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What is JESSICA?

JESSICA stands for Joint European Support for Sustainable Investment in City Areas. This initiative is being developed by the
European Commission and the European Investment Bank (EIB), in collaboration with the Council of Europe Development Bank
(CEB)
.

Under new procedures, Member States are being given the option of using some of their EU grant funding, their so-called
Structural Funds, to make repayable investments in projects forming part of an integrated plan for sustainable urban development.
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. JESSICA is not a new source of funding for Member States, but rather a new way of using
existing Structural Fund grant allocations to support urban development projects.

The benefits of using JESSICA 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 a 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.