JESSICA - 09/07/2010

The Scottish Government has signed a funding agreement with the European Investment Bank (EIB) to establish a new £50 million fund to support urban regeneration in Scotland.

The JESSICA (Joint European Support for Sustainable Investment in City Areas) fund brings together Scottish Government resources with funding from the European Commission's European Regional Development Fund (ERDF) to support regeneration and economic development in Scotland's most deprived urban areas.

What is JESSICA?

JESSICA has been developed by the European Commission and the European Investment Bank (EIB), in collaboration with the Council of Europe Development Bank.

It allows us to use some of our ERDF grant allocation as a source of loans, equity investment and guarantees that, alongside complementary resources from the EIB and others, will help de-risk developments in regeneration areas currently considered too marginal for commercial lenders or investors. A range of activity that directly supports employment can be supported through JESSICA; along with measures to support growth industries, such as renewable energy.

Benefits of JESSICA

The fund has the potential to lever in additional sources of public and private investment; and to create a sustainable fund to support regeneration activity in Scotland well into the future.

The underlying principle is to use ERDF to invest in projects with the expectation of a return on the investment, rather than following the traditional grant approach that allocates ERDF funding with no expectation of repayment.

JESSICA allows for the investment of ERDF and Scottish Government cash - in the form of equity, loans and / or guarantees - in a way that creates a commercial return. This return can then be re-invested into new urban development projects that will create further cash for new projects. An evergreen fund of this type would leave a lasting legacy to support regeneration and economic development throughout Scotland beyond the end of the current Structural Funds programme in 2013.

Next Steps

The holding fund will be managed by the European Investment Bank, which will take investment decisions in conjunction with a new investment board, comprising regeneration and finance experts. The EIB will run a procurement process later this year to identify Urban Development Funds, which will deliver investment to projects, and we expect to see the first investments made during 2011.

JESSICA can be applied to projects in the 13 local authority areas currently eligible for ERDF support (Clackmannanshire, Dundee, East Ayrshire, Edinburgh, Fife, Glasgow, Inverclyde, North Ayrshire, North Lanarkshire, Renfrewshire, South Lanarkshire, West Dunbartonshire, West Lothian).

A pre-call exercise for interested projects has been launched by ESEP, the body that administers Structural Funds in Scotland. This is intended to gauge interest among key stakeholders and identify projects that may be eligible for JESSICA and are at a sufficient stage of development and investor readiness. Further information on the pre-call is available from the following ESEP website link.

Website: www.esep.co.uk/01-esf-jessica.html