JESSICA implementation in Wielkopolska – first...
Transcript of JESSICA implementation in Wielkopolska – first...
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Marek Szczepański
Wielkopolska UDFDirector of European Programmes Department in BGK
5th meeting of JESSICA Networking PlatformBrussels, 31 March 2011
JESSICA implementationin Wielkopolska – first experiences
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Bank Gospodarstwa Krajowego (BGK)
• State-owned bank – the one and only in Poland, the largest in Central and Eastern Europe
• Established in 1924
• Supervised by the Ministry of Finance
• Mission including supporting programmes for local and regional development
• Leader in local governmentsfinancing
• Key clients: central administration and self-governments
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• Goals:
– the revitalization of disadvantaged areas in cities
– strenghtening of the regional innovation system by reinforcing the potential of the institutions that supportbusiness environment
• Available amount: approx. € 73.1 m (PLN 290 m)
– 60% (€ 43.9 m) for large cities (over 50 thous. inhabitants)
– 40% (€ 29.2 m) for smaller cities
– € 10 m for urban projects strenghtening institutions thatsupport the business environment
JESSICA in Wielkopolska – goals and resources
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Wielkopolska Urban Development Fund (1)
• Signing of the Operational Agreement: 29th September 2010
• UDF functions as a separate block of finance within BGK
• Currently available financial product: preferential loans
• Loan maturity: maximum 20 years
• Grace period: maximum 4 years (for capital)
• Loan interest rate: set on the basis of the reference rate of the National Bank of Poland (currently 3.75%), possiblyreduced by „Revitalization Index”
• No fees or commissions from Investors required
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Wielkopolska Urban Development Fund (2)
• Share of loans in investment costs: maximum 75%of the total eligible investment cost (on the basis of regional investment aid rules)
• Potential Investors: local governments, municipal companies, private investors, public-private partnerships, NGOs and others (entities conducting business activity)
• Number of projects to be financed: about 20 (according to the Wielkopolska ROP)
• Call for applications – 29th October 2010
• First applications submitted – late December 2010
• First Investment Committee meeting – 22nd February 2011
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Investment Committee
• Investment Committee:
– 4 representatives of the UDF includingthe Chairperson with a casting vote and
– a representative of the Association of Polish Cities (countrywide self-government union of municipalities)
• Representatives of the Managing Authority andthe European Investment Bank as observers(without voting rights)
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Revitalization Index
Possible reduction of the loan interest rate
• On the basis of the Revitalization Index (maximum – 2 percentage points)
• Revitalization Index is estimated on the basis of superiority of economic elements over the commercial nature of the project
• Non-measurable / non-financial, descriptively presented future benefits (influence on the social sphere, on the economic sphere and on the sphere of natural environment and spatial planning) are also being taken into consideration
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• Three-level shopping mall with about 120 retail and service premises (total area about 28 000 m2)
• The investment situated in the post-industrial facilities areain the city centre (near the old town market)
• Total investment value approx.: PLN 219 m• Loan: approx. PLN 50 m• Social elements: improving the image of the old town, bike
path, parking, the place for a city library and tourist informationin the old tenement house to be bought by the Investor
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Urban projects to be financed (1)
JESSICA loan Own resources Commercial credit Total
PLN thous. 50 000 61 666 66 533 178 199
% 28% 35% 37% 100%
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Urban projects to be financed (2)
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Urban projects to be financed (3)
• Creation of a modern office building for rent by general overhaul and modernization of post-industrial property
• Creation of a park (on adjacent public land), construction or modernisation of access roads and pedestrian crossings
• Creation and maintaining of a visual monitoring system• Creation of professionally equipped lecture room, free
lectures and trainings for the local population• Creation of permanent and temporary workplaces• Loan: PLN 22.5 m• Total investment value: PLN 30 m
• Institution supporting business environment – the three-stage investment including renovation of historic buildings
• Each building will include a separate technological part and typical offices
• Need for loan approx.: PLN 18,5 m• Total investment value approx.: PLN 30,3 m• Public Investor• Social elements: business incubator
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First observations (1)
• High interest of investors (both private and public) but considerable project development usually required before loan can be agreed
• Diverse scope of planned projects: bowling centre, shopping mall, business incubator, office spaces, hostel,hotel, underground car parks, municipal market place…
• Diverse size of projects: from PLN 1 million (€ 252 000)to nearly PLN 220 million (€ 55.4 m) and value of expected JESSICA financing: from a few hundred thousand zlotys up to the PLN 50 m
• Private investors underestimate the loan pricing advantage brought by revitalization effects of urban projects and simultaneously have high expectations in relation to the preferential interest of loans
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First observations (2)
• Rather small influence of projects on cities in comparisonto the scale of integrated plans for sustainable urban development
• Insufficient cooperation of private investors with cityauthorities on revitalization elements of investments
• Lack of projects in the form of the public-private partnership ready to be financed, not even at early stagesof preparation
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What might be improved going forward?
• Possible start of the implementation – early readiness of the regulation
• Clarity of the regulation (eg. rules for monitoring, exit strategy)
• Financing projects which do not generate income? (eg. loan paid back from the self-goverment’s budget)
• Consequence in non-grant approach (durability of the project, financial corrections)
• State aid rules
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Thank you for your attention
Marek SzczepańskiDirector of European Programmes DepartmentBank Gospodarstwa Krajowego
mail: [email protected], [email protected]: www.bgk.com.pl