ECONOMICS UNIQUENESS

232 ■ THE ECONOMICS OF UNIQUENESS
can draw lessons from a number of eff ective brownfi eld projects (especially for
natural heritage sites) in the United States, where tax increment mechanisms in
particular have gained much public-sector attention (Calgary City Council 2005;
Dye and Merriman 2006; Smolka 2000). For instance, among the various fi nancial
programs supporting urban brownfi eld projects in New York State, the redevelopment
tax credit is an interesting example of LVF with a broad urban focus.
Th e redevelopment tax credit has three components that accrue credit between
10 percent and 22 percent: site preparation credits, tangible property credits, and
onsite groundwater credits. Th e participants in the scheme can either be owners
or operators of the urban brownfi eld areas. Signifi cantly, the credits are increased
from their basic level in relation to the number of employees the developer hires;
this tactic aims to reduce poverty and unemployment. However, it should be
underlined at this point that no standardized model of LVF may be replicated
across cities, because usually the most successful applications are cases in which
the fi nancial tools are tailored to the specifi c objectives and needs of a project.
Case Study: Akaretler Row Houses in Istanbul, Turkey
A mixed-use development project in the center of Istanbul, Turkey, is a successful
example of the application of LVF to leverage public money and renovate a city’s
heritage buildings. Th e group of residences, known as the Akaretler Row Houses,
was originally built as housing for palace workers in the 19th century; with its
neoclassical frontage design the ensemble is one of the city’s best examples of
1870s civil architecture. Th e possibility of restoring the houses’ historical value
and bringing new life to this area was hindered for many years by strict regulations
for the preservation of historical buildings owned by a national publicsector
owner, the Turkish Foundation, in conjunction with tedious procedures
for obtaining construction permits for development, and the absence of eff ective
incentives. However, by the time the General Directorate of the Preservation of
Cultural and Historic Heritage and the General Directorate of the Turkish Foundation
approved the development plans, the economic potential for development
had become obvious. In addition, real estate and tourism tax breaks given to this
project helped to create market demand and potential value.
Th e public sector agreed with a project developer, the Bilgili Group, on several
ways in which the value was to be captured: local taxation, private-led real
estate renovation, and local service agreements. As a result of negotiated conditions,
the locally generated tax collected by the municipality successfully funded
the infrastructure improvements on the site, while the private investor, the Bilgili
Group, led the direct restoration of the culturally valuable Akaretler Row Houses.
Th e company also helped to market the area through its involvement in other
renovation projects nearby (at the State Naval Museum) and also assumed the