Capital gaps remain the biggest barrier to brownfield redevelopment. As credit markets tighten, brownfield redevelopers look to the public sector as they package financing for site cleanup and reuse. But competition is increasing for funds, making them harder to secure. The EPA had a record number of applicants for assessment and cleanup grants; less than one-in-three applicants will receive funding. HUD’s Community Development Block Grant (CDBG) program, which provides flexible revitalization and social service funding, is feeling the pressures of the home mortgage crisis and the social service demands of the economic downturn.

As a result, more developers are considering tax incentives, which offer a number of advantages over traditional program grant funding. Tax incentives can increase a project’s internal rate of return. Some credits can be sold for cash or syndicated to attract additional upfront capital investment. Most importantly, they are not subject to a competitive grant process; if a project meets the criteria, it gets the credits. ...

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