Welsh Assembly Government - JESSICA Fund (Joint European Support for Sustainable Investment in City Areas)

Welsh Assembly Government - JESSICA Fund (Joint European Support for Sustainable Investment in City Areas)

JESSICA stands for Joint European Support for Sustainable Investment in City Areas and is a policy initiative of the European Commission (EC) which aims to exploit

financial engineering mechanisms to support investment in sustainable urban development as a component of integrated regeneration. UDF stands for Urban Development Fund and is the key ‘financial engineering’ model for JESSICA. UDFs are funds set up to invest in sustainable urban development by combining primarily;

  • From the public sector; EU funding and public sector property assets with;
  • From the private sector; institutional equity investment; and third party debt.

The Benefits of JESSICA and UDFs were found to be:

  • Efficient and effective by using ‘non grant’ financial instruments that mobilise additional financial resources and focus on sustainability;
  • Leveraging large-scale investment and expertise with major funds to invest over the long term in challenging locations;
  • A holistic approach to regeneration balancing physical, social, economic, financial and environmental goals;
  • Responsiveness to change with the partners retaining the ability to add or change projects under the main partnership framework.

George Grace led the study on behalf of the European Investment Bank that recommended the creation of a UDF for Wales. The study concluded the approach will enable WAG to ensure that ERDF monies are able to make a bigger impact over the long term than a traditional grant funding approach whilst at the same time delivering on the public sector’s social and economic development goals. A financial model was created that showed that a UDF would catalyse large scale physical regeneration projects that would not be started by the private sector in isolation and still result in a revolving fund (ie the cash return to WAG) for future projects at the end of the life of the UDF.

The fund is now active and operating as the Regeneration Investment Fund for Wales and investing in regeneration projects across the country.