Addressing urban development challenges calls for large investments, adequate technical and managerial skills, which often are scarce in cities and towns. Against this backdrop in the programming period 2007 to 2013, the Commission in cooperation with the EIB and the Council of Europe Development Bank proposed a new initiative: JESSICA - Joint European Support for Sustainable Investment in City Areas. It is an optional financial instrument intended to address market failures (i.e. lack of investment funds to finance integrated urban renewal and regeneration projects) and facilitate accelerated investments in urban areas in the context of Cohesion Policy. JESSICA is not a new source of funding for Member States, but rather a new way of using existing Structural Funds grant allocations to support urban development projects.9 By complementing existing financing arrangements, it serves as a tool for financing projects regarding regeneration and development of urban areas and it is conducive to combining subsidies, loans and other financial products for this purpose. Also, it is a tool for stimulating private sector investment in integrated urban development through the use of market-driven instruments and as such is expected to leverage EU Structural Funds' contributions and mitigate some of the risks associated with complex urban development projects. Therefore, JESSICA is an instrument very well suited for investments in PPPs and its use addresses some of the issues encountered in particular in connection with revenue-generating PPP projects.
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9 EIB, JESSICA: A New Way of Using EU Funding to Promote Sustainable Investments and Growth in Urban Areas, 2007.