ECONOMICS UNIQUENESS

FINANCIAL MECHANISMS FOR HISTORIC CITY ■ 239
of massive debt, much of it in the property sector, calls for innovative funding
mechanisms to support sustainable urban development, in particular redevelopment
of urban brownfi elds. In this chapter, the authors have extended the defi -
nition of urban brownfi eld by including not only natural brownfi elds, such as
contaminated sites, but also cultural heritage sites, as, for example, derelict historic
districts.
Urban brownfi eld redevelopment projects have proven public good characteristics;
for that reason, the public sector is typically the driving force and facilitator
in balancing the relationship between public interests and private objectives. Th is
calls for the need to strengthen administrative institutions to foster private investment.
Public authorities also need to take into account the interaction between
natural and cultural heritage and be able to attend to the needs of the present
inhabitants and activities in targeted areas.
Two important factors must be considered carefully before proceeding with
such projects. First, project planners must explore the contextual element; that
is, what city redevelopment, and specifi cally what type of brownfi eld investment
is proposed? Second, crucially, all stakeholders must understand the economic
relationship between the investment(s) and the real estate market. From this perspective,
promoting arrangements for formal partnerships—with transparency
and greater participation of all stakeholders in the decision-making—should be
preferred above the informal partnerships oft en in use. In particular, policies that
encourage decentralization for fi nancing and implementing brownfi eld redevelopment
may allow for a better response to city needs by off ering more fl exible
tools and alternative forms of fi scal and fund incentives to develop the poorest
city areas.
Th e main potential benefi t of the private intervention methodologies reviewed
in this chapter is their fl exibility in adapting the structure of incentives and
spreading risk to specifi c features of a brownfi eld project, and to the economic
and institutional environment. Brownfi eld redevelopment and fi nancing are less
common in developing countries than in the United States and in Europe, where
EU Structural Funds are available. Th e Milken Institute, for instance, has prepared
a plan to alleviate the problem of scarce fi nancial resources for a signifi cant
number of heritage sites in Israel. Th e various funding models developed include
provision of microfi nance for communities, which may leverage loans and donations
to fi nance conservation works for local heritage sites; venture capital funding
that links archaeological conservation with tourism, small business, and retail
industries; and the sale of low-risk archaeological development bonds to provide
long-term project fi nancing.
Accordingly, the integrated urban land management policies related to heritage
brownfi eld regeneration should focus on market-led incentives, including
indirect incentives and gap-funding, and enable public intervention with direct