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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: b.field@eib.org