Housing in JESSICA Operations 28 th June 2011, JNP, Brussels

PwC Agenda The 5 objectives of the study Our organisation Working plan Slide 2 June 2011 Housing EIB

PwC The Conundrum Jessica is about supporting integrated urban development investment through revolving funds. Housing is an important component of the urban fabric and of mixed use regeneration so directly assists Structural Fund priorities and financial viability. Equally a core housing objective is to develop mixed tenure schemes and sustainable and economically viable mixed different demands which involve subsidy and financial partnership arrangements. Slide 3 June 2011 Housing EIB

PwC The 5 objectives of the study 1. Analyse the wider policy context Under Objective 1 we will provide an analysis of the prevailing thinking on the most important issues in housing policy particularly in the context of regeneration. The focus of this review will be the current state of policy with regard to affordable and social housing and its role in urban development, urban regeneration and economic sustainability. The thinking behind the current study is to enable JESSICA funds to be used for the provision of new social and/or affordable housing and connect with urban redevelopment projects in Member States. The feasibility of this approach in each country, and the best way to structure the JESSICA instruments, will be conditioned not only by EU regulations but also, importantly, by the historic and institutional realities of each countrys housing system. We will provide an overview of housing in European urban transformation policies and the role of the residential sector in shaping them, with particular attention on affordable/public/public interest driven housing. Slide 4 June 2011 Housing EIB

PwC The 5 objectives of the study 2. Housing in the programming cycle and transition to the next cycle Task 1: summarise in exhaustive and compact way key elements in the regulatory framework relevant to housing (General Regulation, Implementing Regulation, ERDF regulation, COCOF notes) The cohesion policy regulatory framework on housing has been amended several times in the recent years, mainly due to the response of the Cohesion Policy to the economic crisis, taking into consideration all the elements included in the ToR we will examine the eligibility rules on housing: The geographical differences within EU 27 (old and new Member States); Different regulatory framework on construction of new or existing housingted); Energy efficiency and renewable energy (EE/RE) components within existing and new constriction of housing; Reporting regulation for energy-efficiency expenditure; The 4% rule on expenditure on housing. Slide 5 June 2011 Housing EIB

PwC However Constraints Housing is a national competence, so generally ineligible for Structural Funds, but: Since 2007 the new Member States (EU-12) have been able to invest up to 2% of their total ERDF in the field of housing (such as refurbishment of common parts of the building, energy-efficiency operations); (within the framework of integrated urban plans) – article 7.2 of the ERDF regulation. Since 2009 an additional 4% of ERDF can also be spent on energy efficiency improvements and on the use of renewable energy in this housing stock. This measure also applies to EU-15 (therefore to all Member States), with the condition that social cohesion is supported – article 7.1a of the ERDF regulation. -As part of social cohesion the emphasis is expected to be on social and co-operative housing, but at local discretion market housing can be included as well. -Also Structural Fund can be used to provide assistance for marginalised communities - Roma and others (potentially including new housing developments), although there is no EU definition of marginalised communities yet. However, in the new Member States where housing has been eligible throughout the programme apparently only 0.77% of their ERDF allocation has been used for housing. There is therefore a clear tension between what is desirable to ensure necessary for viable projects and what is being accomplished under the current programme. Slide 6 June 2011 Housing EIB

PwC Eligible measures and ERDF allocations to housing Slide 7 June 2011 Housing EIB

PwC The 5 objectives of the study 2. Housing in the programming cycle and transition to the next cycle Task 2: Identify which countries have exploited the opportunities offered in the regulatory framework to incorporate housing in their OPs, to what extent and through what mechanism. Minimum 5 countries will be selected to give detailed description of the results. Based on the analysis of Objective 1 and knowledge and experience we have collected we will select and further elaborate on a minimum of 5 countries (especially on those of importance to JESSICA), from which 2 will be related to energy efficiency in housing. In Objective 3 from the countries we selected we will use them again to describe practical model within JESSICA (Objective 3, Phase 2). Slide 8 June 2011 Housing EIB

PwC Information gathering on project typologies Could the platform support us? Which projects (and under which measures) are you investing in using your housing allocation from the ERDF? Have you considered using JESSICA for any of these projects? We are particularly looking for examples of mixed-use urban developments including social or affordable housing. Slide 9 June 2011 Housing EIB

PwC The 5 objectives of the study 3. Support the housing embedded in JESSICA operations; Highlighting the relevant dimensions to develop conceptual and practical models to embed housing in JESSICA operations considering the UDFs perspective on projects Development of a taxonomy of housing development projects Identification of the most appropriate funding opportunities Identification of the most appropriate governance structures Development of exemplary conceptuals models integrating opportunities for housing in JESSICA transactions Analysis of current and past JESSICA operations and of the potential for further inclusion of housing development projects into the existing UDF prototypes Development of UDF tipology for housing projects Analysis for the potential application of the conceptual models to JESSICA priority countries Review of JESSICA housing operations in Lithuania and Estonia Application of the conceptual models to JESSICA priority countries Phase 1 Phase 2 Phase 3 Slide 10 June 2011 Housing EIB

PwC The 5 objectives of the study 4. Specific issues for in-depth analysis Topic 1:State Aid issues in social housing: State Aid Issues will be considered during objective 3 in general, but we will also elaborate on the key aspects to be considered in social housing, which we find useful. In our team we will benefit from the legal expert on State Aid in order to develop this topic. Topic 2: Energy expenditure in housing : In view of the relevance of energy in housing and population at risk of energy poverty consider effective management, eligible expenditures, monitoring/reporting options. Topic 3: Using existing technical assistance tools to facilitate the incorporation of housing into JESSICA operations: There seems to be a scope for using the EIB-funded technical assistance facilities, to help managing authorities to establish and monitor the activities of UDFs. Topic 4:The role of sustainable housing in improving resilience to climate change impacts in urban areas: the role of ESCOs in social housing: Housing and construction policies offer great potential for reducing green house gas emissions and for protecting people from negative climate change impacts, such as temperature increases and extreme weather events. Topic 5:Housing policies and investments as means of inclusion of marginalised communities – the case of Roma in Eastern European and Balkan countries: Considering the issues related with housing investment as a means of inclusion. In the framework of the Decade of Roma inclusion ( ), this study will review the action plans adopted by a number of concerned countries inside and outside the European Union (e.g. Czech Republic, Slovakia, Hungary, Bulgaria, Romania, Serbia and Bosnia and Herzegovina). Slide 11 June 2011 Housing EIB

PwC The 5 objectives of the study 5. Conclusions and recommended Action Plan. The results of the extensive analysis described above will be combined into an Action Plan. This will present a set of recommendations on the opportunities to adapt the present JESSICA operating mechanisms and the existing UDF structures to include housing development projects as well as on the proposal and scope of the new housing development fund. In addition, the in-depth analysis will provide useful insights and their results will inform the recommendations and the action plan. The proposed action plan will present an indicative timetable displaying the measures which could be implemented in the short, medium and long term. Furthermore, the proposed measures will be differentiated according to the complexity of the changes they imply for the existing JESSICA operating mechanisms. Slide 12 June 2011 Housing EIB

PwC Our organisation Management Team and Expert Team Assignment Manager Paul Grosvenor Assignment Director Fabio DAversa European Investment Bank DG REGIO Christine Whitehead, LSE Kathleen Scanlon, LSE Tom Bridges Zoe Jankel Giulia MacagnoKrisztina Szenci Velia Leone Legal expert SF regulation and State Aid CEB Slide 13 June 2011 Housing EIB Horizontal Studies Stakeholder Group

PwC Working Plan ACTIVITYJUNE 2011JULY 2011AUG 2011SEPT 2011OCT 2011NOV Housing embedded in JESSICA operation 4 5 Closing 2 - During Next programme period Focus 1 Analysing policy context End of 6 months assignment Analysing housing DEC 2011 Prep.Focus Output: Inception Report Specific issues in-depth analysis Prep. Focus Kick-off meeting Prep. Focus Closing presentation Output: Interim Report Output: Final Report Slide 14 June 2011 Housing EIB

Contact details © 2011 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. Fabio DAversa, PwC Christine Whitehead, LSE Kathleen Scanlon, LSE Zoe Jankel, ARUP Krisztina Szenci, 621