Brownfield redevelopment and inner urban development

The expansion of towns and cities invariably claims more and more open space, –for example, when greenfield land at the outskirts of towns and cities is converted into land for  settlement and transport. The use of greenfield land for shopping malls, commercial zones, and housing tracts has significantly increased over the past three decades, an evolution influenced in large measure by people’s ever growing use of cars and ever growing mobility. But at the same time, structural change has resulted in an increase in the amount of inner urban brownfields. These brownfields provide space that can be revitalized for new uses, because they are often well integrated into existing infrastructures due to their former use.

The term “brownfields” is usually applied to land whose urban development potential is either being under-exploited or not exploited at all. In other words, such areas are unused or underused. There is no official definition of the term “brownfield”., Mostly, brownfields are abandoned factory sites or pieces of land no longer needed by still operating firms. The existence of brownfield land is mainly attributable to economic change and plant closings. Before brownfield land can be used, it must undergo what is known as land recycling, or brownfield redevelopment. However, typical obstacles to brownfield redevelopment are the presence of existing constructions, old utility lines, old foundations, and site contamination. The need to demolish existing structures and possible site decontamination requirements get in the way of brownfield redevelopment, as do legal and planning uncertainties. As a result, “virgin” greenfield land is often more attractive for property development.

Brownfield status

No reliable and current nationwide data concerning inner urban brownfield land is available at present. Statistics show that underused and brownfield landin the human settlement domain has greatly increased since 1993. Surveys conducted in the early 2010s estimate the total area of unused sites in Germany at 150,000 to 176,000 hectares. According to a 2006 survey by the Federal Institute for Research on Building, Urban Affairs and Spatial Development among more than 600 municipalities, in Germany more than 63,000 hectares of land are potentially available for urban redevelopment that does not require extensive preparatory measures. These figures clearly illustrate the importance of inner urban land recycling.

What exactly is inner urban development?

The goal of inner urban development in terms of urban development strategies is to (a) meet future land use needs to the greatest possible extent through the use of previously developed inner urban land; and (b) develop land outside of existing built-up areas as sparingly as possible. Land recycling and strengthened inner urban development are designated in Germany’s national sustainability strategy as core land take reduction instruments. Adoption in 2013 of the new version of Germany’s national building code (BauGB) enshrined the goal of strengthening inner urban development into the planning and construction legislation, which now stipulate that urban development is to mainly take the form of inner urban development. The new law also requires planning authorities to determine inner urban development potential and options prior to the development of land being used for agricultural or forestry purposes.

What exactly is brownfield redevelopment?

Brownfield redevelopment means the process of rehabilitating a particular piece of land for a new use, after the former use has been discontinued. According to a definition formulated by Ingenieurtechnischer Verband für Altlastenmanagement und Flächenrecycling e.V. (ITVA), brownfield redevelopment involves “usage related reintegration of properties in the economic and natural cycle whose original usage has been lost (e.g. abandoned factory or company sites, property owned by the military, traffic infrastructure elements and the like) via planning, environmental and/or economic measures.”

Brownfield redevelopment is a complex process involving numerous players. Land owners, citizens, investors, urban and spatial planners and politicians are involved and have a broad range of different interests. Moreover, responsibility often lies with several planning and authorizing bodies since various types of legal frameworks that are involved – namely environmental law, building permit law, and spatial planning law.

The profitability of brwonfield redevelopment is determined by local real estate prices and the revenues that can be earned in light of current land prices. It is often helpful to divide brownfield sites into the following three categories, via a cost/earnings ratio:

• Type A sites, or “self developing sites,” are sites (e.g. properties in good locations in prosperous regions) whose projected land recycling earnings greatly exceed the projected pre-construction costs. This type of land also attracts private investors without subsidies or other outside financing, and thus do not remain unused for long.
• Type B sites, or “sites with development potential,” are sites whose profitability is uncertain for risk related reasons. In order to reduce such risks, allocate costs, and expedite the process, it is normally necessary in such cases to take action such as carrying out missing development measures or amending unsuitable parcel divisions.
• Type C sites, or “reserve sites,” are sites (e.g. in the case of a glutted real estate market) whose projected redevelopment earnings substantially fall short of the projected pre-construction costs and that can only be developed with significant government funding.

Brownfield activation and management strategies are based on the aforesaid classifications (according to region), whereby planning, economic, fiscal and legal measures related to land take reduction are mainly based on type “B” land. In such cases, strategic public-private partnerships allow for the mitigation of legal, financial and other risk, and thus free up land for redevelopment.

Distribution of land recycling of brownfields

CABERNET (Concerted Action on Brownfield and Economic Regeneration Network) entwarf 2005 die Aufteilung

Source: CABERNET 2005

Inner urban development and renewal (and thus brownfields redevelopment as well) have been strengthened through the adoption of successive amended versions of Germany’s national building code. However, there are many other instruments in areas such as regional planning, tax law, and subsidy law that also promote reduced land take and whose strategic application the UBA has been advocating for years; we have also submitted recommendations in this regard. As early as 2003, the UBA issued a strategy paper describing ways to turn Germany’s land take situation around.

Following are the key instruments that the UBA currently regards as promoting reduced land take and recommends in this regard:

• Tradable land planning permits
• Facilitation of building permit revocation, including in conjunction with tradable land planning permist
• Strenghthening regional-planning regulations by empowering the authorities to set land take limits as spatial planning objectives. This in turn would contribute to meeting the 30 hectare objective for 2020. Various expert reports commissioned by the UBA show that such measures are altogether legally feasible. The federal government could appointland take limits for the Federal States (for example fixed in the Land Use Planning Act (ROG)) based on the German competetive spatial-planning jurisdiction of the federal government and the Federal States governments. Alternatively the Federals government could refer to its  intrinsic sole jurisdiction as regards spatioal planning regulations that apply to multiple Federal Sates. If, for political reasons, the Federal government does not intend to impose land take reduction objectives on the regional states, it can delegate this obligation to the competent regional-state authorities. In other words, federal law would require such authorities to set their own land take reduction objectives.
• Land take reduction-oriented use of strategic environmental assessments regulations. Some Federal States have already set quantitative land take reduction objectives, e.g. five hectares a day in North Rhine-Westphalia, and three hectares a day in Lower Saxony; each politically fixed their coaltion agreements; in Saxony, the Environmental and Interior Ministries have set a two hectare a day land take objective via a joint action program. Section 14g(2)(sentence 1)(no. 2) of the Law on Environmental Assessments (UVPG) states that the said requirements must reflect, among other things, plan related environmental protection objectives, as well as the manner of their implementation. In other words, quantified land take objectives can take effect on the following planning domains: national, Federal-State, regional, and municipal transport infrastructure planning; Public transport planning; regional planning; land use planning; any other planning affecting land take.
• Remove obstacles to brownfield redevelopment.
  - Strengthened support for brownfield revitalization measures - Provide direct support for remediation and demolition measures
  - Provide indirect support through measures such as investment financing or special financing of housing construction on brownfield land
  - Providing Co-financing support, for example for brownfield redevelopment measures that are funded by the European Regional Development Fund (ERDF)
  - Consolidating administrative spheres of responsibility so as to allow for better coordination of planning, soil conservation and economic development activities.
  - Institutionalization of interfaces between public and private sector entities.
• Binding cost benefit analyses or population projections for construction zoning. Section 1(3) of the Federal Building Code (BauGB) states that municipalities are permitted to authorize property development only insofar as necessary for urban development purposes; whereby the degree to which such development is necessary should be determined on the basis of cost-benefit analyses or population projections.
• Reforming zoning laws so that property owners who do not use their vacant lots are subject to a higher property tax rate, the goal being to encourage such owners to either build on such lots themselves or sell them to parties that are prepared to do so.
• Greater harmonization of the funding guidelines for joint federal government/regional-state instruments aimed at improving regional economic structures and improving agrarian infrastructures and coastal protection.
  - Confining funding to those programs that submit regional development plans and minimum requirements concerning profitability calculations for all environmental costs and other long term costs.
  - Incrementally reducing funding for greenfield land development.
  - Abolishing subsidies, under the agricultural structure and coastal protection program, for farm and forest access road construction.
• Lowering land transfer taxes on properties that are being used or that currently have buildings on them, and raising such taxes for newly developed property and vacant lots. Such reform could be effected through measures such as basing property tax assessments solely on the value of the lot or parcel in question (with accordingly higher tax rates) and not on the value of the buildings per se.
• Replacing property tax with a land use tax that would factor in the environmental impact of land use resulting from activities such as paving over open land.
• Modifying income tax laws so that the share of federal income tax allocated to municipalities would not be based on the amount of income tax paid by their respective inhabitants (see Article 106(5) of the Constitution), the goal being to lowering competition between municipalities to attract residents.
• The municipal fiscal equalization scheme should be reformed so that it takes account of municipality ecological performance in terms of measures such as banning greenfield land development and promoting green development of such land.