WHAT IS JESSICA-1 ?  JESSICA stands for Joint European Support for Sustainable Investment in City Areas  JESSICA is an optional facility  JESSICA offers Member States (MS) and Managing Authorities (MA) the possibility to "transform" grants from Operational Programmes (OPs), into repayable and recyclable assistance, to PPPs and other projects for urban renewal and development

WHAT IS JESSICA-2 ?  Under Jessica, MS and MAs have the possibility to allocate and contribute resources from OPs, to: - Urban Development Funds (UDF), - Holding Funds (HF)  Urban Development Funds invest in PPPs or projects included in Integrated Urban Development Plans (IUDP) -art 42 bis of new SF reg.  Holding Funds invest in several UDFs

WHY JESSICA?-1  Increasing investment needs for sustainable cities and towns  Available public funds are scarce - need for private and banking sector contribution  Available administrative and technical capacity within Urban authorities, cities and towns, often does not correspond to investment needs.

WHY JESSICA? -2  Need to use innovative financing schemes for sustainable urban development, levering in additional loan and private resources, not increasing public debt  Need to mobilise technical, financial, managerial expertise and capacity of IFIs, banks, funds, private sector, for sustainable urban investment

JESSICA PHASES  Phase 1: Programming  Phase 2: Implementation by Man. Authorities - selection of funds - funding agreements  Phase 3: Funds support projects  Phase 4: Funds at the Closure of Operational Programmes

Phase 1-Programming: INTEGRATED URBAN DEVELOPMENT PLANS (IUDPs)  IUDPs include a mix of consistent actions and projects, contributing to sustainable urban communities (SUC)  SUC should satisfy to the extent possible, the principles agreed at the Bristol ministerial meeting (December 2005)  ERDF co-finances those actions and projects within IUDP, falling within its scope of intervention

Phase 1-Programming: IUDPs in OPs  The Commission will seek to ensure that relevant OPs include urban development and renewal strategies – priority axes  Such strategies – priority axes within OPs should provide for elaborating integrated Urban Development Plans, as early as possible

Phase 1: EXPECTED EIB AND CEB CONTRIBUTION TO OPs AND IUDPs  Memorandum of Understanding between Commission-EIB-CEB on Coordinated approach to financing urban renewal and development, under preparation Objectives: 1)Involvement and contribution of EIB- CEB to NSRF and relevant OPs, for urban renewal and development 2)Include indicative EIB-CEB loan envelops for urban development and renewal, in relevant OPs

Phase 2-Implementation by MAs: OPTION 1, OPs CONTRIBUTE TO FUNDS (UDFs)  MAs of relevant OPs call for expression of interest by UDFs, willing to invest in PPPs and other projects included in IUDPs  UDFs submit their business plan, present their shareholders, their exit policy, winding up provisions, etc  MAs evaluate and select UDFs, prepare and sign a funding agreement with each one of them

Phase 2-Impl. by MAs: OPTION 2, OPs CONTRIBUTE TO HOLDING FUNDS  Managing Authorities publish call for tender addressed to holding funds  Or, MA can award a grant to the EIB, acting as holding fund  MAs select holding fund, prepare and sign funding agreement with it  Holding fund invests in several urban development funds (UDF)  Holding Fund can provide equity, loans or guarantees to UDF

Phase 2: Funding Agreements  MAs negotiate and sign funding agreements with selected funds or holding funds  Funding agreements should: - provide for deliverables, conditions for OP contributions, planning, monitoring implementation of JESSICA and reporting, exit policy, etc - be flexible, allowing for initial and supplementary contributions

Phase 2: Contributions from OPs to JESSICA funds or holding funds -1  Contributions from OPs to UDF or holding funds will be irreversible for the period  Hence, need for prudent initial and then supplementary contributions, if necessary

Phase 2: Contributions from OPs to JESSICA funds or holding funds-2  Contributions from OPs to UDF or holding funds are eligible for interim ERDF payments  Interests or any revenue earned from OPs contributions to UDF or holding funds, must be invested in projects  Contributions from OPs to UDF or holding funds are recyclable - when paid back by supported PPPs or projects, must be reused for urban projects

JESSICA PHASE 3: Projects Supported by UDF  Contributions from OPs to UDFs must be PAID at least once in the period , OUT of UDFs, for investment in urban projects  UDF invest in PPPs or other urban projects, providing them with equity, loans or guarantees

JESSICA PHASE 3: Projects Supported by UDF  Projects supported by UDF could also receive grant assistance from OPs,  Grant assistance from OPs could finance the equity gap of projects  Supported projects fall within the ERDF /CF scope of intervention

JESSICA PHASE 3: Projects Supported by UDF  Projects supported by UDF/OPs should: - be included in an IUDP - be new projects ( greenfield or brownfield)  Acquisitions or participations by UDFs to existing and already completed projects cannot, in general, be financed by OP contributions to UDF (UDFs cannot put OPs money in existing projects just for speculation)

Option 1, Jessica operating through funds (summary of phases 1, 2, 3) Operational Programme EIB and CEB, other IFIs UDF: Equity Contributions from OP, Urban Authority, Investors. Loan capital from IFIs, Banks, Equity Participations in projects, Loans to support projects, Guarantees for loans to projects

Option 2, Jessica through holding funds ( summary of phases 1, 2, 3) Operational Programme Holding Fund - (it can be the EIB or other specialised Financial Institution) Contributions to the holding fund from OP, Urban Authority, Banks etc. HF Contribute Equity, loans or guarantees to UDFs Additional Loans to UDFs from EIB-IFIs-Banks or loans to support actions for sustainable urban development, including social housing Equity Participations in projects loans to support projects Guarantees

JESSICA PHASE 4: CLOSURE OF OPs - 1  At the closure of relevant OPs, at the end of 2015, contributions from OPs to UDF or HF, must have been PAID OUT of UDFs at least once, for investment in PPPs or other urban projects included in IUDPs  IF THIS IS NOT THE CASE ERDF CONTRIBUTION TO UDFs SHOULD BE PAID BACK TO EU BUDGET

JESSICA PHASE 4: CLOSURE OF Ops - 2  OP contributions to UDFs, paid out of the funds for investment in projects before end 2015, when paid back to the fund, before or after 2015, must be reinvested in urban projects  Funding Agreements should provide details and conditions for exit of OPs (Member States or Managing Authorities), out of UDFs or HF

ADDED VALUE OF JESSICA-1 Simplification and Efficiency for MAs:  JESSICA is a ready made cooperation agreement at the service of MA  MAs using the Jessica facility delegate to professionals the management of OP funds, for urban PPPs and projects  Simpler financial management for MAs- funds contributed from OPs to urban development funds or holding funds are eligible for ERDF interim payments

ADDED VALUE OF JESSICA-2 INNOVATION JESSICA encourages MAs and Cities - Urban Authorities to innovate, by :  using innovative and sustainable financing schemes,  mobilising key players for urban development, to participate and work together in flexible partnerships  promoting more and better PPPs, offering better service to users, not increasing public debt

ADDED VALUE OF JESSICA-3  Sustainability: recyclable ERDF contributions to Urban Investment Funds or Holding Funds  Leverage: additional loan capital contributed by the EIB, CEB, other IFIs and financial institutions, banks, investors

ADDED VALUE OF JESSICA-4  Pooling resources: contribution of technical and financial expertise from the IFIs and Banks, enterprises and promoters, for urban projects  Flexibility: JESSICA can support urban projects with loans, equity or guarantees, or with an appropriate mix of them, depending on the specific characteristics and needs of each project