Housing in JESSICA Operations

Transcription

1 Housing in JESSICA Operations 12 th assignment Contract No. CC3912/PO J Conference Warsaw, 28 October 2011

2 Overall objective of the study To provide clear information and guidance to the relevant stakeholders in the Member States on how they can use JESSICA to invest in housing projects, which are integrated into overall sustainable urban development objectives. 1. Wider Policy Context Review of the current state of policy with respect to affordable and social housing and its role in urban development, urban regeneration and economic sustainability and the study of the correlation between implemented policy and the JESSICA approach. 2. Housing in the programming cycle and transition to the next cycle Analysis of the key elements of the Structural Fund regulatory framework relevant to housing and identification of the countries that have exploited the opportunities to incorporate housing in their Operational Programmes during the current programming period. 3. Supporting the housing embedded in JESSICA operations Analysis of the existing trends in housing development projects as well as their financing instruments and governance structures and the investigation of potential opportunities to further embed housing in JESSICA operations. Slide 2

3 Overview of the wider policy context Until now we looked at the wider policy context, where the fundamental principle is that housing policy is a national competence, not an EU one. JESSICA funds and state aid in general can therefore only be employed specifically for housing where they support broader EU objectives and where determined by EU regulation. The importance of mix : Today s trend shows which is supported by several experts and policy makers that urban development should ideally be characterised by mix in the broadest sense should be socially mixed, with a mix of land uses and a mix of housing tenures, and that they should be well located for services and transport facilities. This is the sort of integrated urban development that JESSICA explicitly seeks to foster. Slide 3

4 Regulatory framework relevant to housing difference between EU-12 and EU-15 The cohesion policy regulatory framework on housing has been amended several times in the recent years, mainly due to the economic crisis: Slide 4

5 Challenges coming from the regulatory review Open issues: - As part of social cohesion the emphasis is expected to be on social and co-operative housing, but market housing can be included as well; - The Structural Funds can be used to provide assistance for marginalised communities (Roma and others) - potentially including new housing developments; - Implication of ownership structure of social and affordable housing e.g. whether the privatised housing stock in much of CEE can be included within the eligible stock. Conclusion: Up to now the majority of housing projects using JESSICA funding have been small scale and mostly concentrated on making buildings more energy efficient. The challenge is effectively to build the JESSICA approach into urban redevelopment, concentrating on ensuring adequate eligible housing expenditure within mixed-use, mixed-community and ultimately financially viable projects. Slide 5

6 Embedding housing in JESSICA operations Exemplary typologies have been developed, encompassing the main project characteristics, financial instruments, final beneficiaries and governance structures. In addition, four case studies have been analysed in detail. The two main project typologies have been identified, namely: 1. Multi-purpose construction 2. Energy efficiency and low-carbon refurbishment Slide 6

7 Project typology 1: Multi-purpose construction This typology includes the refurbishment of existing buildings, the redevelopment of urban brownfield sites or the development of new areas outside the city centre, with the objective to foster the synergies between work and housing. Often public banks, national environmental protection agencies and public sector companies, such as utility companies, may also provide financing to prepare technical and financial feasibility studies. Normally, the selected promoter invests its own resources and receives funding from local authorities and central government and usually commercial sources. The revenue stream comes from the sale/rent of the land, housing, offices industrial and commercial units. Housing (compliant with JESSICA requirements) can be financed as a component of multi-purpose development projects and the financial viability of the whole project may be enhanced by the revenue stream coming from the different components of the project. Slide 7

8 Conceptual model for JESSICA operations in multi-purpose construction European Commission Structural Funds (ERDF) Capital exit Managing Authorities Contribution JESSICA Holding Fund (e.g. public national banks, national housing funds, other national funding schemes) Urban Development Fund (Co-financing between public and private investors) Projects Slide 8

9 Applying the conceptual model: the New East Manchester case Original project description: Total investment is estimated at 3,965 million pounds in the Regeneration Framework over the full duration of the programme ( ), out of which approximately 70% come from the private sector and 30% from public budget, including EU ERDF resources. Managing Authority: North West Development Agency Holding Fund: optional mandate to EIB European Commission Urban Development Fund: New East Manchester Ltd. (NEM) is an Urban Regeneration Company who is already ensuring the matching of public and private funds to finance the individual projects. Contribution Structural Funds (ERDF) Managing Authority North West Development Agency Capital exit Project level: Private investors contribute to finance specific projects. For example, registered social landlords contribute to financing social housing developments. Holding Fund (optional): EIB or other public institution Urban Development Fund New East Manchester Ltd. (Co-financing between public and private investors) Projects Slide 9

10 Project typology 2: Energy efficiency and lowcarbon refurbishment This typology involves the refurbishment of panel houses and multi-apartment blocks. The main objectives are energy efficiency improvements and the fight against energy poverty, in both Eastern and Western European countries. In Eastern Europe housing blocks have been privatized at the end of the communist era and are generally administered by Home Owners Associations. In Western Europe most of these projects involve social housing, owned by social landlords and rented at sub-market rates. There are two JESSICA operations, in Estonia and Lithuania, dealing with energy efficiency refurbishment in housing. The Estonian example provides the possibility to renovate the entire building and not only those parts which are eligible through ERDF funding. Slide 10

11 Conceptual model for JESSICA operations in energy efficiency and low-carbon renovation European Commission Structural Funds (ERDF) Capital exit Managing authorities Contribution JESSICA Holding Fund (e.g. public national banks, national housing funds, other national funding schemes e.g. for energy efficiency measures) Urban Development Fund Loan Final recipients (Housing provider, Home Owners Association, Tenants) Loan repayment (principal+interests) Slide 11

12 Applying the conceptual model: multi-apartment building in Tallinn Original project description: The total cost of the reconstruction project was 6.3 million kroons (403,000 euros), where the winning apartment building are supported by a grant of 1 million kroons (64,100 euros) within the framework of the BEEN (Baltic Energy Efficiency Network for the building stock project was established in the framework of the European Union programme INTERREG IIIB). Managing Authority: Ministry of Finance Holding Fund (optional): KredEx, a public financial institution, providing the loan scheme through the Urban Development Fund. Urban Development Fund: Swedbank provides a loan to Home Owners Associations at favourable conditions, since its interest is below market rate. Contribution European Commission Structural Funds (ERDF) Managing Authorities Ministry of finance Holding Fund EIB or KredEx Capital exit Project level: Home Owners Association - Tenants pay a monthly contribution to a building maintenance fund. They are able to increase this amount due to the savings on their energy bills and thus repay the loan. Loan Urban Development Fund Swedbank Home Owners Association Loan repayment (principal + interest) Slide 12

13 Our main findings until now Possible to build on existing housing delivery mechanisms to embed housing into JESSICA operations in different countries. However they need to be adapted to the current framework of JESSICA. At present, JESSICA can finance housing projects only in a specific range of circumstances. Mixed-use and mixed-tenure urban development projects which include housing but also other uses may allow JESSICA to support housing indirectly. The results will present a set of recommendations on the opportunities to adapt JESSICA operating procedures and existing UDF structures to include housing. Slide 13

14 Contact details Fabio D Aversa, PwC fabio.daversa@lu.pwc.com Krisztina Szenci, PwC krisztina.szenci@lu.pwc.com Giulia Macagno, PwC giulia.macagno@lu.pwc.com Zoe Jankel, ARUP Zoe.Jankel@arup.com Christine Whitehead, LSE C.M.E.Whitehead@lse.ac.uk Kathleen Scanlon, LSE K.J.Scanlon@lse.ac.uk PricewaterhouseCoopers S.à r.l.. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers S.à r.l. Luxembourg which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.