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THE ECONOMICS OF UNIQUENESS
financial mechanisms—to stimulate the reuse and redevelopment of brownfield urban areas and make them more attractive to private investors. In countries such as India and Egypt, the regeneration of brownfields mostly relies on government grants, which are to date the most successful instruments in facilitating regeneration projects and attracting private investors. Local governments, more than regional and central governments, are in the best position to foster heritage brownfield regeneration as well as to lead and facilitate brownfield efforts in the community. Local authorities may create financial solutions to the brownfield financing problem by leveraging a combination of available national and local funds and private money. Local government programs usually offer one or more of several types of incentives. Some of these include regulatory relief, liability relief, grants and loans, insurance, waivers of development fees, property tax abatements and remediation tax credits, public investments in infrastructure and amenities, and changes in regulatory procedures among others. Table 8.1 briefly presents financial tools broadly used by local authorities for brownfield projects. These financial mechanisms are used particularly for natural heritage projects but can certainly be applied to cultural heritage brownfields or historic city areas. National government programs, in general, require that beneficiaries meet special eligibility criteria, many of which are intended to combine public funding with private sources, thereby creating barriers against applying for funds. However, central authorities’ initiatives provide a solid foundation upon which local governments are able to build their own brownfield financing strategies. The foregoing analysis indicates that the public sector must be the initiator of urban brownfield projects for the regeneration of blighted and underused urban areas and historic city areas. In summary, the public financing initiatives must usually employ one or more of the following strategies: • Reduce the risks on the lender site, to make capital more available for brownfield redevelopment. Incentives, such as loan guarantees or companion loans, can ensure a minimum return by limiting the borrower’s exposure to unforeseen problems that can affect the value of collateral or the borrower’s ability to pay. • Reduce the borrower’s financing costs, to make capital more affordable. Local authorities can subsidize interest costs through tax-exempt financing and lowinterest loans, and can reduce loan underwriting and documentation costs through loan packaging assistance and technical support. • Improve the borrower’s financial situation. The project’s cash flow can be improved through tax credits, tax abatements, or repayment grace periods, easing the way for the project to show the expected profitability.