19/04/23 1European Investment Bank

EUROPEAN INVESTMENT BANK

Urban Development Projects

29th May 2009

Barbara LemkeUrban Planner Projects Directorate

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EU APPROACH TO URBAN POLICY

CONTEXT

Urban culture / asset as a major comparative advantage

of the EU in a global economy

Identification of common challenges: demographic, environmental, security, social cohesion

Subsidiarity

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EU APPROACH TO URBAN POLICY

OBJECTIVES

Sustainable communities; avoiding urban sprawl

Ensuring urban sustainability, taking advantage of existing (massive) assets: focus on urban renewal and regeneration

Share experiences

The LEIPZIG CHARTER (2007)

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BANK FINANCING OF URBAN PROJECTS

MAIN SECTORS OF ACTIVITY

Urban renewal and development (i.e. public infrastructures)

Social housing (rehabilitation and new construction, with special focus on energy efficiency)

Individual buildings of public interest (e.g. cultural heritage) Public transport Education and health facilities Water management and improvement of the environment,

including waste treatment Utilities, including district heating & street lighting

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BANK FINANCING OF URBAN PROJECTS

SECTORS OF WEAK ACTIVITY

Supporting proper housing provision and eradication of slums promoting social inclusion (Technical Assistance outside EU)

Regeneration of historic centers (“Medinas 2030 Initiative”)

Natural disasters prevention

Governance (Technical Assistance outside the EU)

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EUROPEAN INVESTEMENT BANK FINANCINGOF URBAN RENEWAL/REGENERATION PROJECTS

EIB Loans in the Urban Sector (Urban Transport & Urban Development) in million EUR, excluding Global Loans

On average, around EUR 6 bn = 10% of the annual lending activity of the Bank

Operation type 2004 % 2005 % 2006 % 2007 % 2008 % Total %

Investment loan 3770 59 % 5155 66 % 2181 66 % 2538 52 % 3828 54 % 17472 59 %

Framework loan 2674 41 % 2679 34 % 1123 34 % 2320 48 % 3289 46 % 12084 41 %

Total 6444 100 % 7834 100 % 3304 100 % 4858 100 % 7116 100 % 29556 100 %

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EU APPROACH TO URBAN POLICY

INTEGRATED URBAN PLANNING

Strategy and objective-based on a sound diagnosis, integrated into its broader socio-economic context

Precise definition of land use and infrastructure facilities Consideration of adequate services and equipment Assessment of environmental impacts Social impacts, including employment Global economic analysis of the operation Financial sustainability (public and private) of investment and

operation Adequate governance and public consultation

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FINANCING URBAN RENEWAL AND DEVELOPMENT

LARGE PROJECTS

Typical projects: public infrastructure, public transport, hospitals, etc.

Project promoters: SPVs

Main role of public administrations: ensuring coordination

Financing: Sources: budget, concessions, PPPs Loans and the issue of public debt Transaction costs in private participation

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EIB FINANCING OF URBAN RENEWAL AND DEVELOPMENT

LONG-TERM LOANS TO LARGE PROJECTS

Amounts, duration, conditions

Adaptations for PPPs and additional requirements Objective: best use of resources, user protection Project quality Adaptation to context: legal issues, relations between partners,

financial sustainability Adequate distribution of risks and rewards

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EIB FINANCING OF URBAN RENEWAL AND DEVELOPMENT

DIRECT LOANS OR LOANS THROUGH INTERMEDIARIES

Public intermediaries (national and regional institutions)

Financial intermediaries (commercial or public banks)

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EIB FINANCING OF URBAN RENEWAL AND DEVELOPMENT

MUNICIPAL FRAMEWORK LOANS

Numerous schemes included in capex Multi-annual budget financing Sector specific loans: social housing, water management, etc. Conditions for success:

Well-defined strategy, objectives and implementation and monitoring procedures

Robust legal, planning and implementation framework Minimum critical thresholds (size of investments) Consensus (public participation) Adapted/reasonable time horizon Multi-sector integration (coordination of services)

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EIB QUALITY REQUIREMENTS FORURBAN RENEWAL/REGENERATION PROJECTS

Part of a local and/or regional strategy integrated urban renewal and regeneration plan/strategy sectoral plans integrated into the broader local and regional

strategy.

Integrated planning to ensure the sustainability of local urban communities:

adequate technical definition, including service provision economically sound and financially sustainable socially responsible under sound governance positive impact on the environment, with particular focus on

energy efficiency and sustainable transport.

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EIB FINANCING OF SOCIAL HOUSING PROJECTS

ELIGIBILITY AND QUALITY CONDITIONS

Policies: urban environment; social cohesion Location:

Brownfield sites Greenfield sites if part of urban regeneration and/or local housing plan

Investment, not maintenance

Quality requirements: Well-defined strategy, objectives and procedures Robust legal context, planning and implementation structure Technical standards and services

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EIB FINANCING OF URBAN RENEWAL AND DEVELOPMENT

URBAN DEVELOPMENT FUNDS

JESSICA, Joint European Support for Sustainable Investment in City Areas

Initiative of the European Commission (DG REGIO) launched at end of 2005, and supported by EIB and Council of Europe Development Bank

Applying “financial engineering” techniques to EU Structural Funds

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PJ/COENV/URB