EU to pump EUR 120bn into urban projects

The European Commission (EC) is providing up to EUR 120 bn to European urban projects over the next five years to promote sustainable investment and growth in urban areas, Gianni Carbonaro, economic advisor at the European Investment Bank, has told PropertyEU. The capital will be made available in the 2007-2013 period to Europe's regional authorities and private investors through special Urban Development Funds (UDFs).

'EU Member states are given about EUR 350 bn in EU grant funding or Structural Funds. Of this amount, there will be about 25% to 35% which will be destined for investment in European cities,' Carbonaro said during the Barcelona Meeting Point conference last week. The funds, which are part of the EU Jessica Initiative (Joint European support for Sustainable Investment in City Areas), seek to boost investment in sustainable urban development projects across Europe following the EC Council's agreement in 2006 to place urban regeneration as a major common policy.

The investments may take the form of equity, loans and guarantees, and can be delivered to private-public partnership projects via UDFs managed by regional authorities.

'The intention behind this initiative is that these funds should act as catalysts for finance and they should be able to leverage additional funds coming from sources other than the European funds,' Carbonaro said. He pointed out that in order to be eligible for EU funding the projects need to be sustainable from an economic, social or environmental standpoint. Moreover, the funds have to generate returns that can be retained by the fund to be successively reinvested.