What are the benefits of using JESSICA?
The principal benefits are:
- Recycling of funds – as long as JESSICA funds have been invested, by UDFs, in eligible project expenditure before the expiry date of the Structural Fund programming period (n+2, i.e. by the end of 2015) then any returns/receipts generated from that investment can be either retained by the UDFs or returned to Managing Authorities for reinvestment in new urban regeneration projects. For those Member States facing a prospect of reduced EU grant funding in the next programming period, JESSICA offers the opportunity to create a lasting legacy for the current funds.
- Leverage – a significant implied advantage of JESSICA is its potential ability to engage the private sector, thereby leveraging both further investment and, perhaps more critically, competence in project implementation and management. Private sector investment can, in some instances, meet the requirements for the Member State’s match-funding contribution (Regulations require that Member States make a contribution, alongside the Structural Funds, to their Operational Programmes. This percentage of “own funds” can be different in each Member State.). Despite the fact that JESSICA allows grant receipts to be “transformed” into repayable investment, they are not repayable to the European Commission and should therefore not be regarded as public sector debt.
- Flexibility – JESSICA provides a flexible approach, both in terms of broader eligibility of expenditures and in the use of JESSICA funds by way of either equity, debt or guarantee investment.
- Expertise and Creativity – Member States, Managing Authorities, cities and towns will benefit from expertise of the banking and private sector. JESSICA could also act as catalyst in urban areas to enhance the investment market and therefore complement other initiatives or sources of funding that may already exist in the Member State. Involvement of the private sector, however, will still need to take account of “State Aid” rules.
