EIBURS “Urban Development Funds in Europe: Opportunities, Structures, Operations“
Presentation Luxembourg 2 February 2012 Wolfgang Breuer
Univ.-Prof. Dr. Wolfgang Breuer Univ.-Prof. Dr. Michael Nadler Chair of Finance Chair of Real Estate Development RWTH Aachen University TU Dortmund University Templergraben 64 August-Schmidt-Straße 6 D-52056 Aachen D-44227 Dortmund Phone +49/241/8093649 Phone +49/231/7557906 2 Feb. 2012 Fax +49/241/8092163 Fax +49/231/7552415 Wolfgang Breuer [email protected] [email protected] www.bfw.rwth-aachen.de www.immo.tu-dortmund.de 1 Introduction
1. Introduction
2. Research approach JESSICA = Joint European Support for Sustainable Investment in City Areas − Joint initiative launched by the 3. First & second steps Commission with the EIB and CEB to
• Promote the use of financial engineering instruments for sustainable urban development in the context of Cohesion Policy • Develop public-private partnerships • Assist Member States in designing and implementing these revolving instruments, in co-operation with regions, cities, national and regional financial institutions and other investors
Our EIBURS Project = “Urban Development Funds in Europe: Opportunities, Structures, Operations“
• Analyse the entire structure around UDFs
2 Feb. 2012 • Within an d ou ts ide of JESSICA Wolfgang Breuer • Research on three major levels with two university partners 2 Introduction
1. Introduction European Commission 2. Research approach Structural Fund Grants
3. First & second steps Member State or Region
Level Holding Fund 1 ((g)of Member State or Region)
Level Invest- Return Invest- Return 3 ment flow ment flow Urban Urban Development Development- Cities Fund I Fund II Equity Equity Banks Return Return Level Loan Loan flow flow (public, private) 2 Guarantee Guarantee Project I Project I Other investors Project II Project II (public, private) Project … Project …
Level 1 =“ Macroeconomic” Level 2 Feb. 2012 Level 2 = “Microeconomic” Level Wolfgang Breuer Level 3 = Combining Level 1 and 2 for the „added value“ of JESSICA 3 Introduction
1. Introduction
2. Research approach Prof. Dr. Wolfgang Breuer Prof. Dr. Michael Nadler 3. First & second steps Dominique Schaeling Stefan Thiel Chair of Finance Chair of Real Estate Development School of Business and Economics School of Urban and Regional Planning RWTH Aachen University TU Dortmund University
Fields of research: Fields of research: •Corporate Finance •Real Estate Economics and Finance •Portfolio Management •Financial Engineering in Urban Dev. •Real Estate Economics and Finance •Sustainable Regional and Urban Dev. •Cultural Corporate Finance, Ethical Inv. •Real Estate Project Development
2 Feb. 2012 Level 1 Level 2 Wolfgang Breuer
4 Level 3 Research approach – Level 1
1. Introduction
2. Research approach Research Team RWTH Aachen University 3. First & second steps
Objective: Develop a method to determine cities eligible for funding through UDF by an indicator-based macroeconomic analysis
TtTarget group: Managing Authorities ofSf regions or Member States → systematic assistance and transfer of knowledge
Procedures: A macroeconomic analysis of sustainable development for cities is needed as a basis to comppygare the efficiency of funding for several financial instruments of the capital market for urban finance → cities eligible for UDF 2 Feb. 2012 Wolfgang Breuer
5 Research approach – Level 1
1. Introduction Status quo for the determination of urban funding targets from the Operational Programmes 2007 2013: 2. Research approach −
3. First & second steps Define the In the EU 12 names of cities e.g. in Czech Republic “Subjective“ Black box Define the In the EU 15 number of cities e.g. Brandenburg Selection of cities E.g. Population Thresholds number in Spain
Development “Objective“ Data based indicators E.g. in France FdiFunding nee dfd for urban development E.g. growing cities Types of cities in Romania
Competition of specific projects E.g. Brussels
─ Black b ox – subjec tive crit er ia are opaque → NblkbNo black box – objec tive crit er ia ─ No foundation – objective criteria are unexplained → Foundation – in research results ─ Simplicity – too simple to capture the complex → Reasonable simplicity – capture situation? the comppylexity 2 Feb. 2012 ─ High variation – member states and regions choose → Adequate variation – general Wolfgang Breuer different (sometimes combined) selection procedures method with slight adaptations 6 Research approach – Level 1
1. Introduction Our approach for the determination of funding targets:
2. Research approach 1.Sustainability comparison 3. First & second steps 2 Method: Principal Component Benchmark Analysis
Input: Indicators for sustainable ssed indicator development ee Cities Compr Result: Distance to the benchmark Compressed indicator 1
2.Efficiency of funding Method: Data Envelopment Analysis
Input: Change in indicators for ed indicator 2 sustainable development, funding type (!) Compress Result: Movability Compressed indicator 1
3.Combining the results UDF-Candidates Area Input: Distance and movability ability vv
2 Feb. 2012 Result: Funding type candidates Mo Technical-Assistance- Wolfgang Breuer Grants Area 7 Distance Research approach – Level 1
1. Introduction BiBasis: Sust a inabilit y compari son among citi es 2. Research approach Method: A principal component analysis (with rotation) 3. First & second steps Input: Higg,pyh number of indicators, for example Urban Audit Key Indicators Output: Small number of (compressed) indicators that are sufficient to describe the differences in sustainabilityyg among the cities
2 Feb. 2012 Wolfgang Breuer
8 Research approach – Level 1 Working on the input: The input is crucial for robust results! 1. Introduction Test the robustness of the revealed small indicator sets over time and among 2. Research approach nations: • Urban Audit Key Indicators for cities of Germany, Poland, UK 3. First & second steps • Two time frames: 1999−2002 and 2003−2006 with their average values • Small set: Determined indicators by the PCA with rotation which are sufficient to represent at least 70 % of the variance in the data (each indicator explains at least 10 %) Different indicators over time Nation and time frame and nations: Our method needs to be adapted for each any any d d -2006 -2002 -2006 -2002 -2006 -2002 nn nn 33 99 33 99 33 99 mm mm tifime frame and dfh for the UK 199 Indicators Ger 200 Ger 199 Pola 200 Pola 199 UK 200 Car journey to work x objects of comparison! Cars x Children day care x Rotation with its strong Children h househ hold ldsx redtifiditduction of indicators Domestic burglary x Employees of employables x suitable only for static Household size x comparison? Dynamic ISCED 1 2 x x approach should be based ISCED 5 6 x Male representatives x on more indicators! Population xxxx Population change 1 x x The initial indicators need to Population density x be chosen carefully for our Price public transport x x 2 Feb. 2012 Road accident deaths x own indicator set (pyramid Wolfgang Breuer Unemployment rate x covering all levels – project, Working age population x 9 urban, regional, national) Research approach – Level 2
1. Introduction
2. Research approach
3. First & second steps Research Team TU Dortmund
Objective: Identification and monetarisationof sustainability effects for Integrated Urban Development Projects and development of a method for controlling those projects
Target group: UDF management → systematic assistance and transfer of kldknowledge
Procedures: Screening, scoring and feasibility of projects, financial engineering and asset allocation for UDFs, deviation analysis of projects
2 Feb. 2012 Wolfgang Breuer
10 Research approach – Level 2
1. Introduction
2. Research approach 1. Conception of UDFs
3. First & second steps 2. Feasibility study of UDFs 2012 3. Sustainability analysis
-Categorisation of indicators to measure sustainability effect -Development of a straight monetary assessment -Development of operationalisation methods -Analysis of active UDFs → Indications for research approach
What’s new? The approach goes be yond the state of the art: ¾Monetarisation of sustainability effects in a transparent and comprehensible way ¾Multi-level approach, a key factor for decision support of sponsoring ¾Target I: Acceptance on the practical level (process innovations) 2 Feb. 2012 ¾Target II: Finding empirical evidence of sustainability effects Wolfgang Breuer
11 First & second steps
1. Introduction Start of EIBURS-Program: October/November 2010
2. Research approach First steps: 3. First & second steps 1. Launch of our website ¾ Consolidation of information on JESSICA and our EIBURS project on Urban Development Funds → www.immo.tu-dortmund.de/EIBURS/ 2. Organisation of a networking meeting in Dortmund on August 26 th 2011 ¾ Title: “Urban Development Funds in Europe: Opportunities, Structures, Operations” ¾ Invitation of European universities working on JESSICA , EIB staff , Managing Authorities and urban development practitioners 3. Definition of main focus on level 1 and 2
Second steps: 1. Organisation of a networking meeting in Aachen on April 27th 2012 ¾ Title: “Efficient Allocation of Structural Funds for Regional and Urban Development” ¾ Invitation of European universities working on JESSICA, EIB staff, Managing Authorities and urban development practitioners 2 Feb. 2012 2. Organisation of visits of urban development funds in operation Wolfgang Breuer 3. Further elaboration and extension of research on level 1 and 2 12 Thank you very much for your attention!
Univ.-Prof. Dr. Wolfgang Breuer Univ.-Prof. Dr. Michael Nadler Chair of Finance Chair of Real Estate Development RWTH Aachen University TU Dortmund University Templergraben 64 August-Schmidt-Straße 6 D-52056 Aachen D-44227 Dortmund Phone +49/241/8093649 Phone +49/231/7557906 Fax +49/241/8092163 Fax +49/231/7552415 wolfgang.b reuer@ rwth -aachdhen.de mihichae l.na dl@tdler@tu-dtdortmund dd.de www.bfw.rwth-aachen.de www.immo.tu-dortmund.de
2 Feb. 2012 Wolfgang Breuer
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