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JESSICA and EIB financing of JESSICA and EIB financing of CitiesCities
Working with the EIB
Katowice, January 11 and 12, 2007
Frank Lee
January 2007
Financial Instruments to Support Urban Financial Instruments to Support Urban
RegenerationRegeneration
EIB’s Action Plan for CitiesEIB’s Action Plan for Cities
Brian FieldUrban Planning and Development Adviser
European Investment Bank
DG Regio Open Days
Brussels, 6th October 2010
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THE LEIPZIG CHARTERTHE LEIPZIG CHARTER
SUSTAINABLE
COMMUNITIES
Innovation and education policies
High quality public spaces
Infrastructure networks and
energy efficiency
Regenerate deprived
neighbourhoods
Improve physical
environment
Training for children and the
young
Local economy and labour market
policies
Efficient affordable transport
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INVESTMENT IN INVESTMENT IN SUSTAINABLE COMMUNITIESSUSTAINABLE COMMUNITIES
SUSTAINABLE
COMMUNITIES
INFRASTRUCTURE KNOWLEDGE
ENVIRONMENT
REAL ESTATE
LOGISTICS
TANGIBLE INTANGIBLE
DEMOGRAPHIC
SOCIAL
SKILLS
CITY ASSETS
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OVERCOMING FRAGMENTATION OVERCOMING FRAGMENTATION INTEGRATED PLANNINGINTEGRATED PLANNING
Source: PriceWaterhouse Coopers
Activity
Land acquisition and assembly
Infrastructure investment
Public Realm development
Commercial Development
Residential - Private
Residential - Social
Residential – Key Worker and Affordable
Operation and Management ????
Public Sector Grant
Private Integrated Partnership
Public
Traditional Approach New Approach
RSL / Public
Public
Public
Private
Activity
Land acquisition and assembly
Infrastructure investment
Public Realm development
Commercial Development
Residential - Private
Residential - Social
Residential – Key Worker and Affordable
Operation and Management ????
Public Sector Grant
Private Integrated Partnership
Public
Traditional Approach New Approach
RSL / Public
Public
Public
Private
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THE BANK RESPONSETHE BANK RESPONSE
An Implicit Action Plan for Cities 2007-2013
Technical Assistance
Traditional Lending
Financial Engineering
Structured Finance
Networking/Partnering
Targeted investmentin more sustainableurban regeneration
and renewal
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Technical Assistance.
Provide technical support to prepare bankable projects, e.g. JASPERS, ELENA etc.
THE FOUR KEY ELEMENTSTHE FOUR KEY ELEMENTS
Traditional Lending.
Increase lending by encouraging greater use of framework and global loans, as well as project-specific investment loans.
Financial Engineering.
Support the use of new financial instruments such as JESSICA and JEREMIE.
Structured Finance.
Taking more risk by extending the scope of the Bank’s Structured Finance Facility (SFF) to include urban investments.
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A project assessment with many facets
RESILIENT PROJECTSRESILIENT PROJECTS The EIB’s « The EIB’s « three pillarsthree pillars » »
Eligibility = consistency with
EU priorities
Technical quality and economic
soundness
Financial viability and adequate
security
Complies with EU procurement and environmental and social potocols
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EIB FINANCING THE URBAN SECTOREIB FINANCING THE URBAN SECTOR
EligibilityEligibility areas and areas and prioritiespriorities
Rating Low Medium HighUrban renewal and regeneration including social and affordable housing
Upgrading, replacement and reorganisation of urban infrastructure and public facilities Acquisition of buildings for social or public usage, including housing
Other social and affordable housing projects (including related infrastructure) Other investments in public buildings
Investments with key focus in energy efficiency (including housing and related infrastructure)Upgrading / construction of housing to alleviate poverty and social exclusion, Redevelopment / conversion of former industrial sitesInvestment in heritage sites and rehabilitation of buildings of architectural value.
Sustainable Urban Transport (urban public transport and transport networks)
Renovation of rolling stock (only if properly justified);City bypasses; Intelligent transport systems
Rehabilitation of public transport infrastructure; Acquisition of new rolling stock (public transport and public services)
Extension and construction of public transport networks; Investments resulting from the ELENA Initiative, Enhancement of public environment
Selected streets & roads including tunnels and bridges (in principle, only in convergence areas)
Rehabilitation of transport networks; Parking spaces under urban parking policy; Investments for sustainable mobility (soft modes)
Energy efficiency measures in traffic management and street lighting; Inter-modal and logistic centres
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JESSICA AND UDFs for citiesJESSICA AND UDFs for cities
The EIB, acting as Holding Fund (HF),
i.e. a fund of funds:
is receiving European Structural Funds from Managing Authorities (MAs)
to be deployed in investment vehicles called Urban Development Funds (UDFs)
which invest in projects/development programmes by way of loans, equity, or the
provision of guarantees.
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JESSICA AND EIB LENDINGJESSICA AND EIB LENDING
UDFs can be considered as “impact funds for territorial transformation”, i.e. policy-driven, geographically-focused and planning-led investment vehicles supporting the sustainable trans formation processes of urban areas or regional city systems.
JESSICA fills a market gap (low-IRR investments with high ERR for equity/credit enhancement) which is highly complementary and synergetic with EIB financing (senior lending).
JESSICA Funds can operate as a “CREDIT BUFFER” in order to obtain credit enhancement for typical senior lending (from EIB and others).
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ROLE OF UDFs AS URBAN IMPACT FUNDsROLE OF UDFs AS URBAN IMPACT FUNDsHOW CAN WE USE STRUCTURAL FUNDS?HOW CAN WE USE STRUCTURAL FUNDS?
Examples of JESSICA supported UDFs:
Urban regeneration funds (mainly area based)• “Place making” locations/incubators/creative class attractors• Brownfield locations mostly in inner city areas• Deprived city districts, urban sprawl voids
City transformation funds (city systems)• Addressing structural imbalances occasioned by changes in settlement
hierarchies• Focusing on the provision of capital in less competitive areas• Focusing on the transformation of strategic urban infrastructure
Energy focused funds (regional or city based)• EE/RE and energy/emission audit and certification systems• Climate action strategies (EU 20/20/20 targets in urban areas)• Regional upgrade of green technology and transmission systems
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EIB FINANCING THE URBAN SECTOR EIB FINANCING THE URBAN SECTOR
Indicative levels of activityIndicative levels of activity
In 2009, some 40 projects (loans totalling over Euro 10 billion) were approved,
which represents about 10% of the total activity of the Bank
(and continuously growing)
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EIB CONTACT INFORMATIONEIB CONTACT INFORMATION
Brian G. FieldUrban Planning and Development Adviser
European Investment Bank100 boulevard Konrad Adenauer
L-2950 LuxembourgTel: +352 4379 83063Fax: + 352 4379 62599Email: [email protected]