Preparatory Study on the application of JESSICA in the Apulia Region Foggia Final Report Summary - Barletta-Andria-Trani March 2010 BARI Brindisi This document has been produced with financial assistance from the European Union. Taranto Lecce The opinions expressed herein should not be considered as the official positions of the European Union under any circumstances. CERTET - Centro di Economia regionale, dei trasporti e del turismo March 2010 This study is the result of joint work by the Centro di Economia Regionale, dei Trasporti e del Turismo (CERTeT), the Bocconi University of Milan and Gruppo Finanziaria Internazionale (Finint) and has been finalised in a single document by the European Investment Bank (EIB). The study was commissioned by the EIB from CERTeT and Finint following a request submitted by the Apulia Region, on 19 February 2009, to benefit from the programme of preparatory studies for the JESSICA programme currently taking place in Italy and in other Member States of the Union, thanks to co-funding from the European Commission and the EIB. The purpose of the study was to examine the potential methods for applying the JESSICA (Joint European Support for Sustainable Investment in City Areas) initiative to the Apulia Region's ERDF Operational Programme for 2007-2013, in the belief that this tool could play an important role in implementing the Operational Programme itself, in particular by making the implementation of the sustainable urban development strategy it contains more effective. Specific interest was expressed by the Region in determining the potential to use financial engineering instruments like JESSICA to support the "San Raffaele del Mediterraneo Hospital" project in Taranto and, consequently, this project was examined as a pilot project. The document presents a series of elements that require further examination because the potential scenarios are based on assumptions that need to be confirmed by the Regional authorities. The decision to proceed with implementation of the Initiative cannot in fact be taken before the Administration has made a number of decisions. A discussion with the regional authorities is therefore essential at this point in order to allow work to be done together to establish the subsequent steps and finalise the work that has been done so far. List of main acronyms MA Management Authority R. C. Regional Council AMAT Azienda per la Mobilità nell’Area di Taranto (Taranto public HSRM San Raffaele del Mediterraneo Hospital transport company) IRCSS Istituto di Ricovero e Cura a Carattere Scientifico (research AO Azienda Ospedaliera (hospital trust) hospital) APQ Accordo di Programma Quadro (framework programme VAT Value Added Tax agreement) JESSICA Joint European Support for Sustainable Investment in ARPA Agenzia Regionale Protezione Ambiente (regional City Areas environmental protection agency) R. L. Regional Law ASI Area di Sviluppo Industriale (industrial development area) CSG Community Strategic Guidelines ASL Azienda Sanitaria Locale (local health authority) PA Public Administration BAT Barletta Andria Trani PAR Piano di Attuazione Regionale (regional implementation EIB European Investment Bank plan) BURP Bollettino Ufficiale Regione Puglia (official journal of Apulia) CIP Community Initiative Programme EC European Commission GDP Gross Domestic Product CIPE Comitato Interministeriale di Programmazione Economica PIRP Programmi Integrati di Riqualificazione delle Periferie (interministerial committee for economic planning) (integrated suburb upgrading programmes) COCOF Coordination Committee of the Funds PIS Programmi Integrati Settoriali (integrated sectoral CNR Consiglio Nazionale delle Ricerche (national research council) programmes) D.G.R. Delibera Giunta Regionale (regional council resolution) PIT Programmi Integrati Territoriali (integrated local programmes) DRAG Documento Regionale di Assetto Generale (regional general structure document) SMEs Small and Medium Sized Companies DSR Documento Strategico Regionale (regional strategic POI Programma Operativo Interregionale (interregional document) operation programme) ECU European Currency Unit PON Programma Operativo Nazionale (national operation programme) ERP Edilizia Residenziale Pubblica (public residential building) POR Programma Operativo Regionale (regional operation EAFRD European Agricultural Fund for Rural Development programme) ERDF European Regional Development Fund PPP Public-Private Partnership HF Holding Fund PROTECT Project for the Organic Recovery of Coastal Areas SF Structural Funds with Transnational Cooperation ESF European Social Fund PRU Programmi di Recupero Urbano (urban recovery programmes) UDF Urban Development Fund CG Central Government PRUSST Programmi di Riqualificazione Urbana di Sviluppo SPV Special Purpose Vehicle Sostenibile del Territorio (urban upgrading and sustainable SSR Sistema Sanitario Regionale (regional healthcare system) local development programmes) CIT Communication and Information Technology RSA Residenze Sanitarie Assistenziali (residential healthcare IRR Internal Rate of Return establishments) EU European Union QSN Quadro Strategico Nazionale (national strategic UTAP Unità Territoriali per l’Assistenza Primaria framework) (local primary assistance units) SLL Sistema Locale del Lavoro (local labour system) Contents 4. URBAN PROGRAMMES (page 37) 1. BACKGROUND (page 2) What are the problems and opportunities in the Apulian What has been financed by Urban Programmes in the past? - Urban CIPs and the Urban Italia Programme in Apulia…………………… 33 - Bari, Foggia and Lecce (Urban I)……………………………………………………….. 38 - Past visions...............…………………………………………………………………… 3 - Mola di Bari and Taranto (Urban II)…………………………………………………… 39 - Difficulties of the Apulian production system………………………………… 3 - Taranto URBAN II CIP ………………………………………………………………………… 40 - Population and demographic changes.........………………………………… 4 - Brindisi and Bitonto (Urban Italia)……………………………………………………… 41 - Distribution of the population across the region...………………………… 6 - Bitonto Urban Italia Programme…………………………………………………………. 42 - Infrastructure and environmental conditions.......……………………….. 8 5. JESSICA AND ITS APPLICATION IN APULIA 2. ANALYSIS OF THE 2007-2013 ERDF OP (page 10) What could be the first JESSICA-type UDF? (page 43) What is the urban dimension of the ERDF OP in the Region? - Key elements of the JESSICA Initiative.....……………………………………. 44 - The framework............……………………………………………………………… 11 - Potential application models…........………………………………………………… 49 - The 2007-2013 ERDF OP……………………………………………………………… 12 - UDF scenarios in Apulia…...................…………………………………………… 51 - The JESSICA Community Initiative……………………………………………… 14 - A UDF dedicated to rationalising healthcare service………………………. 52 - Urban dimension of the ERDF OP in the Apulia Region...…………… 17 - The typical benefits of JESSICA tools………………………………………………. 55 - More easily "JESSICAble" OP actions.........………………………………. 19 -The benefits of a UDF dedicated to rationalising healthcare services 56 - Cross-subsidies and ineligible costs.....…………………………………….. 25 - Architecture of the JESSICA Initiative in Apulia…………….………………. 57 3. LOCAL PLANNING (page 27) 6. THE PILOT PROJECT (page 59) What “JESSICAble” opportunities does it contain? How could the new Taranto HSRM be financed? - General framework.......…………………………………………………………… 28 - The “San Raffaele del Mediterraneo Hospital” (HSRM) project………… 60 - ERDF OP Integrated Plans..……………………………………………………...... 29 - Implementation tools and sources of funding…………………………………… 61 - Integrated Urban Regeneration Programmes..……………….....……… 30 - Option 1: a contract with JESSICA……………………………………………………. 62 - Area Social Plans................……………………………………………………...... 30 - Alternative structures: leasing vs project financing…………………………. 66 - Integrated suburb upgrading programmes (PIRP)…..................... 31 - Option 2: leasing………………………………………………………………………………… 67 - Large Area Strategic Plans..……………………………………………………...... 32 - Comparison between a works contract and leasing….……………………… 69 - Overall vision…………………………………………………………………............ 35 - Option 3: JESSICA's action in the leasing structure…..……………………. 71 - Comparative analysis of construction instruments…..……………………… 73 Key results of the Study and Conclusions…................. 77 Appendix 1: The Regional Budget and the ERDF OP….…………. 79 1 Introduction Sustainable urban development is one of the priorities of the European Union's current Structural Funds Programme Period (2007- 2013), which aims to pursue cohesion policies and promote competitiveness in the widened European Union. Structural Funds Programme Periods The focus on cities, and the desire to resolve the serious economic, environmental and social problems that are concentrated in them, began in the early 1990s when, building on the encouraging results achieved by a 1994-1999 number of pilot projects, the European Commission launched the URBAN I (1994-1999) and URBAN II (2000-2006) Community Initiative Urban I Programmes, focused on the economic and social regeneration of cities and of neighbourhoods in crisis. The recognised importance of urban development policies has grown during 2000-2006 the current programming cycle (2007-2013) because they are seen as one of the key instruments for implementing the Göteborg and Lisbon Urban II strategies: making Europe a strongly competitive area, increasing employment and innovation rates, requires investments to be made in cities, Lille Action Programme (2000) which are the driving