1. COCOF meeting 27 May 2010, Barcelona
Modification of the Commission Implementing Regulation (EC) No 1828/2006
COCOF meeting
27 May 2010, Barcelona
This is the second modification of the Implementing Regulation. The first one entered into force last September and involved mainly the simplification measures stemming from the discussions in the Simplification Task force.
This modification is necessary because of the changes made in the General and ERDF Regulations which are now being finalised for adoption. Several implementing rules must therefore be adapted.

2. The general objective of the proposal
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The general objective of the proposal
To align the Implementing Regulation with the recent modifications of the General Regulation
To clarify rules for implementation of interventions in housing for marginalised communities in line with the modified ERDF Regulation
To clarify further certain rules for the implementation of the financial engineering instruments
This modification has two objectives:
It is necessary to do textual adaptation in the several parts of the IR (Art. 43,44 and 45), Annex XVIII , Annexes XX to XXII
In addition, the Commission considers necessary to clarify the rules regarding:
the use of guarantees
and as regards eligible expenditure in housing projects for marginalised communities following the modification of the ERDF Regulation

3. Overview of the proposed changes
Subject
Article of the IR proposed to be modified
Purpose
Corresponding Article in the (revised) ERDF Regulation
Housing for marginalised communities
Article 47
Clarification
Article 7 of the ERDF Regulation
Article / Annex of the IR proposed to be modified
Corresponding Article in the (revised) General Regulation
Financial engineering instruments
Articles 43, 44, 45
Alignment of the text
Article 44 of the General Regulation
Financial engineering instruments - guarantees
New Article 46 a
Annual and final reporting on OP implementation
Annex XVIII
Article 67 and recital 3 of the General Regulation
Major projects
Annexes XX, XXI, XXII
Articles 39, 40, 41 of the General Regulation

4. Housing for marginalised communities (Article 47)
Objective
To clarify the elements which make eligible the interventions in housing in favour of marginalised communities
Such housing intervention must take place in an integrated framework involving actions in the field of education, health, employment and must ensure spatial integration (Art. 7 and recital 6 of the revised ERDF Regulation)
Article 7 of the amended Regulation (EC) No 1080/2006 now provides that housing interventions in favour of marginalised communities must take place only in the framework of a multi-dimensional integrated approach, to be defined at national level, with strong partnerships and taking on board aspects relating to education, social inclusion, integration, culture, health, employment etc.
The aim of the amendment in Article 47 is thus to clarify the elements which make eligible the intervention in housing in favour of marginalised communities.
The aim is not just to provide decent housing but to promote the integration of these communities to the mainstream society, with particular regard to spatial integration (this is also reiterated in recital 3 of the revised ERDF Reg.)
In addition, since the eligible interventions in the housing sector, as currently provided for by Article 47(2), have already been included in Article 7(2a) of the amended Regulation (EC) No 1080/2006, this paragraph is deleted.

5. Annual and final reporting on OP implementation (Annex XVIII, revised table in point 2.1.2)
There are two objectives of the modification in Annex XVIII:
Simplification of the financial reporting in the annual reports:
New template for financial reporting is proposed in point 2.1.2; this change reflects the simplification of financial reporting provided for in the revised Article 67 of the General Regulation
The template for annual reports is identical to the one already presented to the MS during the Council negotiation on GR
The revised Article 67 provides for financial reporting as follows:
(i) the total amount of certified eligible expenditure paid by beneficiaries and the corresponding public contribution;
(ii) the ratio between the total amount of certified eligible expenditure paid by the beneficiaries and the total funding of the programme including Community funding and national counterpart;
The annual implementation report is to show the financial progress in the implementation of the OPs. The ratio will be obtained by using the information already provided in the statement of expenditure (last statement of expenditure submitted during the year covered by the annual implementation report) and in the financing plan for the programme as follows:
In the case of priority axes where the Community contribution is calculated on the basis of the total costs: financial progress is expressed as ratio between the total amount of certified eligible expenditure paid by the beneficiaries and the total funding (Community + national) of the programme
In the case of priority axes where the Community contribution is calculated on the basis of public costs: financial progress is expressed as ratio between public contribution corresponding to the total amount of certified expenditure paid by beneficiaries and the total funding (Community + national) of the programme
The advantages of the new reporting model: the information is already available in the SFC 2007 system - in the financing plans of the OP and in the submitted statements of expenditure, the SFC 2007 will automatically calculate the ratio
Additional information required in the final reports only:
Checking the Community amounts spent in the transitional areas. it is necessary to check at OP closure the respect of Article 22 of the GR (non-transferability of resources between objectives and components. ) Until now the Commission did not have means to check the Community spending in transitional areas as the problem remained undetected. This task has to be done in the final report only and will have to be filled in manually (final statement of expenditure include the total amounts, not breakdown by axis)
Reporting on the use of cross-financing at the priority axis level. The "interim" statements of expenditure do not include any data on Article 34(2). Therefore in order to keep the simplification effect the annual reporting on the application of Article 34(2) will be qualitative only, by priority axis (see point of Annex XVIII). In order to verify the respect of the 10% capping at closure of such expenditure, a detail by priority axis is necessary. In consequence for the final report the financial reporting by priority axis of expenditure falling under the scope of Article 34(2) will still be required, in addition to the qualitative reporting. This figure will have to be filled in manually because the final statement of expenditure includes the total of expenditure falling under the scope of Article 34(2) (and not by priority axis). The MS were already presented this during the Council discussions
Objective
To streamline financial reporting in the annual reports in accordance with modified Art. 67 of the General Regulation
Implementation progress will be calculated automatically by SFC 2007
2) To report in the final reports only:
On the amounts spent in transitional and non-transitional regions (Article 22 of the General Regulation)
On the use of cross-financing per priority axis (Article 34 of the General Regulation)

6. Monitoring and reporting on projects between 25-50 million euro (Annex XVIII, new point 5a)
Objective
To have information on the implementation of environmental projects which will no longer require a Commission decision (projects between 25 and 50 million euro)
this reporting is now provided in recital 3 of the modified General Regulation
to facilitate the reporting, the same reporting format as for major projects is proposed
Monitoring and reporting of environmental projects between 25 and 50 million euro
This specific reporting is provided in recital 3 of the modified General Regulation (and was required by DG ENV as one of the three conditions for agreeing to the threshold increase)
Therefore new point 5a is added to allow for the reporting.
To facilitate the monitoring and reporting requirements for the MS the Commission proposes to ask for the same type of information as for major projects (details will be explained in the COCOF note on MP thresholds)

7. Major project application forms (Annexes XX, XXI, XXII)
Objective
To allow submission of a a major project co-financed by more than one operational programme
=> Textual adaptations in the three Annexes
The changes in the three annexes of the IR (Annex XX, XXI and XXII) are of drafting adaption only, such as making the word “axis” in plural
Change of the word “Community” into “Union” as result of the entry into force of the Lisbon Treaty

8. Financial engineering instruments (Articles 43, 44, 45)
Objective
To align text with changes in the General Regulation which extended the scope of financial engineering to funds or other incentive schemes for energy efficiency and use of renewable energy in existing housing
The objective of changes in Articles 43 to 45 to align the text with the changes in the amended General Regulation which extended the scope of financial engineering to energy efficiency and renewable energy in buildings, including in existing housing. Funds or other incentive schemes for energy efficiency and use of renewable energy in existing housing is now one of the three possible forms of financial engineering instruments (besides urban development funds and FEI for SMEs).

9. Financial engineering instruments (new Article 46a - Guarantees)
Objective
To clarify the functioning of guarantees operations
To emphasize that the Structural Funds' contribution to guarantees and guarantee funds must ensure the most efficient use of resources of the Union
A new Article 46a is to address the following two problems:
The idea of the new Article is to ensure adequate leverage and sound financial management. The MA/fund manager will have to make a risk assessment based on the market practice and historical experience and on that basis establish an amount of money to be set aside as the value of the guarantees to cover expected losses from loans to SMEs. In paragraph 2 of the Article it is explained that, at closure, the amount of the guarantee should be capped to the value of the guarantee (i.e. the amount earmarked), corresponding to loans effectively given out to SMEs.

10. Financial engineering instruments (new Article 46a - Guarantees) Risk assessment
New Article 46a requires to carry out an appropriate ex ante assessment of expected losses according to market practice (risk assessment)
The resources blocked to honour guarantees shall reflect such risk assessment (=> NO over- guaranteeing).
Possibility to review the assessment if duly justified by subsequent market conditions

11. Financial engineering instruments (new Article 46a - Guarantees) Efficient use of EU resources
Guarantees operations must achieve an appropriate leverage factor according to market conditions
At the partial or final closure of the operational programme, the value of the guarantees shall be proportionate to the underlying investments (e.g. loans effectively issued to SMEs)

12. Thank you !