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Redeveloping Brownfields: How States and Localities Use CDBG Funds


Report Acceptance Date: October 1998

Posted Date: April 12, 2007

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Experts estimate that this Nation has more than 450,000 brownfields -- vacant or underused industrial sites with environmental contamination caused by chemical compounds and other hazardous substances. To build their economies and attract employers, an increasing number of State and local governments are working with community groups and the private sector to plan, clean up, and redevelop brownfields. HUD's Community Development Block Grant (CDBG) and Section 108 Loan Guarantee fund a full range of community development activities used by State and local governments for brownfields redevelopment.

In Redeveloping Brownfields: How States and Localities Use CDBG Funds, researchers recommend that HUD "maintain and highlight the availability and flexibility of CDBG funds for brownfields redevelopment" without displacing or earmarking existing CDBG funding. Sponsored by HUD's Office of Policy Development and Research, the study surveys States and urban areas that receive CDBG funds about their awareness, involvement, and technical assistance needs in this area.

Knowledge and Involvement Vary

The study found that many cities and counties receiving CDBG funding (known as entitlement communities) have used CDBG for brownfields redevelopment. The study found expenditures ranging from $150,000 to more than $5,000,000 per project. Due to competing claims for their CDBG resources, States and entitlement areas do not typically earmark funds for brownfields redevelopment. Several grantees have tapped other financing sources for brownfields redevelopment, such as Environmental Protection Agency brownfields pilot grants, city bonds, and State funds. The most common use of CDBG funds for brownfields has been for remediation, followed by site assessment and redevelopment. A few grantees have used CDBG for planning, site acquisition, and demolition. A few States have used CDBG funds to provide technical assistance to communities regarding brownfields.

Grantees vary in their knowledge of brownfields issues. Researchers found that many CDBG grantees believe brownfields activities include only assessment and cleanup. Experienced grantees -- especially those that worked closely with environmental agencies and the private sector -- view brownfields redevelopment as a more comprehensive process of planning, assessment, cleanup, reconstruction, and readiness. Barriers and Technical Assistance Needs

The deterrents to brownfields redevelopment mentioned most frequently by grantees were cost and lack of available funding. Researchers found that the Section 108 loan guarantee program is gaining in popularity as a funding source large enough and flexible enough for economic development projects involving brownfields. Some grantees report that Section 108 loan guarantees allowed them to apply funds quickly, without encumbering current CDBG funds.

Grantees with brownfields experience reported that they did not face significant liability issues, although nonexperienced grantees commonly cited liability concerns as a major deterrent. Grantees suggested that flexible cleanup standards and formal liability releases for parties not responsible for existing contamination will simplify brownfields redevelopment.


Experienced grantees reported that the potentially cumbersome issues involved in brownfields redevelopment projects -- including environmental regulations, liability, HUD regulations, lender requirements, and other legal concerns -- make them too complex for any single person or agency to understand fully. The researchers recommend that HUD promote brownfields redevelopment by continuing flexible funding streams; clarifying guidelines on how to use CDBG and Section 108; and providing reliable, targeted technical assistance.

Because community development agencies often spread their staff thinly across a variety of activities, researchers found that the staff often misunderstood CDBG and Section 108 regulations in relation to brownfields. The researchers advise HUD to instruct grantees on using these programs to plan and carry out economically viable brownfields projects -- including focused technical assistance to help communities with specific projects.


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