The Federal Government and the Länder attach great importance to urban development promotion as a guiding programme for the future-oriented, sustainable, resilient and modern development of cities and municipalities in Germany. Due to demographic change and changed conditions of use and interests, municipalities are faced with great need for adaptation and urban development transformation processes. This applies in particular to the preservation of lively and identity-creating city and town centres, measures for climate protection or adaptation to climate change as well as the creation of living space as well as needs-based and future-oriented infrastructures. The overarching goal of urban development promotion is to enable participation and exchange in social life for all, and thus to strengthen social cohesion.

In 2020, urban development funding was restructured and has since concentrated on three funding programmes. The new programme "Growth and Sustainable Renewal - Designing Liveable Neighbourhoods" contains the previous funding objectives of the urban redevelopment programme, but goes beyond this in terms of sustainable renewal and focuses on brownfield development to support housing construction and the development of new quarters. The special eligibility conditions for the new Länder introduced in the predecessor programme "Urban Redevelopment" continue to apply due to the previous problem situation. Its introduction was historical:

With German reunification, the framework conditions for urban development promotion changed fundamentally. In the municipalities of the eastern German states, the urban development challenges - neglected historic old towns or the large prefabricated housing estates on the outskirts - were completely different from those in western Germany. The shrinking processes and the high vacancy rate in the eastern German states at the beginning of the 2000s were the reason for the launch of the "Stadtumbau Ost" programme in 2002. In 2004, the "Stadtumbau West" programme was launched, which initially aimed primarily at the revitalisation of brownfield sites. As a result of a well-founded programme evaluation, the two programmes were merged into a nationwide urban redevelopment programme in 2017 and merged into the "Growth and Sustainable Renewal" programme in 2020.

In the new Länder, four so-called programme areas can be used in the "Growth and Sustainable Renewal" programme: In the upgrading programme area, the Federal Government contributes one third of the eligible costs, as is generally the case in urban development promotion. In the other three programme areas, Article 5(5) of the Administrative Agreement on Urban Development Funding allows the new Länder to use funds for funding under the "Growth and Sustainable Renewal" programme at a rate of up to 50 % of the eligible costs, notwithstanding the generally applicable financing conditions of the Federation and the Länder.

The Federal Government and the new Länder have agreed to examine the effectiveness and necessity of the special provisions in the Growth and Sustainable Renewal Programme for the new Länder until 2023. The aim of the project is to develop a sound basis for decision-making with regard to the continuation of the special funding conditions for the new Länder according to Article 5 paragraph 5 of the Administrative Agreement on Urban Development Promotion.

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