CHICAGO (AP) _ A $1 million factory expansion expected to inject new life into one of this city's struggling industrial neighborhoods was humming along on schedule until workers hit _ literally _ a snag that ground work to a halt: They found an underground storage tank they feared could contain toxic waste.

It just so happened that a vanful of top city officials stopped by the Chicago Dryer Co. just hours after the exasperating discovery. But their offer to get an inspector to oversee the tank's removal that afternoon still couldn't prevent a critical five-day delay in the project.

Such nightmares are being repeated in cities nationwide as they confront the difficulties _ from overcoming the fear of expensive lawsuits to arranging inspections _ of redeveloping the country's estimated 400,000 abandoned, often polluted industrial properties known as ``brownfields.''

Now the U.S. Conference of Mayors, with a boost from the Clinton administration, is mounting a new drive to transform these eyesores into opportunities. On Wednesday, several mayors and county government heads will showcase brownfields success stories and plot strategy for the first time at a White House meeting with Vice President Al Gore.

``In effect, we've created dead zones in cities all across the country,'' said Mayor Paul Helmke of Fort Wayne, Ind., the conference president.

Ranging from old dry cleaners to mothballed steel plants, many brownfields are close to urban centers and transportation. But confusion about how extensive the cleanups must be, the costs and the threat of liability for contamination scares off lenders and developers.

For now, the problem is being tackled largely through a patchwork of local efforts similar to welfare reforms that percolated for years in the states before Congress overhauled federal laws.

On an Allegheny River island, Pittsburgh spent $8.4 million to help turn an old meat-packing plant, saw mill, oil refinery and scrap yard into a new community with townhouses, a 210-boat marina, offices and a city park.

And in Charlotte, N.C., the banking community, the city and local developers have transformed former textile factories into a chic collection of restaurants, shops, housing and a home design center in the formerly decaying South End district. Down the road, the Carolina Panthers football team practices on ground once contaminated with lead from a metal scrap yard; their grand new Ericsson Stadium also sits in a former brownfield.

Chicago's program was among the earliest and remains one of the most ambitious. Launched in 1993 with $2 million for two sites, it now operates with a $54 million budget through a federal loan guarantee.

With that money, the city buys abandoned land or acquires it through a lien on back taxes, pays for the cleanup, and even makes improvements. It then gives the land to an interested developer _ sometimes for as little as $1 _ in hopes the new tax revenues will repay the investment in just a few years.

In the case of Chicago Dryer _ which manufactures laundry equipment for hotels and hospitals _ the city took special care to keep its 175 jobs from leaving Chicago and to rid the area of an unsightly, idle blemish. It spent $240,000 to demolish a rotting old paint and varnish factory and clean the soil. It then turned the land over to company president Bruce Johnson to pave as a parking lot.

Helmke and other city officials contend the brownfields were unintentionally created by federal environmental laws meant to speed cleanup of heavily toxic Superfund sites.

The mayors want Congress to enact regulatory and legal reform so the specter of future federal or state lawsuits can be removed from the sites. They also want Superfund dollars diverted to brownfields.

Bills to achieve those changes are stalled by partisan disagreements over whether brownfields should be addressed as part of Superfund reform or separately.

Henry Henderson, head of Chicago's Environment Department, also believes that EPA's rigid approach to brownfields has slowed redevelopment and said the agency needs to ``take a deep look at itself.''

EPA Administrator Carol Browner disagreed, saying her agency has been as flexible with local governments as current law allows. She nonetheless backs the mayors' effort to squeeze changes through Congress.

``We've pushed the envelope on the law as far as we can go,'' Browner said. ``I admit we can't provide the kind of limits on liability that investors need. ... But the real proof of the success of our administrative reforms is that there are cleanups going on in thousands of locations.''

Congress has approved a tax deduction for first-year cleanup costs worth $2 billion over five years, starting in the current fiscal year.

EPA's brownfields budget rose by $50 million to $87 million, allowing more than 100 communities to get $200,000 grants to assess such sites. All told, 15 federal agencies will spend $300 million on brownfields and issue $165 million in loan guarantees over the next two years.