Mangement and Economic Aspects

Mária Zúbková

„This project has been funded with support from the European Commission. This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the

information contained therein.“

Awareness

• Availability of management and economic instruments in the process of brownfield redevelopment.

• The role of economic and real estate markets in the process of brownfield redevelopment

• The types of brownfields in terms of economic aspects and opportunities of risk/profit management

• Public-private partnership in brownfield redevelopment.

Goals of the teaching unit• To know the key management and economic

instruments in the process of brownfield redevelopment.

• To recognize the role and importance of economic markets in the process of brownfield redevelopment

• To identify different conditions for brownfield redevelopment and the types of brownfields in terms of economic aspects.

• To understand the role of public-private partnership in brownfield redevelopment.

Content• Management and economic instruments in the process

of brownfield redevelopment.• Economic and real estate markets in the process of

brownfield redevelopment.• The types of brownfields in terms of economic aspects –

ABCD model of brownfield categories.• Public-private partnership in brownfield redevelopment. • The role of Action Plans in the process of

redevelopment of brownfields?

Economic Instruments

• Property market intervention• Land, infrastructure, ownership, accessibility• Rent allowances• Demand and sale guaranties• Joint enterprises, e.g. PPP (public-private

partnerships)• Marketing support• Other economic instruments, like..........

Management Instruments

• Management comprises:• planning, • organizing, • staffing, • leading or directing, and • controlling an organization (a group of one or more

people or entities) or effort for the purpose of accomplishing a goal.

Markets in the process of brownfield redevelopment

• Redevelopment of brownfields is a stimulus to local economic development and impacts several markets of economy: – land market; – real estate market; – labour market; – capital market; – financial market; – market of resources; – infrastructure market; – market of innovations.

Relation between brownfield redevelopment and markets

Economic conditions for regeneration

• To characterize different types of sites in terms of their economic viability is based on variation in:

• location standing, • site treatment costs, and • other economic conditions, like ownership,

situation on real estate market (price of land, rent/lease of land).

• Identification of conditions can help policy makers identify strategies that can improve the economic viability and status of the sites.

Site classification from economic aspects(based on the CABERNET project output)

• A Sites – these represent sites that are highly economically viable and the development projects are driven by private funding.

• B Sites – these sites are characterized as being on the borderline of profitability. These projects tend to be funded through public-private co-operation or partnerships

• C – D Sites – are not in a condition where regeneration can be profitable. Their regeneration is driven mainly by public sector or municipalities.

ABCD Model

• A Sites: beneficial location This kind of localities are commercially viable sites.

They will be taken by the market. The benefits for the community can be increased by public non-monetary policy.

• B Sites: less beneficial location These are marginally viable sites. There is a need for

public intervention and involvement of public money. Usual ratio of public and private money is 1:5.

ABCD Model• C Sites: non-commercial localities These are non-viable sites. Usually the objectives follow

more social aspects or protection of the environment. Share of public finance is higher, usually 1:1 up to 1:4.

• D Sites: accident situation These are sites that are risky to public safety or health. If

there is no one responsible for the situation, the removal of damages must be paid from public finance.

ABCD Model - figure

ABCD Model and its market economy

• In the category A sites brownfield land is being brought back into beneficial use solely by the market.

• In the category B and C-D sites vacant and derelict brownfield land persists. These persistent sites can often be concentrated in areas of social deprivation, and so policiy to deal with the backlog of vacant and derelict brownfield land is clearly a crucial component of urban regeneration.

Categories B and C-D sites

• Category B sites - only modest adjustments to perceived costs and values are required for the market to redevelop brownfield in that category.

• Category C-D sites - the market is highly unlikely to be able to respond with category C-D sites. Some of them can be taken forward by the private sector if the public sector is able to assist with the costs (tax breaks, direct and indirect contributions to the operation).

Category C-D sites

• C-D sites represent a significant problem as they can have a negative impact on the surrounding area and community.

• These sites generally require substantial pre-investment from the public sector before they can be handed over to private developers or redeveloped using public/private partnership approaches or put to soft end uses, like „green amenities“.

Partnerships in redevelopment process

• Public-Private Partnership (PPP) is defined as cooperation between the public sector and the private sector, with the objective to supply efficient public infrastructure, public spaces and services.

• Public-private partnership recognizes that both the public sector and the private sector have certain advantages related to one another in the performance of specific tasks.

Partnerships in redevelopment process• The A-B-C-D model also highlights the partnership

opportunities for regeneration.• A category sites represent development projects that are

driven by private funding.• B category sites is usually funded through public-private

co-operation or partnerships. This category includes a number of industrial parks which have been subsidised with the aim to create new jobs.

• C-D category sites represent mainly public sector or municipality projects driven by public funding or specific legislative instruments.

Integrated Action Plans • The integrated action plans for brownfield

regeneration represent a key instrument in the form of the package of measures to affect the management of brownfield regeneration in the areas of planning, information, organization and cooperation, funding and budget, marketing and arrangements which can be implemented or initiated locally or regionally.

• It includes specific packages of measures to make progress towards accomplishing the process of regeneration.

Format of integrated action plan• The format of the integrated action plan depends on the

nature of redevelopment and needs to be defined in the strategy. The action plan for the realisation of the strategy has to specify:• The goal(s) that are to be accomplished,• How each goal contributes to the strategy's overall goals,• What specific results (or objectives) must be accomplished, • How those results will be achieved,• When the results will be achieved (or timelines for each

objective).

Conclusions

• The most important types of instruments in the process of brownfields redevelopment are: Legal and Institutional Instruments, Planning Instruments, Economic Instruments, Financial Instruments.

• The types of brownfields from economic and management point of view are important to distinguish in order to clarify which instruments to use in the whole process of brownfields redevelopment.

Conclusions• Management of brownfields redevelopment comprises

planning, organizing, staffing, leading or directing, and controlling.

• Redevelopment is always a stimulus to local economic development impacting primarily Land market and Real estate market.

• Partnership and cooperation in the brownfield redevelopment process between private and public sector are necessary.

• Key instrument for management the process of brownfield redevelopment is integrated action plan.

Thank you for your attention

http://browntrans.vsb.cz

„This project has been funded with support from the European Commission. This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the

information contained therein.“