ECONOMICS UNIQUENESS

FINANCIAL MECHANISMS FOR HISTORIC CITY ■ 237
addresses the cultural, social, and environmental aspects of urban brownfi eld
regeneration and also delivers consistently satisfactory fi nancial performance to
investors.
In the case of impact funds, investors are keen to achieve social and environmental
goals through their investments (for example, by investing in urban
areas with high unemployment and contaminated properties, such as with “base
of pyramid” populations—BoPs) (Hammond et al. 2007), 3 but they are also
interested in generating profi ts. In this context investors can decide if they prefer
to prioritize social returns (impact-fi rst investors) and accept lower fi nancial
returns, or prioritize profi ts (fi nancial-fi rst investors), which also includes social
and environmental returns. Between these two kinds of investors there is the socalled
layered structure, in which both types of investors (impact and fi nancialfi
rst investors) work together and combine diff erent fi nancial and socially or
environmentally oriented goals.
Urban brownfi eld projects, geared toward sites of either natural or cultural
heritage, can certainly fi t into the investment strategies of such funds because
such projects can generate social and environmental benefi ts and, at the same
time, generate signifi cant returns to investors. An example of this is the cultural
heritage project aimed at revitalizing the old district of Hafsia in Tunis,
assisted by a World Bank loan, which is a double award–winning project. 4 Th e
consortium of the credit impact fund supporting the project is composed of
private-sector investors and the Municipality of Tunis, the Association pour la
Sanvegarde de la Medina, and the Agence de Rehabilitation et Renovation Urbaine.
Th e success of this fund, which has produced an economic rate of return
of about 11 percent, also included the conservation of the old town and revitalization
of the economic structure of the area, safeguarding the social mix of
inhabitants, and helping to accomplish a resettlement scheme (Kaul et al. 1999).
An interesting example of the use of impact funds for redevelopment of a natural
brownfi eld site is provided by India’s Byrraju Foundation and Water Health
International. 5 Th e aim of this fund is to implement water fi ltration businesses
and provide access to purifi ed water at about half the price these populations are
accustomed to paying for purifi ed water (O’Donohoe et al. 2010).
Th e impact investment funds may therefore “out-perform” other types of
social funds, because they are integrated across many industries and provide
fl exibility in investing in assets with performance potential. In conclusion,
impact investment funds used for brownfi eld projects must satisfy two basic
conditions: (1) they must seek private-sector involvement, and (2) they cannot
be dedicated exclusively to short-run, profi t-driven investments, but rather
they must have a balanced investment portfolio that engages in socially and
environmentally responsible and/or ethical investments in cities, particularly
in brownfi eld areas.