The recent improvements in the real estate market, and the shift toward city living, have made urban real estate redevelopment more desirable. However, with the uncertainties and increased costs of redevelopment, incentives are still a necessary component of many projects. Not only do these programs provide funding for extraordinary brownfield costs, but they can provide funding for construction, infrastructure, site preparation, and operating costs if a financing gap exists.
The good news is that there are still incentives available for challenging sites, with the right kind of development, in the right location. The bad news is that the incentives available today are not as robust as those available five or so years ago, often requiring projects to obtain approval for multiple incentive programs. In addition, the timing of the incentives has become an even more important consideration, since most projects need funding upfront while incentives are typically provided over time or at specific milestones.
The first challenge is determining eligibility for a specific project. But equally important is understanding the threshold requirements and policy considerations of the agency controlling the incentive. While a project may appear to be eligible, specific threshold requirements, such as demonstrated financial need and programming requirements, may make funding unavailable. Policy decisions, such as local-participation or affordable housing set-asides, may make implementation too difficult or may require too much brain damage to be worth the incentive.
Therefore, prescreening is an important tool to determine if the incentives are eligible, achievable, and reasonable before providing the applications. This can be done by evaluating key performance indicators and conducting screening meetings with the local and state representatives. Incentive programs work best when they are partnerships between private and public entities, and when all parties get a benefit from the final agreement, so crafting that partnership early with a clear and compelling project narrative is important.
Contributed by Tom Wackerman, President and founder of ASTI Environmental.
View the on-demand webinar “Incentives for Urban Redevelopment: Brownfields & Beyond” with Tom Wackerman.