JESSICA JOINT EUROPEAN SUPPORT FOR SUSTAINABLE INVESTMENT IN CITY AREAS Implementing JESSICA in the South-East Cohesion Region, Czech Republic EVALUATION STUDY English version May 2010 This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. Implementing JESSICA in the South-East Cohesion Region, Czech Republic Evaluation Study Introduction “JESSICA stands for Joint European Support for Sustainable Investment in City Areas. This initiative is being developed by the European Commission and the European Investment Bank (EIB), in collaboration with the Council of Europe Development Bank (CEB). Under new procedures, Member States are being given the option of using some of their EU grant funding, their so-called Structural Funds, to make repayable investments in projects forming part of an integrated plan for sustainable urban development. These investments may take the form of equity, loans and/or guarantees. JESSICA is not a new source of funding for Member States, but rather a new way of using existing Structural Fund grant allocations to support urban development projects.” (EIB, Jessica 2008) This Evaluation Study was prepared based on the contract of 11 November 2009 between the client and author. The text is based on documents and information available as of elaboration date hereof and shown in the secondary literature chart. The study reflects and states truly all relevant information known to the author on the topic. Nevertheless, the author shall not be liable for possible changes in parameters, information and/or forecasts in future or for possible damage incurred due to a decision of economic or non-economic nature based on the information named or not named in this Study. Client: European Investment Bank - Jessica Task Force Clients Representative: Christos Kontogeorgos Office (street, city): 100, boulevard Konrad Adenauer, L-2950 Luxembourg Tel., Fax: tel.: +352 4379 83071, fax: +352 4379 63099 E-mail, web-page: [email protected], www.eib.org Author: eCBA s.r.o. Authors Representative: Petr Halámek, Ph.D. Office (street, city): Wurmova 6, Brno, 602 00, Czech Republic Seat (street, city): Neumannova 52, Brno, 602 00, Czech Republic Tel., Fax: +420 602 513 254, fax: +420 537 036 825 E-mail, web-page: [email protected], www.ecba.cz Brno, 5 May 2010 Petr Halámek, Ph.D. CEO, eCBA s.r.o. Team members: Petr Halámek, Ph.D. Team Leader, Project Management and Evaluation Pavel Grégr, Ph.D. Urban Area Analysis Petr Tesař JESSICA Implementation and Case Studies Pavel Černý Legal Issues and State Aid Veronika Konečná Financial and Economic Evaluation of Case Studies Content: 1 EXECUTIVE SUMMARY ...................................................................................................... 8 2 GOALS, METHODOLOGY AND INPUT DOCUMENTS .................................................................. 15 3 KEY ACTORS ................................................................................................................ 18 4 URBAN ENVIRONMENT ANALYSIS ....................................................................................... 25 4.1 Socio-Economic Profile of Brno ............................................................................. 25 4.1.1 Demographic growth and its consequences ..................................................... 27 4.1.2 Residential .................................................................................................... 28 4.1.3 Economy ...................................................................................................... 31 4.1.4 Innovative infrastructure ................................................................................ 33 4.1.5 Functional Brno city region ............................................................................. 35 4.1.6 Traffic position and traffic situation ................................................................. 36 4.2 Strategic and concept documents – identification of the city’s problems ................... 38 4.2.1 City development strategy as the formulation of the development concept ......... 39 4.2.2 City Economic Development Concept (KERM) ................................................... 41 4.2.3 New Brno Masterplan ..................................................................................... 41 4.2.4 General Residential Development Plan – update 2008 ....................................... 42 4.2.5 Residential Development Strategy (2009) ........................................................ 42 4.2.6 General Development Plan for sports facilities in Brno (2007) ............................ 43 4.2.7 Development Programme for the South Moravian Region (update 2009) ............ 44 4.3 Complex projects ................................................................................................. 45 4.3.1 Brno brownfields ........................................................................................... 45 4.3.2 South Centre ................................................................................................. 47 4.3.3 Ponava ......................................................................................................... 50 4.3.4 Revitalization of Old Ponávka ......................................................................... 51 4.3.5 Slatina Barracks ............................................................................................ 52 4.3.6 Janáček Cultural Centre ................................................................................. 52 4.3.7 Královo Pole Station....................................................................................... 53 4.4 PPP projects ........................................................................................................ 54 4.5 Problems (market failures) in city development ...................................................... 54 5 DEMAND ESTIMATE ....................................................................................................... 57 5.1 Integrated Urban Development Plans of Brno ........................................................ 58 5.1.1 IUDP I .......................................................................................................... 58 5.1.2 IUDP II ......................................................................................................... 61 5.1.3 IUDP III ....................................................................................................... 67 5.2 Resumption of IUDP Projects Recommended for JESSICA ....................................... 68 5.3 Strategy Projects of South Moravian Region ........................................................... 70 5.4 Other JESSICA Type Projects ................................................................................ 72 5.5 Intersection between market failures and identified demand ................................... 74 5.6 Example of project concept revision ...................................................................... 76 5.6.1 Project description ......................................................................................... 77 5.6.2 Setting of project model ................................................................................. 77 5.6.3 Revision of investment costs, operating revenues and costs .............................. 78 5.6.4 Considered options ........................................................................................ 79 5.6.5 Grant + JESSICA option ................................................................................. 80 5.6.6 Resulting financial indicators and project cash-flow .......................................... 81 6 SELECTION CRITERIA ..................................................................................................... 83 6.1 Compliance with Land Development Priorities and Objectives and with IUDP ............ 85 6.2 Financial and Socio-Economic Return .................................................................... 85 6.3 Project Preparation State ..................................................................................... 89 6.4 Project Holder Character ...................................................................................... 89 6.5 Project and applicant assessment by the bank ....................................................... 90 7 MODEL PROJECTS ASSESSMENT ........................................................................................ 91 7.1 Assessment Methodology ..................................................................................... 91 7.2 Model Projects Assessment .................................................................................. 92 7.2.1 Cultural Centre .............................................................................................. 93 7.2.2 Sports Centre ................................................................................................ 94 7.2.3 Traffic Infrastructure ..................................................................................... 95 7.2.4 Social Infrastructure ...................................................................................... 97 7.3 Positioning .......................................................................................................... 98 8 LEGAL IMPLEMENTATION PREREQUISITES .......................................................................... 100 8.1 Issues of state aid