Why and How Cities Should Step Up to Tackle Bad Buildings and Brownfields
When the private real estate market fails, the public sector can take a lead role in community revitalization.
We all have them in our cities. The properties where nothing ever seems to happen. Underutilized, abandoned, polluted and sometimes dangerous properties impacting the environment, affecting community health and hurting the local economy. Some are big hulking industrial properties. Most are small obsolete buildings, gas stations and vacant parcels. And whether a bad economy or good, their development seems perpetually stalled.
Bad buildings and brownfields can bring down the town—an eyesore in the physical fabric of the community, but also a blight in the mind of residents and visitors. As they lie idle and rot, their conditions can worsen. Sometimes bad properties attract bad elements including crime, drugs and illegal dumping—compounding already more complicated redevelopment potential.
Everyone would see these properties returned to a useful, productive purpose. So, why doesn’t anything happen?
Often properties are simply too difficult for a private developer to take on alone. Some of the larger, more complicated properties have huge potential to anchor development in their local markets, but the risk, cost and potential for loss are too high for the private sector to overcome. Other brownfield properties may be smaller and seem relatively simple, but developers nevertheless pass them over, and so they anchor property values down in their neighborhood.
These properties get stuck in the brownfield trap and sit in limbo rather than becoming catalyst projects that attract additional development and revitalization in the community. Locked in the trap, brownfields and bad buildings are often locked out of the regular real estate market.
Communities, then, have a strong interest to step in to loosen the brownfield trap so these properties can stop weighing real estate values down and start lifting the community up towards its potential. And they do. Many community leaders and city officials work hard every day to take on the real estate challenges in their community and spur economic development.
Increasingly, community stakeholders are coming together to advance redevelopment ideas and drive real estate development forward. Land Banks and Community Development Corporations (CDCs) with 501(c)3 not-for-profit status are being employed, re-tasked or created to tackle the toughest buildings and projects. Nonprofit status provides access to additional resources that private developers cannot access. While a private developer must remain focused on the highest financial return to its investors, a nonprofit can focus on the highest and best use for the community.
Funds beyond the reach of private developers can be utilized, such as grants, low interest loans and in-kind services. U.S. EPA Brownfield Grants, for example, are open to city and local government entities and nonprofits, including churches and religious organizations, but not private developers (at least not directly). For projects starved for capital to get off the ground, these sources of funds can help to fill a financing gap and plug important holes in the capital stack, as well as help reduce the uncertainties blocking development of brownfields (e.g., by funding environmental assessments and testing).
And these are important advantages when taking the brownfield bull by the horns. Instead of shying away from bad buildings and brownfields, CDC’s can lead the charge toward them. Brownfields have outsized negative impacts on the areas around them, and thus they have outsized positive impacts when they are repurposed—a double benefit. And the positive potential is substantial. Through the EPA brownfield program, on average $17.79 is leveraged for each EPA brownfield dollar spent on assessment, cleanup, and revolving loan fund cooperative agreements—and 7.3 jobs leveraged per $100,000 (through fiscal year 2013).
So once in motion, brownfields are proven catalysts. To redevelop brownfields is literally to eliminate the negative and accentuate the positive. They become capital magnets by eliminating the stigma, doubts and negative elements holding an area back, thereby unlocking pent-up demand. When land banks and CDC’s actively target brownfields, they begin to clear local inventory of bad properties. This clears the path for private developers and capital to move in, but it also sends clear signals that a community is working to take on the tough challenges in its market—which can have ripple effects beyond the immediate area of the properties.
CDC’s and their economic development partners also clear the conceptual development path by providing planning and vision that sets the course for the future. The work of CDC’s provides the heavy intellectual lifting and develops vital information for healthy markets, such as identifying the needs in the community, demands in the market and land use opportunities. By driving the vision, they free private developers to stay focused on returns for their investors while completing projects that meet community needs. Or CDC's can actively partner with private developers.
And CDC’s can be catalysts for more inclusive development. By engaging the community of stakeholders in their work, CDC's can leverage the information and plans they develop to sow good ideas in the market. Sharing in the redevelopment exercise, the public benefits from the ability to interact in an organized setting around reliable information—and give direct feedback, which provides the opportunity to crowd-source even better ideas. This can activate the community beyond any one project by getting people talking, strategizing and thinking about potential in their city.
To drive redevelopment, often times you must first drive conversation.
Start driving your redevelopment conversation at BrownfieldListings.com, where you can publish a plan or post a redevelopment idea. Upload pictures, drawings, or renderings to our project platform and connect to thousands of redevelopment professionals and community stakeholders. Share with others and start building your brownfield momentum.