Catalyzing Investment in Urban Sustainability
U.S.-Brazil Joint Initiative on
Urban Sustainability


Site Cleanup Incentives-Financial Policies

Numerous financial strategies exist to reduce risk and "level the financial playing field" between undeveloped land and previously used, often contaminated brownfield sites.

Policy Approach

The public sector plays a critical catalyst role in projects involving site cleanup by providing resources to jumpstart the site assessment and cleanup process, covering cleanup costs to make properties more economically competitive and offering gap financing to plug the financing pro forma holes not easily covered by traditional capital sources. A range of policies and programs are in place to achieve each of these goals. In a site cleanup context, targeted grants can provide vital up-front resources to pay for critical activities such as site assessment, remediation, demolition, or property preparation. Tax incentives -exemptions, credits, and deductions-are used to encourage cleanup and redevelopment through the use of taxation policies. A range of private, nonprofit/quasi-public, and public sector institutions lend money for specific site cleanup activities, including construction and improvement. Loan guarantees- agreements to repay some or all out outstanding loan principal-offer greater leverage of public resources while minimizing risks to private lenders. Finally, interest subsidies-payments or incentives to banks to reduce interest rates-can be targeted to certain types of borrowers, or for certain types of project activities such as cleanup. All these approaches can enhance project financing to make it easier for developers to address site cleanup capital needs.

Policy Implementation

Implementation is done by federal, state, and local governments, and it takes various forms, depending on the policy approach. Typically, grants are made to (or passed through) public or nonprofit partners. They take one of two forms: block (or formula) grants based on statutory criteria or project grants for specific activities such as cleanup. Tax exemptions provide a release from taxation, credits provide dollar-for-dollar reductions in taxes owed, and deductions allow certain costs, such as cleanup expenses, to be subtracted from income over one year (expensing), or over several years (depreciation). Tax incentives help by easing cash flow demands. Direct loans and loan guarantees can make capital more available (and sometimes more affordable) by reducing risks. Revolving loan funds-capital pools pulled together from a range of sources-can further reduce risk because of the "arm's length" comfort they provide to investors. Interest subsidies-either direct cash grants to lenders or negotiated rates in exchange for other benefits-reduce or stabilize the cost of borrowing.

Contact Information
Charlie Bartsch
Phone: +1 (202) 566-1054

For additional information, please see for numerous examples of financing incentives in action.