Reclamation Costs and their Weight in the Economic Sustainability of a Project

Since the late 80’s, reclamation of former industrial sites has become one of the most debated issues, nationally and internationally. This is due to the presence of toxic and harmful substances in the soil and subsoil, and to the need to regain, functionally, those areas that represent “urban voids” within the cities. Negative effects generated by the presence of abandoned sites are essentially attributable to the increased amount of diseases (even serious ones) affecting the population who lives near those areas and to the related higher costs needed to ensure health care; to the costs (often public) for implementing measures finalized to secure those sites; to the revenue losses that the non-use of those areas determines for the public entity, and to the negative effects generated towards the development of other activities located nearby (Meyer, 2003). The expansion of the cities has incorporated these areas inside their structure; those became strategic also for the provision of public services such as green areas, parking lots, etc.. The restoration of former industrial sites collides with some critical issues related to the uncertainty on the level of pollution and, therefore, to the consequent reclamation costs and to the time required for their approval, as well as to the uncertainty about who should be in charge of this operation. The valuation of the economic and financial feasibility thus becomes the tool that, not only allows identifying possible solutions for the recovery of former industrial sites, but also allows identifying risk factors that threaten the success of the operation. This work, after a presentation of the topic and an attempt to analyse parametrical costs for completed works, presents a case study of a former factory in Lentate sul Seveso, the “Tessitoria Schiatti”, now abandoned, on which a series of project has been developed within the Workshop of Architectural Project and Constructions held in Polytechnic of Milan1. Each work-group verified the economic and financial sustainability of its project through the application of a discounted cash-flow analysis (DCFA) model. All the models revealed that reclamation costs strongly affected the sustainability of those projects; those, in fact, cannot be paid entirely by the ones who develop the operation, but they need an external economic support in order to ensure the financial feasibility of the intervention.