Transcript Slide 1

JESSICA
Holding Fund in Bulgaria
Status, types and selection of UDFs – Next steps
Christos Kontogeorgos
Jessica and Infrastructure Funds, EIB
8 December 2010
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WHAT IS JESSICA?
Joint European Support for Sustainable Investment
City Areas
in
 Initiative of the European Commission (DG REGIO)
launched beginning of 2006, supported by EIB & CEB, to
establish a common approach for financing urban
development and strengthening the urban dimension in
cohesion policy through the “transformation of grants” in
repayable/recyclable assistance
 Applying “financial
Structural Funds
engineering”
techniques
to
EU
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WHY JESSICA?
 To make Structural Fund support more efficient and effective
by using tailor-made “non-grant” financial instruments, thus
creating stronger incentives for successful project
implementation
 To mobilise additional financial resources
development projects and PPPs with a
sustainability/recyclability
for urban
focus on
 To utilise financial and managerial expertise
international financial institutions, such as EIB
from
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The role of the EIB - Contributing to Jessica
(NB: EIB is a not-for-profit making institution)
 Taking a leading role, alongside DG REGIO, in promoting and
developing JESSICA in Member States
 Providing complementary loan financing, where possible
 Providing technical assistance and dissemination of best
practice, based on established expertise in lending to urban
regeneration projects across the EU
 Operating the JESSICA Holding Fund on the basis of
Regulations specifically providing for EIB involvement
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The role of EIB: Promoting JESSICA, delivering UDFs
•
Pre-implementation phase: technical assistance, Evaluation
Studies
•
Implementation: Shaping UDFs together with the MA and according
to MA’s needs
•
JESSICA Holding Funds & Technical Assistance
•
Managing JESSICA Holding Funds: transitory vehicles accelerating
UDF creation
•
Selection of UDF, preparation of Operational Agreement with UDF
•
Helping to solve regulatory issues
•
Advice on integrated urban investment strategies
•
Tailored technical assistance in UDF development
•
Dissemination of best practice, based on established expertise in
lending to urban regeneration projects across the EU
•
Match-making with local or international investors
•
Potential for tailored EIB co-financing to UDFs/projects
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JESSICA Operations
55 Evaluation Studies
(national, regional, sectoral)
19 Memoranda of Understanding on
cooperation in JESSICA implementation
15 JESSICA Holding Funds under EIB
management
3 JESSICA operations directly with
national/regional financial institutions
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JESSICA IMPLEMENTATION MODEL
EU
Level
European Commission
ERDF – DG Regio
National /or
regional Level
Programming Authority
€
Managing Authority
National/regional
/Local Level
Holding Fund (« HF »)
€
€
Urban Development
Funds
€
Regional /Local
Level
€
Projects
€
€
HF
Manager
€
€
Sustainable Urban
Development Plan
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WHAT IS A HOLDING FUND…
…AND WHAT ARE ITS ADVANTAGES?
A Holding Fund is a fund of funds (optional) set up to invest in
several Urban Development Funds
Main advantages of using a Holding Fund:
• fund projects ex-ante v. ex-post (Structural Funds)
• accelerate project implementation of strategic nature
• catering for absorption capacity issues (paid-in amounts
accounted for as “interim payments” under EU Reg/s)
• exploiting expertise and experience in fund and/or
investment selection and management
• additional leverage opportunity (EIB, banks, private sector)
• reduction of administrative burden for MAs
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WHAT IS AN URBAN DEVELOPMENT FUND (UDF)?
 Simply defined as “funds investing in public-private partnerships
and other projects included in an integrated plan for sustainable
urban development”
 Art. 43 of Commission Regulation 1828/2006 is not specific on the
legal form, although a UDF should be set-up as an independent
legal entity or possibly a “separate block of finance within a
financial institution”
 There is a need for a tendering procedure and a “business plan”,
specifying items such as target market, operational budget,
ownership structure, exit and winding up provisions
 Managing Authorities shall take precautions to minimize distortion
of competition in the market (combine Jessica with private funds)
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UDF can be tailor-made
Geographic focus
Project pole
City district
Municipality
Functional urban/metropolitan area
Region
Objective
Area-based regeneration funds
Asset improvement funds
•
Social housing
•
Brownfield regeneration
Infrastructure funds
Energy Efficiency Funds for cities
Integrated urban energy funds
Multi-sector funds for cities
Governance
Public – Public
Public – Private (local)
Public – Private (international)
Private – Private (merchant bank for urban
development)
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SPECIFIC TYPES of UDFs (i)
POTENTIAL UDF STRATEGY IMPLEMENTATION
 General fund (general investments covered)
 Geographical level (cities, islands, regions)
 Thematical level (waste, energy efficiency, urban regeneration)
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SPECIFIC TYPES of UDFs (ii)
POTENTIAL UDF FUNDING PARTNERS
 JESSICA funds ► loans, private investors at project level
 JESSICA funds + EIB lending
 JESSICA funds + bank lending
 JESSICA funds + municipality/public/private investors
or
any other combination of the above, depending on estimated
demand and strategic decision of MA on UDF structure
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SPECIFIC TYPES of UDFs (iii)
POTENTIAL TENDERING STRATEGY
The tendering procedure for selection of a UDF can focus on
different categories…
 UDF manager (banks, financial institutions, mixed cos etc)
 Projects to be financed (waste, energy efficiency, etc)
 Specific strategic project to be financed
or
any other combination of the above, depending on demand,
sustainability of projects and strategic urban planning of MA
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Implementation structure
Managing Authority of an
Operational Programme
Contribution from OP
(2010)
JESSICA HF (managed by EIB)
Key features of a UDF
Revolving financial instrument for financing
sustainable urban development
• OP contribution (core resources)
• Possible leverage of other resources
(UDF-level or project-level)
Provides loans, guarantees, or equity to urban
projects
Projects must meet objectives of the OP and be
included in an integrated plan for sustainable
urban development
UDFs can be selected by and organized
through a Holding Fund
Investment into UDF
(2011)
Urban Development Fund (UDF)
Loans & equity for projects
(2011)
Resources repaid from
projects to UDF
(2012/13  )
Urban projects
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Revolving – flows of funds (HF ↔ UDF ↔ Project)
Deposit account
Mgt fees
(a, b)
Investment account
Holding Fund
Repayment account
OPERATIONAL
AGREEMENT
UDF
INVESTMENT
AGREEMENT
Urban Projects
Contingent fee
(c)
Reserve account
Possible UDF remuneration/reward structure
2010-2015
Fixed fee (% p.a. from amount transferred by HF into UDF)
Performance incentive for early disbursement (% from amount transferred by HF into UDF)
From 2016 onwards
Contingent fee (% p.a. from amount repaid back to UDF)
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WHAT TYPES OF PROJECTS CAN BE FINANCED?
Site remediation and preparation
Basic urban infrastructure (parking, street furniture, green)
Public networks (transport, water & wastewater, energy)
Urban e-government infrastructure (tech-parks, clusters)
Health/education (hospitals, rehabs, universities, R&D)
Tourism (hotels, leisure facilities)
Restoration of “signature/landmark” buildings
Cultural and multi-use recreational complexes
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What types of projects can be financed?
Projects generating revenue
• Enabling repayment of the loan,
guarantee or equity investment
back to the UDF
• JESSICA financing (e.g. loan) can be
also combined with grants
Projects included in an Integrated Urban Development Plan
Projects fulfilling requirements of the relevant OP
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JESSICA in Bulgaria State of Play
Until today
 Finalised an Evaluation Study for the capital and 6 major cities of
Bulgaria (Sofia, Bourgas, Pleven, Plovdiv, Rousse, Stara Zagora and
Varna)
 Positive outcome ►Projects’ potential high!
 Still, a lot of work to be done at preparation level
 Funding agreement signed on 29 July 2010 for the establishment of JHF
in Bulgaria (EUR 33m), financed by the Operational Program “Regional
Development”2007-2013
Next steps
 Identification of projects’ needs
 Preparation of Call for Expression of Interest
15 December 2010
 1st Investment Board meeting – Defining and updating of Investment Strategy
Mar 2011
 Launching of Call for EoI
Q3 2011
 UDFs selection
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…….SELECTION OF UDF …..
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Call for EoI: Documents typically required
1) Expression of Interest
 Expression of Interest – filled-in form
 Declaration
• Registration details, authorized representatives, no
bankruptcy, no liquidation, information on penalties and
pending proceedings, conflict of interest, tax and social
obligations, relevant experience
 Supporting documents
 Exclusion criteria
 Selection criteria (mainly complete file and track record)
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Call for EoI: Documents typically required
2)
Final proposal – The Offer

Deed of undertaking

Declaration (similar as with the EoI)

Submission of Business Plan
 Award criteria
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Example of a potential Call for EoI
Specific characteristics of a Call for EoI
 Lot 1 – Metropolitan Area
 Lot 2 – Other urban areas outside Metropolitan Area
 Projects could be realized under different thematic priorities of
OP
• 61 – Integrated project for regeneration of rural urban areas
•
•
(urban, post-military and post-industrial sites)
78 – Housing infrastructure
43 – Energy efficiency
 The total amount disbursed for Lot 1 should be 40% and for
Lot 2 the remaining 60% of the total funds allocated
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Example: required UDF business plan content
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Investment strategy
Financial forecasts and operational budget of the UDF
Portfolio of potential Urban Projects
Methodology for the identification and evaluation of Urban Projects
The policy of the UDF concerning exit from Urban Projects
Legal and ownership structure of the UDF
The by-laws of the UDF
Governance structure and key experts
Annual management fee
Co-financing
Winding-up provisions of the UDF
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…SOME EXAMPLES…
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JESSICA HF Lithuania: Housing Energy Efficiency
Managing Authority: Ministry of Finance
OP for Promotion of Cohesion 2007-13
Measure: Holding Fund for the modernization of multi-family houses
Administering Authority of the measure: Ministry of Environment
ERDF + national match-funding: EUR 227 M
HF within EIB: 227 M
INVESTMENT STRATEGY
UDF
selection;
JESSICA
Financing
Lithuanian commercial banks
UDF
(Separate block of finance)
In some cases leveraged by
commercial co-financing
from banks’ own resources
BUSINESS PLAN
Repayments
Repayments
UDF Financial Product
PROJECTS:
energy-efficiency actions in common parts of multi-family residential buildings
BENEFICIARIES:
associations of apartment owners, owners acting under partnership agreement,
administrators of shared parts of apartment houses
Technical assistance
in project preparation:
Housing and Urban
Development Agency
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JESSICA HF London (London Green Fund):
Decentralized Energy & Waste management / re-use
OP London, priority axis 3 (Sustainable places for business)
ERDF £50m, London Development Agency £32 m,
London Waste and Recycling Board £18 m
Focus on selected regeneration areas in East London
Expected
private sector
co-investment
HF managed by EIB: £100M
(pari passu)
Waste UDF
BUSINESS PLAN
Esp. equity and
subordinated debt
Repayments/
Exits
URBAN PROJECTS
(additional public and private cofinancing at project level)
Decentralized Energy &
Energy Efficiency UDF(s)
BUSINESS PLAN
Loan
Guarantee
Equity
Repayments/
Exits
URBAN PROJECTS
(additional public and private cofinancing at project level)
The London Waste and Recycling Board is coordinating with / providing support to project promoters

Brokering the preparation of a project pipeline for the Waste UDF
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Prospective Project in Wielkopolska, Poland
Regeneration of Old Gas-Works buildings in Poznań
Conversion of a brownfield to a new cultural-commercial centre
1) Galleries, theatre auditorium, concert hall, cinema/conference room, coffee
shops, bookshop, multi-media library, office and technical background
 Whole complex to be administered by one institution, headed by a team of
curators and managers
2) Office spaces, commercial spaces, services and apartments
 Making the project financially feasible
Expected implementation: Special purpose company of the city and the brownfield’s
private owners
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EIB JESSICA Holding Funds (Implementation Process
December 2010)
EIB Holding Fund mandate
Implementation progress
Volume (EUR
m)
HF FA
HF - Wielkopolska (PL)
67
II/09
HF - Andalucía (ES)
86
II/09
Managing Authority
0
1
2
3
4
5
6
Key implementation stages:
HF - Lithuania (LT)
HF - Portugal (PT)
HF - WestPomerania (PL)
HF - London (UK)
HF - NorthWest England (UK)
HF - Sicily (IT)
227
130
33
110
110
II/09
Pre-negotiation Stage/ HF
Agreement to be signed in 2010
1
HF Agreement signed/
Investment strategy/
Investment board
2
Call(s) for Expression of
Interest in preparation
3
Call(s) for Expression of
Interest launched
4
Call(s) for Expression of
Interest closed
5
UDF(s) selected
6
Operational agreements in
place (HF/ UDF)
III/09
III/09
IV/09
IV/09
148
IV/09
20
I/10
HF - Campania (IT)
100
I/10
HF - Scotland (UK)
55
II/10
258
III/10
HF - Silesia (PL)
60
III/10
HF - Pomerania (PL)
57
III/10
HF - Bulgaria (BG)
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III/10
150
IV/10
HF - Castilla La Mancha (ES)
50
IV/10
HF - West Midlands (UK)
80
IV/10
HF - Moravia Silesia (CZ)
0
Funding agreement signed
HF - Energy Efficiency (ES)
Total
1,774
of which already signed
1,494
Legenda
HF - Greece (GR)
Implementation of the stage iminent
Signature expected in coming moths
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JESSICA Activities
1
2
3
4
5
6
7
8
9
10
11
12
13
14
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Holding Fund
Wielkopolska (PL)
Andalucía (SP)
Western Pomerania
(PL)
Lithuania
Portugal
London (UK)
Northwest England
(UK)
Sicily (IT)
Moravia Silesia
(CZ)
Campania (IT)
Greece
Bulgaria
Pomerania (PL)
Silesia (PL)
Scotland
Type of Intervention
Urban Development and Regeneration
Urban regeneration / Energy Efficiency
Urban Regeneration / Urban Infrastructure
Energy Efficiency (Housing)
Urban Regeneration (Several Ops)
Decentralized Energy, Waste Reutilization
Urban Regeneration
Urban Development / Energy Efficiency
Urban Regeneration (Brownfield revitalisation)
Urban Regeneration (Medium-sized cities)
Urban Development / Urban Regeneration
Urban Regeneration / Energy Efficiency
Urban Development / Energy
Urban Development / Brownfield Development
Urban Development, Urban Regeneration/ Energy Efficiency /
Renewables
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…NEXT STEPS…
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Next Steps for Cities…?
… in order to finance “their” projects
•
Discuss the main aspects of the project with Managing
Authorities (interactive process…)
•
Prepare - mature the project (in cooperation with private
investors) for … ensuring recyclability
•
Present the project to candidate UDF (financial institutions,
other schemes)
•
Update or develop an Integrated Plan for Sustainable Urban
Development
•
Initiate immediately project preparation procedures
31
Next Steps for Candidate UDF Managers ?
•
Familiarize themselves with the Operational Program
•
Create a project portfolio which will constitute a basic part of
the business plan which will be submitted in the context of the
tendering procedure
•
Discuss with municipalities/cities their Integrated Plans for
Sustainable Urban Development and the potential to incorporate
revenue generating projects
•
Initiate immediately project preparation procedures
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Next Steps for Project Owners ?
• Familiarize themselves with the requirements of the
OP
• Prepare properly the revenue generating projects
− Feasibility study / project business plan
• Discuss with municipalities/cities the potential to
incorporate their project into Integrated Plans for
Sustainable Urban Development
• Discuss the main project aspects, mainly, with
Managing Authority
•
Initiate immediately project preparation procedures
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INGREDIENTS FOR SUCCESS…
 A reference integrated urban development plan
 Revenue generating capability (directly / indirectly)
 Possibility to combine with grants
 Commitment and clear benefits for all public stakeholders –
Ministries, Regions, Cities
 Transparent and efficient planning process
 Contributions in kind – publicly owned land and buildings
 Technical assistance for project preparation
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Contact
JESSICA and Infrastructure Funds Division
European Investment Bank
100 Blvd. Konrad Adenauer, L-2950 Luxembourg
www.eib.org/jessica
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