The Scottish Government has signed a funding agreement with the European Investment Bank (EIB) to establish a new £50 million fund to support urban regeneration in Scotland, while the EIB has launched a Call for Expressions of Interest to run the fund.
The JESSICA (Joint European Support for Sustainable Investment in City Areas) fund brings together Scottish Government resources with funding from the European Commission’s European Regional Development Fund (ERDF) to support regeneration and economic development in Scotland’s most deprived urban areas.
What is JESSICA?
JESSICA has been developed by the European Commission and the European Investment Bank (EIB), in collaboration with the Council of Europe Development Bank.
It allows us to use some of our ERDF grant allocation as a source of loans, equity investment and guarantees that, alongside complementary resources from the EIB and others, will help de-risk developments in regeneration areas currently considered too marginal for commercial lenders or investors. A range of activity that directly supports employment can be supported through JESSICA; along with measures to support growth industries, such as renewable energy.
Benefits of JESSICA
The fund has the potential to lever in additional sources of public and private investment; and to create a sustainable fund to support regeneration activity in Scotland well into the future.
The underlying principle is to use ERDF to invest in projects with the expectation of a return on the investment, rather than following the traditional grant approach that allocates ERDF funding with no expectation of repayment.
JESSICA allows us to invest ERDF and Scottish Government cash – in the form of equity, loans and / or guarantees – in a way that creates a commercial return. This return can then be re-invested into new urban development projects that will create further cash for new projects. An evergreen fund of this type would leave a lasting legacy to support regeneration and economic development throughout Scotland beyond the end of the current Structural Funds programme in 2013.
Next Steps
The holding fund will be managed by the European Investment Bank, which will take investment decisions in conjunction with a new investment board, comprising regeneration and finance experts. The EIB will run a procurement process later this year to identify Urban Development Funds, which will deliver investment to projects, and we expect to see the first investments made during 2011.
JESSICA can be applied to projects in the 13 local authority areas currently eligible for ERDF support (Clackmannanshire, Dundee, East Ayrshire, Edinburgh, Fife, Glasgow, Inverclyde, North Ayrshire, North Lanarkshire, Renfrewshire, South Lanarkshire, West Dunbartonshire, West Lothian).
ESEP, the body that administers Structural Funds in Scotland, recently launched a pre-call exercise for interested projects. This allowed potential project sponsors to register an interest in the programme; provide high level information on potential investment propositions; and receive early feedback on eligibility. The pre-call will not determine which projects receive funding; and there will be future opportunities for project sponsors to present investment propositions to Urban Development Funds once they are established.
The Scottish Government will confirm details of a follow up information sharing event shortly. This will give project sponsors and stakeholders an opportunity to ask questions of Scottish Government and EIB officials about how JESSICA will operate in Scotland; and how the process will unfold in the coming months.
JESSICA Investment Board
The Scottish Government has announced the composition of the JESSICA Investment Board, which will work alongside the European Investment Bank (EIB) to determine how the £50 million regeneration investment fund should be invested.
Call for Expressions of Interest
The European Investment Bank has launched a Call for Expressions of Interest to run the first Scottish JESSICA Urban Development Fund. This JESSICA (Joint European Support for Sustainable Investment in City Areas) fund will invest at least £33 million in a potentially wide range of regeneration projects across eligible local authority areas. The European Investment Bank manages the JESSICA initiative in Scotland on behalf of Scottish Ministers.
Simon Brooks, European Investment Bank Vice President responsible for the United Kingdom said: “The European Investment Bank looks forward to supporting significant regeneration across the lowlands and uplands of Scotland and working closely with Scotland to promote sustainable employment, support climate action projects and create new opportunities for communities across the most deprived local authority areas.”
For the EIB’s Call for Expressions of Interest see LINK
Scottish Government Article: LINK
