Zone (IFEZ) has entered a new phase after Incheon City issued an official statement on the matter.
The Incheon Free Economic Zone Authority (IFEZA) had been asking Incheon Global City Development (IGCD) — a company it wholly owns — to continue suspending contractor selection work, effectively stalling the project's normalization. Incheon City has now acknowledged that "meaningful changes" have occurred in the circumstances surrounding the project, including the resolution of a legal dispute with Hoban Construction.
However, the city stopped short of providing a clear answer on when or under what conditions contractor selection work would resume.
The debate surrounding Phase 3 of the Songdo Global Town project is thus shifting — from the question of why IFEZA halted the project to the question of when Incheon City will make the policy decision to normalize it amid changed circumstances.
Earlier, IFEZA sent IGCD official correspondence this month, as it had last month, asking the company to suspend contractor selection work until further approval was granted.
IFEZA had maintained that it needed to weigh a range of factors comprehensively — including the legal dispute with Hoban Construction, which had been the preferred negotiating partner, repeated failed re-bids, and problems that arose during the subscription intent process.
Since then, however, the situation has changed. Hoban Construction voluntarily withdrew on Wednesday the injunction application it had filed with the Incheon District Court in June, seeking to preserve its status as the preferred negotiating partner for Phase 3 of the Songdo Global Town project.
IGCD argued that the legal obstacle blocking the contractor reselection process had in effect been removed, and called for the immediate resumption of contractor selection work.
But IFEZA, which owns IGCD, moved to put the brakes on that push.
On this, Incheon City acknowledged that "contractor selection work for the project was temporarily put on hold," while explaining that "unexpected problems arose continuously and in combination during the contractor selection process — including consecutive failed bids, issues in the subscription intent process, and a legal dispute with the preferred negotiating partner."
Incheon City officially acknowledged an important shift in the project's circumstances.
The city said that "with the lawsuit withdrawn by Hoban Construction itself, the legal dispute has concluded, and meaningful changes have occurred in legal and other matters." It added that it "plans to carefully examine the changed surrounding conditions, any further shifts in the legal situation, and the criteria for the contractor selection tender — including expanding the number of evaluation committee members — before proceeding with a comprehensive review to ensure the project moves forward smoothly and stably."
Incheon City's position differs somewhat in tone from IFEZA's earlier stance of simply maintaining the work suspension.
IFEZA had previously said it had not received any official instruction from Incheon Mayor Park Chan-dae's newly inaugurated ninth-term city administration to suspend contractor selection, but maintained that the work should be halted until further approval was granted in order to prevent confusion over the project.
Incheon City, by contrast, acknowledged the change in the legal situation and said it would review the project's future direction.
The problem starts there. Despite acknowledging that the legal situation has changed, Incheon City has not provided a clear answer on when contractor selection work will resume.
Also left unanswered were three key questions: who will conduct the review and by what criteria, when the review will be completed, and what conditions IGCD must meet before it can proceed with contractor selection again.
As a result, IGCD finds itself in a prolonged state of limbo — unable to actively push the project forward as normal, yet unable to officially halt or abandon it either.
Time and money are the core concerns. Phase 3 of the Songdo Global Town project covers 1,700 units and received project plan approval with a schedule calling for ground-breaking in August and completion in early 2030.
The construction period is set at no more than 44 months, but delays in the contractor selection process have already thrown the original ground-breaking schedule off track.
IGCD has expressed concern that further delays in contractor selection and project financing closure could affect its ability to pay the roughly 306 billion won ($221 million) land balance due in mid-December.
Fixed costs — including interest expenses and corporate operating costs — currently run at about 1.5 billion won per month.
If IGCD fails to pay the 306 billion won land balance to IFEZA by December, the fallout from the resulting project disruption would be extremely difficult to manage.
In effect, while Incheon City continues its "review," IGCD — the project developer — is being left to absorb the full financial burden of the delays.
Some observers have raised the concern that "in the end, Incheon City and its subsidiary IFEZA are only reviewing, while IGCD alone is left to bear all the risks — including the financial costs of the project delays."
The result is an unreasonable situation in which Incheon City, as IFEZA's superior authority, and IFEZA, as IGCD's investor, bear no accountability, while IGCD is left holding all the responsibility.
IGCD, which did not cause the delays, is instead being cast as the party responsible for the confusion surrounding the project.
The controversy is further complicated by political scrutiny. The project was initiated under former Mayor Yoo Jeong-bok's eighth-term city administration, and political attention has now turned to the current head of IGCD — pushing the debate beyond a simple administrative matter into broader questions about Incheon City's future policy direction.
Some observers have raised the possibility that the newly inaugurated ninth-term city administration under Mayor Park Chan-dae may be putting the brakes on the project.
No concrete evidence has emerged to support that view. Still, it is a clear reality that as the project remains stalled, the resulting accountability and management burden are increasingly falling on IGCD and its current leadership.
The selection of a new IFEZA chief has also become a matter of quiet interest.
Among the five candidates who passed the first round of screening for the ninth IFEZA commissioner position, one is confirmed to have previously served as IFEZA's head of investment attraction and to have worked as an executive director at Hoban Construction until last August.
The candidate is no longer a current Hoban Construction executive. However, given that the legal dispute between Hoban Construction and IGCD has just concluded and the future direction of the Songdo Global Town Phase 3 project is closely tied to IFEZA's policy judgment, questions have been raised about the need for more thorough vetting of the candidate's potential conflicts of interest and the need to ensure impartiality in the role going forward.
Ultimately, the core issue in this controversy is not any individual's political background or a particular candidate's past career.
It is that Incheon City has yet to present a clear policy direction for how it intends to handle Phase 3 of the Songdo Global Town project going forward.
Incheon City has acknowledged that "meaningful changes" have occurred in the legal situation. If that is the case, the city must clearly state what it still needs to review and by when, and who will bear responsibility for the project delays and financing costs that accumulate in the meantime.
The litigation surrounding Phase 3 of the Songdo Global Town project has, for now, ended. But the project itself has yet to move.
The controversy over IFEZA's work suspension order has also entered a new stage with Incheon City's official position.
The ball has now passed to Incheon City — not IGCD, not Hoban Construction.
One question remains after the city's official finding that "the legal situation has changed."
Will Mayor Park Chan-dae's ninth-term city administration move to normalize Phase 3 of the Songdo Global Town project — or will it continue the standby state it has called a "comprehensive review" indefinitely?
"This is a massive residential project involving 1,700 units — everyone should be working flat out to get it back on track, not getting dragged into an internal fight between Incheon City, IFEZA and IGCD that only hurts themselves," said a representative of a civic group. "It is deeply frustrating — I wonder whether they even understand the real reason the project has been delayed and the enormous damage it is causing in so many ways."
Meanwhile, IFEZA and IGCD are expected to hold talks next week over the suspension of contractor selection.
gilbert@heraldcorp.com
