JESSICA is a joint European Commission and EIB initiative, supported by the Council of Europe Development Bank, which promotes urban regeneration projects. By establishing a JESSICA holding fund, the North West will work with the EIB to invest European Structural Funds in integrated and sustainable urban regeneration projects. The MoU which establishes this agreement was signed in Warrington by Simon Brooks, EIB Vice-President, and Steven Broomhead, Chief Executive of the NWDA.
Simon Brooks who is responsible for EIB activities in the UK said: "This collaboration between the EIB and the Northwest Regional Development Agency builds on the EIB's reinforced commitment to support SME activities and sustainable urban regeneration in the current financial and economic crisis. We intend to use EIB financial resources to their full advantage, and where appropriate, to complement the investment of European Structural Funds in the region."
Steven Broomhead, Chief Executive of the NWDA, said: "This initiative is an opportunity for the region to put a mechanism in place that will ensure we can prolong the benefit of our ERDF Programme. JESSICA will allow us to invest in revolving funding, in addition to the normal single use grants. This might be in the form of equity, loan or guarantee perhaps which can then be re-used on other projects again, and again, extending the life of our European funding and helping us to maintain a level of physical regeneration during the difficult economic climate."
The MoU provides for a JESSICA evaluation study for the North West, funded jointly by the European Commission Directorate General for Regional Development and the EIB. The evaluation study will establish how JESSICA funding can assist most efficiently and effectively in the delivery of urban regeneration projects that form part of integrated urban development plans and strategies in the region. Moreover, the study will consider how these projects can help the North West to meet the objectives set for the area in the European Regional Development Fund (EDRF) Operational Programme 2007-2013.
The North West is the second English region to sign an MoU for a JESSICA initiative, following a similar agreement between the EIB and the London Development Agency in December 2008.
Background notes
JESSICA - Joint European Support for Sustainable Investment in City Areas - is one of the Cohesion Policy Joint Initiatives that were developed by the European Commission to contribute to making EU Cohesion Policy more efficient and sustainable. The JESSICA mechanism is based on cooperation established between the Commission, the EIB and the Council of Europe Development Bank and supports investment in sustainable urban development and regeneration.
This initiative, designed to increase the use of financial engineering instruments, allows Managing Authorities to use some of their European Structural Funds allocations to invest in revolving funds - rather than once-off grant financing. By doing so the Authorities can recycle financial resources in order to enhance and accelerate investment in urban areas. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via Urban Development Funds and, if required, holding funds.
The Cohesion Policy Joint Initiatives originate from partnerships established between the European Commission, the European Investment Bank Group and other international financial institutions. The four Joint Initiatives developed by the Commission in the context of the Cohesion policy are:
JASPERS - Joint Assistance to support Projects in European Regions (EIB, European Bank for Reconstruction and Development and KfW Bankengruppe);
JEREMIE - Joint European Resources for Micro to Medium Enterprises initiative (EIF);
JESSICA - Joint European Support for Sustainable Investment in City Areas (EIB and Council of Europe Development Bank)
JASMINE - Joint Action to Support Micro-Finance Institutions in Europe (EIB Group)
The EIB, the European Union's long-term financing institution, contributes to the integration, balanced development and economic and social cohesion of the Member States by financing sound investment. Between 2007 and 2013, some EUR 350 billion have been earmarked for EU cohesion policy, representing nearly 36% of the Union's total budget. This puts the allocation for this finance stream ahead of the common agricultural policy for the first time.
EIB Activity in the North West
Over the last ten years (1999-2008), the EIB has lent some GBP 2.5 billion for capital investment to encourage development in the North West of the UK. This has included projects such as support for research and development into glass processing technology, construction of a chipboard factory, design development and manufacture of vehicles, modernisation of a bus fleet, research and development investment in some of the region's universities, modernisation of hospitals, construction and refurbishment of social housing, extension and renovation of electricity supplies, and water and waste-water improvement schemes.
In 2008, the Bank lent some EUR 3.8 billion (GBP 3.6 billion) for projects in the UK, ranging from investment helping the UK's regions, to protecting the environment and improving national health facilities, transport, and supporting the activities of small and medium sized enterprises. Financing in the UK accounted for over 7% of the EIB's overall lending in the EU in 2008.