1 JESSICA and EIB financing of Cities Working with the EIB Katowice, January 11 and 12, 2007 Frank Lee January 2007 Financial Instruments to Support Urban Regeneration EIBs Action Plan for Cities Brian Field Urban Planning and Development Adviser European Investment Bank DG Regio Open Days Brussels, 6th October 2010

2 THE 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

3 INVESTMENT IN SUSTAINABLE COMMUNITIES SUSTAINABLE COMMUNITIES INFRASTRUCTURE KNOWLEDGE ENVIRONMENT REAL ESTATE LOGISTICS TANGIBLE INTANGIBLE DEMOGRAPHIC SOCIAL SKILLS CITY ASSETS

4 OVERCOMING FRAGMENTATION INTEGRATED PLANNING Source: PriceWaterhouse Coopers

5 THE BANK RESPONSE An Implicit Action Plan for Cities Technical Assistance Traditional Lending Financial Engineering Structured Finance Networking/Partnering Targeted investment in more sustainable urban regeneration and renewal

6 Technical Assistance. Provide technical support to prepare bankable projects, e.g. JASPERS, ELENA etc. THE 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 Banks Structured Finance Facility (SFF) to include urban investments.

7 7 A project assessment with many facets RESILIENT PROJECTS The EIBs « three 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

8 EIB FINANCING THE URBAN SECTOR Eligibility areas and priorities RatingLowMediumHigh Urban 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 sites Investment 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

9 9 JESSICA 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.

10 JESSICA 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).

11 ROLE OF UDFs AS URBAN IMPACT 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

12 EIB FINANCING THE URBAN SECTOR Indicative 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)

13 EIB CONTACT INFORMATION EIB CONTACT INFORMATION Brian G. Field Urban Planning and Development Adviser European Investment Bank 100 boulevard Konrad Adenauer L-2950 Luxembourg Tel: Fax: