European Union European Regional Development Fund

Call for Expressions of Interest - Ref. IR-899

Title : JESSICA Holding Fund Andalucía

JESSICA (Joint European Support for Sustainable Investment in City Areas) is an initiative developed by the European Commission and the European Investment Bank (EIB), in collaboration with the Council of Europe Development Bank (CEB), in order to promote sustainable investment, growth and jobs in urban areas. Under new procedures, Member States are being given the option of using part of their European Union (EU) Structural Fund allocation to make repayable investments in projects forming part of relevant plans defined by the Andalucía municipalities in accordance with Regulation (EC) No 1080/2006 and the specific urban, administrative and legal context of Andalucía (Integrated Plans for Sustainable Urban Development or Integrated Plans). The focus of these Urban Projects (public private partnerships or other projects included in an Integrated Plan for Sustainable Urban Development) will not be only alleviating deprivation, but supporting measures, enhancing wider competitiveness and employment objectives by investing in urban assets promoting, for instance, high-technology clusters, universities and the knowledge industry, tourism and other service sectors.

In the context of the National Strategic Reference Framework for the period 2007-2013, submitted by the Ministerio de Economía y Hacienda, and of the FEDER Operational Programme for Andalucía for 2007-2013 (Andalucía OP), the autonomous government of the Spanish Region of Andalucía (Junta de Andalucía or the Managing Authority) has decided to support the financing of Urban Projects in line with the JESSICA initiative.

The Junta de Andalucía and EIB signed a Funding Agreement on 8 May 2009 (the Funding Agreement) establishing the JESSICA Holding Fund for the Spanish region of Andalucía (JHFA). The Junta de Andalucía contributed to the JHFA an initial amount of EUR 85 714 286 from its Andalucía OP allocation for 2007-2013. In this regard, 70% of this amount is cofinanced by the European Regional Development Fund (ERDF).

The JHFA has been established as a separate block of finance for the purpose of investing funds in repayable investments, in public-private partnerships or other Urban Projects in co-operation with the banking sector in Andalucía. The functioning of JHFA is supervised by its Investment Board (Investment Board of the JFHA), currently consisting of the members appointed by the five Regional Councils (Consejería de Turismo, Comercio y Deporte, Consejería de Cultura, Consejería de Vivienda y Ordenación del Territorio, Consejería de Agricultura y Pesca and Consejería de Economía y Hacienda) of the Regional Government of Andalucía.

In this context, the EIB is launching a call for expressions of interest (Call for EoI) with the aim of selecting Urban Development Funds (UDFs) that will receive resources from the JHFA to implement Urban Projects.

The funds available from the JHFA are divided into 2 separate lots and the selected UDFs will receive the support of the JHFA Local Officer, who is in charge of mandate and advisory activities in Andalucía and coordination with EIB headquarters.

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If you wish to participate in this Call for EoI, please forward your Expression of Interest (EoI) enclosed in a sealed envelope inside another, one bearing instructions not to open the inner envelope, which should be marked:

DO NOT OPEN:

Ref.: IR-899

Subject: JESSICA Urban Development Fund Andalucia

Deadline for reception of Expressions of Interest: May 6 th, 2010

and delivered:

(a) either by registered post, to the following address:

EUROPEAN INVESTMENT BANK For the attention of Mrs. Isabelle Rei Purchasing and Administrative Services Division 98-100 boulevard Konrad Adenauer L-2950 LUXEMBOURG

by May 6, 2010 at the latest, as evidenced by the postmark,

(b) or by handing it in (by messenger or courier) at the reception desk of the

EUROPEAN INVESTMENT BANK For the attention of Mrs. Isabelle Rei Purchasing and Administrative Services Division 98-100 boulevard Konrad Adenauer L-2950 LUXEMBOURG

Applications must be posted or handed in by May 6, 2010, at the latest (up to midnight in the case of delivery as described in (b) above).

The receipt, dated and signed by the employee at the reception desk who receives the tender (reception desk open 24 hours a day), will provide evidence of the application having been handed in.

Applications which:

a) are not sent in two sealed envelopes; b) are not sent or delivered by hand to the EIB before the specified deadlines (as evidenced by the

postmark or receipt signed and dated by the officer at the reception desk); c) do not conform to the provisions of this Call for EoI;

will not be accepted.

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The applicants must take account of the following provisions:

1. The selection of UDFs will proceed in three stages:

a. Stage 1: EoI which are not excluded in accordance with the Exclusion Criteria as presented in Annex 3, will be assessed on the basis of the Selection Criteria.

b. Stage 2: All applicants that meet the Selection Criteria will be invited to submit their Offers (including detailed Business Plans prepared in line with Annex 3). The Offers will be evaluated on the basis of the Award Criteria, as described in Appendix A of Annex 3.

c. Stage 3 : The applicants that have submitted the most favourable Offers may be invited to a negotiated process in order to do the final selection. For the sake of clarity, this stage is not compulsory.

2. Offers must be firm and non-revisable, free of taxes and duties, the EIB being exempt therefrom under the Protocol on the Privileges and Immunities of the European Communities.

3. The applicant must declare that it has taken note of the terms and conditions of the Call for EoI and has had the opportunity to gauge the scope and quality of the services required, as well as the possible difficulties.

4. Applicants cannot invoke any error, inaccuracy or omission in their applications to call any contract into question or to attempt to have any contract amended.

5. The EIB reserves the right to reject any application that fails to comply with the specifications of this Call for EoI.

6. Applications must be drawn up in writing in English (offers in other languages will not be accepted). Applicants must correspond to the specifications item by item.

7. The EIB reserves the right to award contracts to the applicants of its choice, in accordance with the criteria set out in the specifications, or not to award a contract to any applicant. The Bank may cancel the procedure at any time. Applicants should only participate in the tendering process on the understanding that they would not be entitled to any form of compensation, should the EIB decide to interrupt the procurement procedure of any of the lots before the contract is signed.

8. Participation in this Call for EoI involves acceptance of all the terms and conditions mentioned in the present Call for EoI and the conditions of the specifications.

9. The following documents shall form an integral part of this Call for EoI:

• Annex 1 -“Template for Expression of Interest” • Annex 2 -“Declaration to be made by the applicant” • Annex 3 -“Technical specifications” (Terms of Reference)

10. EoI must be drawn up on paper in duplicate, i.e. one original and one copy, clearly marked as “Original” and “Copy”. An electronic copy in MSWord or PDF format on a single CD-ROM marked with the name of the company shall also be submitted.

11. Applicants that have submitted EoI may be invited to a presentation, if the EIB so decides.

12. Before the assignment begins, the selected applicant must undertake to comply with all current laws and provisions and to obtain all relevant permits required to provide the services described.

13. Applicants will be informed by post of the outcome of their applications.

14. Any dispute concerning procurement conducted by the EIB falls under the jurisdiction of the European Court of Justice.

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Any requests for additional information should be addressed in writing by April 29, 2010 , at the latest to Mrs Isabelle Rei , fax: +352-437968167, e-mail: bei.asa@eib.org. The EIB will send its replies to all applicants before the deadline for submission of applications.

Privacy statement The personal data provided by you will be processed in accordance with Regulation (EC) 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data. The information requested for the call for tender is necessary in order to assess your tender and will be used solely for that purpose under the authority of the EIB purchasing division (ASA), in accordance with the EIB guide for procurement, approved by the Management Committee of the EIB. Please note that for your tender to be considered, it may be mandatory to answer some or all of the questions in the declaration to be made by the tenderer. The mandatory/optional nature of these questions is outlined in the specific call for tenders document. In order to assess the tender, the personal data provided by you will be accessed by members of the Selection Panel and the Directorate which requested the call for tender. Upon request, access to this data may be granted to the EIB’s Office of the Chief Compliance Officer, the legal service or the Inspectorate General. The data of the successful candidate shall be retained for the duration of the contract, plus two years in the central archives, unless these are needed in the context of litigation or claims. The data of unsuccessful candidates shall be retained for four years, unless these are needed in the context of litigation or claims. You have the right to access and rectify or update your data. You can exercise these rights by contacting the Head of the ASA division (bei.asa@eib.org). You also have the right to have recourse at any time to the European Data Protection Supervisor.

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TABLE OF CONTENT ANNEX 1 - Template for Expression of Interest ............................................................7 ANNEX 2 – Declaration to be made by the applicant ..................................................11 ANNEX 3 – Terms of reference ...................................................................................13 APPENDIX A - Award Criteria ....................................................................................25 APPENDIX B – Financial Conditions...........................................................................27 APPENDIX C – Financial Forecasts............................................................................35 APPENDIX D – Economic Growth...............................................................................41 APPENDIX E – Key Exprts Availability Declaration.....................................................43 APPENDIX F - Guidelines ...........................................................................................45

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ANNEX 1

TEMPLATE FOR EXPRESSION OF INTEREST

____________________________________________ (name of an applicant)

EXPRESSION OF INTEREST

____________________________________________ (place of conclusion)

________________________________ (date)

(Stamp of the applicant)

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1. Information about the applicant

1.1. General information about the applicant

Name of the applicant

Address (registered office)

Registration number (copy of certificate to be attached)

Telephone No.

Fax

Email

* In case the EoI is submitted by a consortium, it will be necessary to include the information contained in chart 1.1 for each of the members of the consortium. The aforementioned information must be accompanied by a cooperation agreement signed by each of the members, including their commitments to participate in this Call of EoI, as well as the identification of the percentage that each of them represents in the consortium. In any case, there should be a leading party within the consortium holding more than 50% of participation.

1.2. Person authorised to submit the EoI*

Name, surname

Position

Contacts:

Address

Telephone No

Fax

Email

* In case of the EoI being submitted by a consortium, a power of attorney or a cooperation agreement authorizing the applicant to submit the EoI and the Offer and to represent the consortium at all stages of the selection procedure on behalf of the partners jointly applying for the contract.

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1.3. Person for communications (if different from paragraph 1.2)

Name, surname

Position

Contacts:

Address

Telephone No

Fax

Email

By submitting this EoI, the undersigned declare(s) that:

1. the applicant is fully aware that resources of the JHFA, which aim is to finance Urban Projects included in Integrated Plans for Sustainable Urban Development, are provided by the EU structural assistance 2007– 2013;

2. the information contained in this EoI and its Annexes is complete and correct in all its elements.

ENCLOSED: 1. Declaration to be made by the applicant

2. Supporting documents (to be completed by the applicant) related to Exclusion and Selection Criteria:

a) …

b) …

c) …

…

_______________ ______________ _________________ (position) (name, surname) (signature)

� having taken note of this Call for EoI, � having taken note of the specifications and the documents referred to therein, � and having completed the requisite declaration (see Annex 2), hereby undertake

unconditionally, in accordance with the provisions of the aforementioned documents, to supply the services on the terms set out in this Call for EoI, this application being binding upon the applicant, however, only if its acceptance is notified by the EIB within 150 days of the date of formal submission of the EoI.

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ANNEX 2

DECLARATION TO BE MADE BY THE APPLICANT

1. Name of the applicant......................................................................

2. Type of business ..............................................................................

3. Address (registered office) ...................................................................

..........................................................................................................................

..........................................................................................................................

4. Number and date of entry in trade register

.........................................................................................................................

5. Represented by (name and position):

..........................................................................................................................

(In case of the EoI being submitted by a consortium, a power of attorney or a cooperation agreement authorizing the applicant to submit the EoI and the Offer and to represent the consortium at all stages of the selection procedure on behalf of the partners jointly applying for the contract)

6. Are there any liens or charges outstanding against the organisation at a commercial court (or any other relevant authority)?

..........................................................................................................................

7. Is the declarant in receivership (or the subject of equivalent proceedings)?

..........................................................................................................................

If so:

(a) date of the receivership order: ............................................................

(b) on what terms is the declarant authorised to carry on its activity?

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Specify in particular:

the name and address of the receiver(s):

............................................................................................................

the date and period of validity of the authorisation given by the official receiver or the court to continue the business or activity:

............................................................................................................

8 . Is the declarant or any of the persons authorised to act on its behalf in liquidation?

..........................................................................................................................

..........................................................................................................................

9. Has the declarant been the subject of any sentence, disqualification or penalty regarding the proper pursuit of commercial or industrial occupations, or under the rules on prices and competition?

..........................................................................................................................

..........................................................................................................................

10. Has the declarant or any of the persons authorised to act on its behalf a conflict of interest that may affect the performance of the tasks referred to into this Call for EoI?

..........................................................................................................................

..........................................................................................................................

11. Has the declarant complied with its tax and social obligations, with prudential requirements compulsory to financial institutions, where applicable?

..........................................................................................................................

..........................................................................................................................

12. Is the declarant authorised to carry out business in Spain under the applicable regulatory framework?

..........................................................................................................................

• The declarant certifies that all information submitted in the previous paragraphs is correct.

Done at ................................................. (date) .................................................

STAMP NAME(S) SIGNATURE(S)

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ANNEX 3

TERMS OF REFERENCE

I. GENERAL INFORMATION

JESSICA responds to the request by several Member States and the European Parliament to give special attention to the need for urban regeneration and urban investments, and is based on the scarcity of investment funds to finance integrated urban renewal and regeneration projects in pursuit of more sustainable urban communities. JESSICA has therefore been launched with a view to provide new opportunities for managing authorities responsible for the current generation of cohesion policy programmes by:

• ensuring long-term sustainability through the revolving character of the Structural Funds contribution to UDF specialising in investing in Urban Projects;

• creating stronger incentives for successful implementation by beneficiaries, by combining loans and other financial instruments;

• leveraging additional resources for Public-Private Partnership (PPP) and other projects for urban development with a focus on sustainability/recyclability in the regions of the EU;

• contributing financial and managerial expertise from specialist institutions such as ElB, CEB, other International Financial Institutions (lFIs) and other financial institutions.

Junta de Andalucía acknowledges the fact that its region has a considerable demand for urban regeneration projects in both the largest cities and the small and medium towns. Regeneration needs are observed both in dilapidated parts of consolidated urban areas and in sites that have been abandoned due to the present real estate crisis that has so thoroughly affected Andalucía. Regeneration can only be successful if the long-term development of the urban area in question is ensured, which requires actions to stimulate job creation and economic growth in the area. There is therefore a significant market potential in Andalucía for projects that drive urban regeneration and business enhancement. This fact was recognised by the Junta de Andalucía, with the possibility of including in the Andalucía Operational Programme Urban Projects that may be financed through the JESSICA initiative shall be included in an Integrated Plan for Sustainable Urban Development and shall essentially be aimed at:

� revitalising decaying urban areas and abandoned industrial sites;

� revitalising cultural and tourism infrastructure; or

� strengthening the business environment, notably Small and Medium Enterprises (SMEs) and innovative enterprises.

In accordance with the Funding Agreement, the JHFA should channel its funds to Urban Projects through UDFs selected in accordance with a process initiated by this Call for EoI.

II. AMOUNT ALLOCATED FOR THE CALL FOR EOI 1. The amount of JHFA funds to be allocated in response to this Call for EoI is EUR 80.000.000

minimum. The amount is divided into 2 lots. The value of each lot is EUR 40.000.000. This amount could be slightly increased by the JHFA, after having discounted or added the final fees and interests charged to JHFA by EIB. This amount could also be increased if Junta de Andalucía contributes additional funds to the JHFA pursuant to the Funding Agreement.

2. Any applicant may apply for both lots. If this is the case, a single EoI shall be submitted, indicating

that the applicant applies for two lots and specifying the conditions applicable to each lot (if different).

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III. PORTFOLIO DIVERSIFICATION

In order to ensure proper allocation of JESSICA funds across the Region of Andalucía, in line with the stipulations of the Andalucía OP, a system of diversification of the project portfolio needs to be implemented. This diversification should proceed according to the following scheme: * 40% of the total amount applied for shall be invested in projects to be developed in cities with less

than 50.000 inhabitants and * 60% of the total amount applied for shall be invested in projects to be developed in cities with more

than 50.000 inhabitants

IV. SUBMISSION OF EXPRESSIONS OF INTEREST

Each EoI submitted by an applicant shall be prepared in accordance with the template attached as Annex 1 and shall be accompanied by the following annexes:

• A declaration to be made by the applicant in the form attached as Annex 2; • Supporting documents.

V. EVALUATION OF EXPRESSIONS OF INTEREST

1. EXCLUSION CRITERIA

Applicants will be excluded from participating in this Call for EoI if any of the following Exclusion Criteria apply to them:

a) they are bankrupt or are being wound up, are having their affairs administered by the courts, have entered into an arrangement with creditors, have suspended business activities, are the subject of proceedings concerning those matters, or are in any analogous situation arising from a similar procedure provided for under national laws or regulations;

b) they have been convicted of an offence concerning their professional conduct by a judgment

which has the force of res judicata;

c) they have been guilty of grave professional misconduct proven by any means which the contracting authorities can justify;

d) they have not fulfilled their obligations relating to the payment of social security contributions or

the payment of taxes in accordance with the legal provisions of the country in which they are established or with those of the country of the contracting authority or those of the country where the contract is performed;

e) they have been the subject of a judgment which has the force of res judicata for fraud,

corruption, involvement in a criminal organisation or any other illegal activity detrimental to the Community’s financial interests;

f) they are guilty of misrepresentation in supplying the information required by the contracting

authority for participation in this Call for EoI or who have not provided such information. Applicants must show that they are not in one or more of the situations listed above by providing the following evidence in relation to the items mentioned above:

a) In relation to items (a), (b), and (e) above, relevant extract(s) from the judicial record or, failing that, equivalent documentation issued by a competent judicial or administrative authority in the country where they are established, not earlier than 6 months before the deadline for the submission of the applications. Depending on the national legislation of

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the country in which they are established, these documents must relate to entities with legal personality and/or natural persons, including any person with powers of representation, decision-making or control in relation to the applicant.

b) In relation to item (d) above, the most recent certificates issued by the competent social

security and tax authorities of the country where they are established. Where such certificate is not issued in that country, this can be replaced by a declaration on oath or solemn statement made before a competent judicial or administrative authority, a notary or a competent professional or trade body in that country. The declaration or statement provided must be dated less than 4 months before the final date for submission of applications. Depending on the national legislation of the country in which they are established, these documents must relate to entities with legal personality and/or natural persons, including any person with powers of representation, decision-making or control in relation to the applicant.

c) In relation to items (c), and (f) above, a solemn declaration stating that the applicant is

not guilty of professional misconduct, and is supplying all the information required under this Call for EoI in good faith and without misrepresentation. This solemn declaration should be signed by the person(s) empowered to represent the applicant and sign the contract if the applicant is selected and dated less than 4 months before the final date for submission of applications.

2. SELECTION CRITERIA

Non excluded applications will be assessed on the basis of the following Selection Criteria:

1. The EoI is prepared in accordance with Annex 1 and all supporting documents are provided;

2. Declarations indicated in Annex 2 are completed to the satisfaction of the EIB;

3. Experience in the relevant targeted market: minimum three years in the management of equivalent or similar projects to those foreseen in this Call for EoI.

4. If applicants are financial entities or non-financial private corporations: minimum rating of BBB+/BBB1 provided by either Standard & Poor's Rating Services (a division of The McGraw-Hill Companies Inc.), Moody's Investors Service Inc. or Fitch Ratings Ltd.

5. If applicants are non-financial public entities: a clear evidence (supported by legal opinion) that their ultimate risk either through external guarantee or through implicit State/Local Entities support shows a minimum rating of BBB+/BBB1 provided by either Standard & Poor's Rating Services (a division of The McGraw-Hill Companies Inc.), Moody's Investors Service Inc. or Fitch Ratings Ltd.

6. Should the applicant be a consortium, the leading party (which should hold more than 50% of participation) shall provide the rating indicated in the above paragraphs 4 or 5.

VI. SUBMISSION OF OFFERS

Applicants who are not excluded and meet the Selection Criteria will be invited to submit Offers, including a Business Plan for use of resources received from the JHFA, demonstrating economic viability of the investment strategy. Business Plans shall contain all the elements described below:

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Business Plan

1. Key experts

An appropriate expert team will be established and is available in order to complete the Business Plan’s objectives. The following persons will act as Key Experts of the Business Plan team:

NO.

NAME AND SURNAME

SCOPE OF DUTIES ENTRUSTED

DESCRIPTION OF THE EXPERT’S EXPERIENCE

1.Key Director of the UDF

2.Expert on Urban Projects

3.Project finance expert

4.Team manager for monitoring and reporting

5.Expert for Structural Funds (ERDF) mechanics and eligibility criteria

Should any of the Key Experts not be at the direct disposal of the applicant, the applicant shall present a declaration of other entities confirming availability of the Key Expert (according to template provided in Appendix E).

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2. Investment Strategy

The applicant should describe its investment strategy for the Business Plan (the Investment Strategy). The Investment Strategy will be the starting point for the future Portfolio of Urban Projects (the Portfolio of Urban Projects) that the UDF will have to develop as described in Section IX hereof.

The Investment Strategy will describe, at least, the following matters:

a) its compliance with the objectives established in Andalucía OP and with the eligibility conditions stipulated in the “Guidelines for JESSICA-compliant Integrated Plans for Sustainable Urban Development” (Appendix F);

b) the targeted market, geographical coverage and other relevant criteria and objectives of the future Urban Projects;

c) the conditions for financial products in accordance with the description of the UDF financial products provided for in the Terms of Reference (as described in Section XI hereof);

d) the system of selection and diversification of the future Urban Projects.

The presentation of the applicant’s Investment Strategy may refer to best practices and benchmarks in this field.

The applicant may include in the Investment Strategy some provisional cases of future Urban Projects to be selected in order to give more consistency to the proposal. With that purpose, the projects available in the study published by AFI and published in EIB’s website may be included.

In any case, for single Urban Projects presented by large cities (more than 50.000 inhabitants), the maximum amount to be allocated is EUR 15 million. For single Urban Projects presented by small and medium size cities (less than 50.000 inhabitants), the amount allocated should not exceed EUR 5 million. These limits will apply to JHFA funds financing UDF, that is to say, from Operational Programme for Andalucía 2007-2013.

3. Provisional financial forecasts and operational budget of the UDF

In this part, the applicant shall indicate if the application is for one or two lots and shall describe the corresponding operational budget of the UDF.

The provisional financial forecasts and operational budget of the UDF should be presented according to the template provided in Appendix C, based on the projects’ criteria and other aspects included in the Investment Strategy.

4. Methodology for the identification and evaluation of future Urban Projects

The applicant shall describe the methodology for the identification and evaluation of the Urban Projects to be financed by the UDF.

The methodology shall contain provisions assuring that the selected Urban Projects to be financed by the UDF will comply with:

a) the objectives established in Andalucía OP (including quantitative outputs) and the Guidelines for “JESSICA-compliant Integrated Plans for Sustainable Urban Development” (Appendix F);

b) the expected economic rate of return of the Urban Projects, including a description of the social and environmental benefits resulting from its execution, according to the financial model of the UDF and the conditions for the financial products, as described in sections X and XI hereof.

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Based on the applicant’s knowledge of the local market and local needs, the applicant shall play an active role in terms of cooperation with local authorities as regards identification, selection and financing of Urban Projects.

Finally, the applicant should also include a full description of the internal scoring system to be applied for the selection of Urban Projects.

5. The policy of the UDF concerning exit from Urban Projects

The applicant shall describe the rules governing the exit of the UDF from Urban Projects as described in Appendix B.

6. Legal and ownership structure of the UDF

The applicant shall provide information on the proposed legal structure and ownership structure of the UDF.

The UDF may be established as: joint stock companies, limited liability companies, investment funds, and a separate block of finance within a financial institution or other organisational forms requiring a special legal regulation/statute.

The applicant shall identify the UDF Manager who will be either the applicant itself or a member of its group as defined in article 4 of the Spanish Stock Exchange Market Act (Law 24/1988 of 28th of July), or a member of the consortium or their respective groups.

7. The by-laws of the UDF

The applicant shall provide a draft of the by-laws of the UDF, if necessary, or equivalent regulations and information about the licences required by the competent Spanish authorities, according to the regulatory framework for the activities that the UDF will develop.

8. Governance structure

The applicant shall describe the management, administration and accounting procedures, which will be applied in the exercise of the function of UDF. The applicant shall also present the governance provisions of the UDF, including internal control procedures, as well as the risk management procedures that will be applied to the operations of the UDF. The governance provisions shall also define the mechanism intended to guarantee the compliance of Urban Projects with eligibility criteria under the Andalucía OP, applicable local and regional rules, and obtaining all relevant authorisations and licences relevant thereto, as well as the fulfilment of all obligations arising from the ERDF cofinancing according to regional, national and European rules.

For that reason, the applicant should pay particular attention to the procedures to be adopted to ensure the compliance of Urban Projects with eligibility rules and technical/economic quality requirements. The applicant shall propose the structure and operation of the UDF management system, which should ensure a proper appraisal of the Urban Projects.

Project appraisal could be carried out internally, within the UDF, or through external support and report, and should ensure that Urban Projects are feasible from the economic, social and technical points of view and that they comply with the eligibility criteria set up in the EU Structural Funds Regulations1, in

1 According to the Commission Regulation (EC) No. 1828/2006 of 8 December 2006, amended by Commission Regulation (EC) No 846/2009 of 1 September 2009, setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No

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the national applicable rules, and in the FEDER Operational Programme for Andalucía 2007-2013. It should, of course, also analyse the risks involved, the financial structure and the expected revenues for the different stakeholders of the Urban Projects in order to set up the conditions for the participation of the UDF in the financing of these projects.

The UDF Manager will have to propose a practical, cost-effective method to achieve a satisfactory management and governance system.

9. Term and financial conditions of the Operational Agreement with the JHFA

The applicant should propose the requested term of the Operational Agreement to be concluded between the UDF and the JHFA. This term must be compliant with the timing of the applicant’s Investment Strategy.

The applicant will also propose the financial conditions of the Operational Agreement. As an indication, the description of the general structure of its main financial conditions is included in Appendix B.

In any case, the Operational Agreement must comply with the requirements set forth for this Agreement in the EU Structural Funds Regulations.

10. Annual management fee

The applicant should indicate the percentage to be claimed by the UDF Manager, as annual management fee, of the total JHFA funds managed, as described in Section XII hereof.

11. Co-financing

An important factor in the evaluation of the Offer will be the ability of the UDF Manager to provide co-financing, either in monetary term or in kind and to raise finance from other private sources. For that reason, the applicant shall present the strategy for obtaining potential financing from external sources to the JHFA with a view to co-financing suitable Urban Projects including its undertaking, if any, for this respect.

The applicant must distinguish whether the co-financing commitment is carried out inside or outside the UDF. In the first case, the applicant will determine the mechanisms for remunerating the different resources (equity, loans or equivalent instruments) of the funding recieved by the UDF, if any. In the second case (co-financing with the UDF to Urban Projects) the applicant will indicate the subordinatory relationships that may exist between UDF financing and external financing, if any.

Likewise, the applicant shall indicate if it proposes any risk sharing mechanism, under the Operational Agreement, related to the potencial losses for the JFHA arising from the financing to Urban Projects developed by the UDF.

12. Reutilisation of Resources

The UDF Manager undertakes to repay to JHFA the funding received by the UDF, subject to any risk sharing element which might be established. Detailed procedures for the returning of the funds shall be described, including the winding-up provisions of the UDF. If possible, the plan for the reutilisation of resources returned to the UDF from investments in Urban Projects should be also described.

1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (Official Journal of the European Union L371 of 27.12.2006)

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VII. NEGOTIATIONS AND CONCLUSION OF THE OPERATIONAL AGREEMENT

The applicants, whose scores are the highest with respect to each lot, may be invited to negotiations concerning the terms and conditions of the Operational Agreement once their applications have been accepted by the Investment Board of the JHFA. The negotiation could be developed in several phases.

Once the previous phases have been concluded, with or without negotiation, EIB shall make a proposal on the award of contracts to the Investment Board of the JHFA for approval. Such proposal shall include the key terms and conditions of the Operational Agreement to be signed between EIB, acting as the entity that has to administer and operate the JFHA according to the Funding Agreement, and the selected UDF.

VIII. OPERATIONAL AGREEMENT The Operational Agreement shall, notwithstanding any other terms set out in this Terms of Reference, include, at least:

a) the relevant rights and obligations of the UDF and the UDF Manager according to the Business Plan of the UDF presented by the applicant in its Offer, the conditions established in the Terms of Reference, and the results of the selection process;

b) the financial conditions that will apply to the JHFA funds delivered to the UDF. An outline of the main financial conditions of the Operational Agreement is provided in Appendix B;

c) the events of default under the Operational Agreement and the liabilities that the UDF and the UDF Manager will assume in this particular situation.

In any case, the Operational Agreement must fulfil the requirements set forth in this Terms of Reference, in the EU Structural Funds Regulations and in any other applicable EU Regulations, Directives or Guidelines, in particular EU Rules on State aid, as well as other applicable rules to the nature of the Urban Projects and the source of its financing.

IX. PORTFOLIO OF URBAN PROJECTS, FINAL FINANCIAL FORECASTS AND OPERATIONAL BUDGET OF THE UDF

Once the Operational Agreement is signed as described in Section VIII, the selected UDF will provide the JHFA with the definitive Portfolio of Urban Projects to be financed, within a time period to be agreed by the parties to the Operational Agreement [six months maximum] from the date of signature. The Portfolio shall include, at least, the following matters for each of the Urban Projects:

a) General description of the project and planned schedule.

b) Justification for the selection of the project.

c) Identification of the project’s risks.

d) Accordance of the project’s objectives with the objectives set forth by the JESSICA initiative (as described in the Andalucía OP). This means that the project shall contribute to the achievement of the Andalucía OP objectives, including quantitative outputs, as stipulated in the relevant measures of Andalucía OP and in the Appendix D of the Call of EoI. The contribution to the achievement of the quantitative outputs established in Andalucía OP will depend on the nature of the project. It is understood that the project will not necessarily address all areas of economic growth and the quality of life improvement measures.

e) Forecast of the expected economical rate of return of the project, including a description of the social and environmental benefits resulting from the execution of the project (the economical rate of return should be presented according to the financial conditions indicated in Section XI hereof).

f) Structure of the financing of the project.

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The Portfolio of Urban Projects shall contain all the Urban Projects that the selected UDF considers that could be potentially financed under the Operational Agreement. For that reason, the Portfolio contains sufficient Urban Projects to reflect the fact that some of the potential Urban Projects included may not be implemented under the Operational Agreement. The UDF shall only be used to finance Urban Projects included in the Portfolio, other than under unforeseen circumstances. In particular, such circumstances may be related to the approval of Integrated Plans as a result of which certain Urban Projects become ineligible for JHFA financing. In such cases, it will be permitted to substitute the Urban Projects contained in the Portfolio with other Urban Projects of a similar nature (according to the methodology for the identification and evaluation of future Urban Projects). The details of such substitution shall be specified in the Operational Agreement.

The selected UDF shall elaborate and present in the abovementioned and agreed term the definitive Business Plan, including the financial forecast and the operational budget of the UDF. The Business Plan should take into consideration the financial model of the UDF described in Section X hereof and the conditions for the financial products described in Section XI hereof. The prior consent of the Investment Board of the JHFA to the definitive Business Plan shall be required.

X. FINANCIAL MODEL OF THE UDF

1. In accordance with the JESSICA concept, the UDF should be active partners for regional and local

authorities in stimulating individual area development, while investing in Urban Projects with a long-term perspective.

2. The key implementation parameters of the Financial Model of the UDF are as follows:

a) The UDF will invest, using the financial conditions established in the Operational Agreement (see

Appendix B), in PPPs or other Urban Projects included in Integrated Plans.

b) The boundary conditions for financial products are described in Section XI hereof.

c) The JESSICA funds allocated to the UDF should be fully invested in Urban Projects according to the following scheme:

i. 60% of the allocated funds shall be invested by 31 December 2013 ii. 90% of the allocated funds shall be invested by 31 December 2014 iii. 100% of the allocated funds shall be invested by 30 April 2015

Non-compliance with the abovementioned terms shall result in a reduction in the management fee to be paid, according to a pattern presented in the Business Plan, whilst an earlier allocation of the funds should be a plus.

d) The UDF will compensate the UDF Manager for the administration services provided by them in the form of a management fee (as described in section XII hereof).

XI. CONDITIONS FOR THE FINANCIAL PRODUCTS 1. As described in section X, the UDF will invest in PPPs or other Urban Projects included in an

Integrated Plan. 2. The UDF shall not re-finance acquisitions or participations in Urban Projects that have already

been completed.

3. Urban Projects receiving grant assistance from an Operational Programme of the Structural Funds may be supported by the UDF, according to the relevant EU Structural Fund Regulations.

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4. Conditions for the UDF financial products shall be based on the following guidelines:

• The sum, before discounting, of all cash flows from operating and investing activities of the Urban Projects (including initial expenditure) must be positive.

• The profitability of an Urban Project without UDF support should be lower than normally required by the market, so that with typical forms of financing the selected Urban Project could not have been realised [internal rate of return (IRR) for selected Urban Project’s investors would be lower than required under the normal market conditions applicable to such an Urban Project].

• The terms and conditions of financing from the UDF should be sufficiently more advantageous in relation to market terms, so that:

i. due to UDF financing, the rate of return for equity investors reaches a fair market level (Normal Equity IRR);

ii. due to UDF financing, the rate of return for providers of debt reaches a fair market level (Normal Debt IRR).

• The intensity of UDF financing should not exceed the level sufficient to encourage a project promoter to execute an Urban Project. Following the investment from UDF, the rate of return for equity investors and providers of debt shall not exceed the Normal Equity IRR and Normal Debt IRR respectively.

• For the purpose of the Business Plan:

i. Normal Equity IRR shall be established at a fair market level;

ii. Normal Debt IRR shall be established in line with the interest rates applicable by Spanish banks for the purpose of financing similar projects.

• The determination of the terms and conditions of project financing from the UDF must take place before the Urban Projects are implemented and must be performed on the basis of the anticipated financial and economic results, presented as part of the financial analysis (i.e. as part of the financial plan of the Urban Project).

• The terms and conditions of engaging the UDF should be determined on an individual basis.

XII. MANAGEMENT FEE 1 The UDF Manager will be entitled to receive a management fee (Management Fee) in accordance

with the EU Structural Funds Regulations for their origination and servicing of the Portfolio of Urban Projects. The Management Fee shall be calculated as a percentage of the pro rata share (i.e. on the funding contributed by JHFA to the UDF) of the average outstanding amount of the Portfolio. The detailed calculation criteria will be based on the UDF proposal included in the Business Plan.

2 The Management Fee shall include all fees and expenses to be incurred by the UDF Manager in

relation to administration services and other auxiliary activities and the UDF shall not have the right to request remuneration from the selected Urban Projects with respect to the same.

3 The level of Management Fee payable to the UDF Manager shall be indicated in the Business

Plan submitted by each applicant. In any case, the Management Fee to be paid according to JFHA resources may not exceed, on an annual average, 3% of the capital contributed from the JHFA to the UDF. It is suggested to applicants to propose a Management Fee linked to three components of its activity: (i) An annual “project appraisal fee” to cover costs related to the project appraisal

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process; (ii) An annual ”structural funds monitoring fee” to cover costs of monitoring, reporting and other services related to ensuring the compliance with structural funds regulations and (iii) An annual “loan administration fee” until its final maturity date. It is expected a substantial decrease over time of the Management Fee according to the evolution and workload requested to the UDF.

4 The annual Management Fee paid according to JFHA resources will not exceed the time period for

eligibility of costs under the EU Structural Funds Regulations, that it is to say, December 31, 2015. After that period, the Management Fee will be paid subject to the repayments made by the UDF under the Operational Agreement.

5 The Management Fee shall be calculated as a percentage of the funds allocated trough the UDF

to the selected Urban Projects. 6 The Management Fee shall not be calculated on the interest earned on any deposits of funds

allocated to the UDF by the JHFA. 7 The detailed provisions concerning the Management Fee shall be established in the Operational

Agreement. 8 The JHFA will not be entitled to receive any fees or commissions under the Operational

Agreement. 9 The Operational Agreement will include the rights, obligations and liabilities associated with the

services that the UDF Manager provides to the UDF.

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25

APPENDIX A

Award criteria

Criterion Sub criterion Description and assessment rules Scoring for criterion

Understanding of the objectives, clear definition of goals, targeted market including geographical coverage, terms and conditions for financial products.

The applicant shall define the goals of the UDF and objectives of its Investment Strategy, the targeted market and geographical coverage of the UDF and shall present the terms and conditions for UDF financial products.

Assessment rule: - level of understanding of JESSICA objectives and manifestation of this comprehension in the Investment Strategy will be assessed, together with the terms and conditions of the JHFA financing, which shall ensure optimisation of the utilisation of funds in order to achieve the objectives of the Investment Strategy.

Financial forecasts, operational budget, UDF legal and ownership structure.

The applicant should produce an operational budget for the UDF based on the expected financial results of the UDF participation in Urban Projects but identifying the risk areas for particular Urban Projects

Assessment rule: credibility of the financial forecasts and compliance with the Investment Strategy, potential of the Portfolio of Urban Projects and robustness of the ownership and the legal structure of the UDF.

Methodology for the identification and evaluation of Urban Projects, risk management procedures.

The applicant should describe the methodology for identifying and evaluating Urban Projects. The methodology should contain provisions ensuring Urban Projects comply with the eligibility conditions established in the “Guidelines for JESSICA-compliant Integrated Plans for Sustainable Urban Development” and risk management procedures that will be applied to the Operations of the UDF.

Assessment rule: contribution of the Investment Strategy to Andalucía OP quantitative outputs, methodology, compliance of the Investment Strategy with the eligibility conditions. Potential amount of external funds and probability of acquiring additional funds at the level of the Investment Strategy. Reliability and credibility of the risk management procedures.

1. INVESTMENT STRATEGY and GOVERNANCE STRUCTURE

Management, organisational capacity, accounting and internal control procedures, monitoring and reporting.

The applicant shall prove the organisational capacity of the UDF, including the strength of the team proposed for delivering the tasks and the potential to identify Urban Projects, provisions on the professionalism, competence and independence of the management and description of accounting procedures. The applicant should also present the corporate governance provisions for the UDF, including internal control procedures. A particular attention will be dedicated to the proposals on coordination with the Managing Authority and the JFHA and on relations with regional and local authorities and private investors.

0-50

2. ANNUAL MANAGEMENT FEE The applicant should indicate the percentage claimed from the total JHFA funds managed by the UDF.

Assessment rule: the lower the level of the Management Fee indicated by the applicant, the greater the number of points awarded. 0-25

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3. CO-FINANCING

The applicant shall indicate the amount that he will invest in the UDF or lend to the UDF if it is selected. He should also present the strategy for obtaining additional financing from external sources from JHFA with a view to co-financing Urban Projects or participating in the UDF, including its eventual external co-financing undertaking.

Assessment rule: The larger the amount invested and the higher the capacity to attract private funds to the initiative at the UDF or project level, the higher the points awarded. The risk sharing mechanism will also be taken into account.

0-25

TOTAL 100

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APPENDIX B

FINANCIAL CONDITIONS OF THE OPERATIONAL AGREEMENT

1.- Structure of the financial conditions for the Operational Agreement JHFA funds will be provided by EIB (acting as JHFA Manager) to the selected UDF, to provide a funding instrument bearing equity, loans or other equivalent financial instruments to Urban Projects (On-Funding Agreements).

The remuneration of the JHFA funds provided will depend upon the income generated by the Portfolio of Urban Projects of the UDF. The repayment of the JHFA funding will depend on the cash-flow generated by the flows received by the UDF under the On-Funding Agreements (On-Lending Agreements in case of loans, Equity Investment Agreements in case of equity participation, or the specific Financial Agreements that could be signed in case of other equivalent financial instruments) composing the Portfolio of Urban Projects of the UDF.

The On-Funding Agreements will be signed between UDF and the entities that will undertake to develop of the Urban Projects (Final Beneficiaries).

The UDF further undertakes to develop (for the Portfolio of Urban Projects), with the received JHFA funding, a new loan/equity/financial instrument partly funded from the disbursed funds and partly co-financed by external resources. The origination, due diligence, documentation and execution of the Urban Projects will be performed by the UDF in accordance with the methodology for project selection agreed with JHFA and applying all normal standard procedures and governance structure of the UDF.

In this context, JHFA will no have any direct or indirect client funding relationship with each Urban Projects.

2.- Indicative Summary of Financial Terms

Structure Financial instrument of the JHFA funding shall be denominated in Euro.

Contract language

English

Applicable law To be determined

Competent court

To be determined

Form Repayment of JHFA funding will depend on the cash-flow generated by the flows received by the UDF under the On-Funding Agreements included in the Portfolio of Urban Projects.

Limitation of liability

Liability of JHFA will be limited to the amounts disbursed to each UDF under the relevant Operational Agreement.

Co-financing The UDF will finance Urban Projects with external resources from JHFA or third parties. The co-financing share of the UDF shall account for a certain percentage of the total financing of each Urban Project according to the proposal included in UDF’s Business Plan. The commercial co-financing terms will be included in a term sheet to be attached to the Operational Agreement and shall be applied by the UDF in accordance with its external or internal structure. The external co-financing tranche could have seniority in respect of the On-Funding Agreement for the purpose of the priority of repayment by Final Beneficiaries, should that be the case. The interest rate or the remuneration agreed in respect of the external co-financing tranche will be calculated according to the criteria proposed by the UDF in its Business Plan. In case of inside co-financing, the applicant will determine, if applicable, the diverse mechanisms established inside the UDF to remunerate the different resources of the UDF financing.

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The Operational Agreement will incorporate the undertaking of the UDF Manager or third parties in order to secure this external or internal co-financing of the JHFA funds.

Risk sharing rate

JHFA will assume the risk associated with the part of the On-Funding Agreements financed by itself, unless it has been proposed a specific risk sharing mechanism by the JHFA in the financing structure included in the Operational Agreement.

Eligible forms of Urban Projects financing

The nature of the Financial Instrument by means of which the UDF will finance the Urban Projects could be one of the following:

1 Investment loans (tangible and intangible assets).

2 Working capital loans.

3 Quasi equity (participative loans).

4 Equity: shares subscription.

5 Equivalent financial instruments.

Exit strategy of the Urban Projects

Urban Projects Loan Maturity: Minimum 12 months and maximum 20 years including a grace period (for capital repayment), if any. Loans with a fixed repayment profile (both amortising and bullet) are eligible, or subjected to suitable maturity criteria to be established.

Equity Investments: the UDF should propose in its Business Plan a clear exit strategy to be followed when providing Equity Investments. Specific exit options should be foreseen at appraisal stage of each Equity Investment decision.

Equivalent Financial Instruments: equivalent terms as abovementioned instruments according to their nature.

Urban Projects Funding Amount

The maximum financial amount to be invested in an individual Urban Project shall be set ex ante by JHFA and in such a manner as to allow the Portfolio of Urban Projects to be sufficiently diversified following the criteria set-up in the Business Plan of the UDF. The maximum obligor concentration should be provided by UDF in its Business Plan.

Disbursement under the Operational Agreement

Disbursement up-front at the consent of the Investment Board of the JHFA to the Portfolio of Urban Projects and the final Business Plan.

Repayment of the JHFA funds

Repayments over a minimum amount would occur regularly (e.g. quarterly) on a pro rata basis mirroring principal repayments of the underlying On-Funding Agreements covered by JHFA.

Process for the concession of On-Funding Agreements

The amount disbursed by the JHFA to the UDF under the Operational Agreement shall be used exclusively to finance Urban Projects (and for the payment of the Management Fees with the limitations established by the regulations and the Operational Agreement), through the signature between the UDF and the Final Beneficiaries of the Urban Projects of On-Funding Agreements, the terms of which will comply with requirements to be set out in the Operational Agreement.

The amounts disbursed by the JHFA to the UDF can be varied by the JHFA according to the rules defined for the financing of JESSICA operations.

The UDF will be responsible for approving the Urban Projects in accordance with its internal criteria and with criteria indicated in the Business Plan and will comply with the reporting and monitoring requirements of the JHFA including reporting in a standard form on the Urban Projects according to the procedures defined in the Operational Agreement.

The UDF Manager will undertake full management responsibility in respect of the On-Funding Agreements. The UDF will be responsible and shall have full power and authority in particular but without limitation to:

(i) identify, select and evaluate Urban Projects that qualify under the On-Funding Agreements;

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(ii) manage and monitor the proper performance of the On-Funding Agreements obligations;

(iii) exercise tasks and responsibilities given to it under the Operational Agreement;

(iv) monitor the Projects in accordance with diligent banking practice, by reviewing financial statements, assessing the On-Funding Agreement and controlling compliance with each applicable provision; and

(v) inform the JHFA through the agreed reporting mechanisms if an On-Funding Agreement becomes subject to the UDF’s intensive management or if an On-Funding Agreement is classified as non-performing according to the UDF standards.

All amounts disbursed by the JHFA to the UDF shall be disbursed to Urban Projects before a maximum disbursement date to be fixed according to UDF Business Plan.

Re-use of un-disbursed amounts

In the event that by the maximum disbursement date the total amount of funds disbursed by the JHFA to the UDF under the Operational Agreement has not been disbursed to the Urban Projects, the UDF will inform the JHFA accordingly and will be required to approve new Urban Projects to be financed with the un-disbursed amounts. The UDF will have an additional period to be agreed by the parties to re-use un-disbursed amounts (the extended disbursement period). The total un-disbursed amounts from the UDF to the Urban Projects at the end of this extended disbursement period will be repaid to the JHFA as a mandatory prepayment.

Treasury management by the UDF of disbursements by JHFA not yet disbursed to Final Beneficiaries

The JHFA funds disbursed to the UDF shall be kept as deposits, unless otherwise indicated by the JHFA and agreed between the JHFA and the UDF in writing. Interest payable on the JHFA deposits with the UDF shall be comparable to interest rates on similar commercial deposits paid by the UDF to third parties, as reviewed from time to time, for an equivalent maturity period on such funds. Exact terms and conditions for the JHFA deposits or such other arrangements as agreed between the parties shall be defined in the Operational Agreement.

Remuneration of the Operational Agreement

The remuneration and repayment of the JHFA funds, according to the Operational Agreement, will depend on the cash-flow generated by the Portfolio of Urban Projects of the UDF, in particular by the cash generated according to the On-Funding Agreements, both paying the fixed, variable or contingent remuneration of the invested funds in the Urban Projects and/or repayment or divestment of the principal or the capital invested.

Pricing of the On-Funding

On-Lending Agreements: the interest rate for the Urban Projects loans shall ensure that the financial instrument does not entail any element of state aid. Equity Investment Agreements: the remuneration of equity provided to UFD and to the Final Beneficiaries should be based on market conditions without any type of subordination or differentiation to any other shareholder. Other Financial Agreements: equivalent terms as abovementioned instruments according to their nature.

Other conditions of the On-Funding Agreements

The On-Funding Agreements will contain, besides what was previously indicated, the following conditions:

1. On-Funding Agreements shall be denominated in Euro.

2. On-Lending Agreements shall be granted for the period of up to 20 years.

3. Repayment of the principal amount, only in the case of an On-Lending Agreement, may be deferred, upon request of the Final Beneficiaries, until the completion of the Urban Project, but in any case not longer than for 36 months (the grace period) from the date of the first disbursement under the On-Lending Agreement. During the above-mentioned grace period only interest shall be paid by the Final Beneficiaries.

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4. The UDF shall require the Final Beneficiaries’ own funds which are to be used for financing Urban Projects to be disbursed prior to or at the same time of disbursement under the On-Funding Agreement.

5. The Amounts prepaid shall not be re-borrowed.

6. UDF will have the right to enter into On-Funding Agreements only after confirmation of the compliance of proposed Urban Projects with the legal and technical requirements indicated in the Operational Agreement.

7. Amounts shall be disbursed under On-Funding Agreements only after the eligibility of expenses or advance payments has been confirmed in accordance with applicable legislation.

8. Additional support may be granted to the Urban Projects of other financial sources or public entities, which have o not have ERDF cofinancing (for instance, subventions and interest bonus).

9. On-Funding Agreements shall include minimum undertakings in respect of Final Beneficiaries as described in the section below.

Special Undertakings

MINIMUM UNDERTAKINGS FOR THE UDF

1. An obligation on the UDF to pursue the objectives set out in the Operational Agreement, which shall include the obligation to act in accordance with the Investment Strategy as presented in the Business Plan;

2. The UDF shall ensure that, during the time of the Operational Agreement, a dedicated team with appropriate resources, expertise and skills will be permanently dedicated for the Urban Projects;

3. An obligation on the UDF to keep all relevant records2 in accordance with applicable EU laws and regulations, specially in state aid rules;

4. An obligation on the UDF to provide regular reports to the JHFA in a standard form and scope to be indicated by the JHFA in the Operational Agreement;

5. An obligation on the UDF to maintain a separate accounting system or use a separate accounting code for the Operational Agreement down to the level of the Urban Projects;

6. Submission by the UDF of annual accounts for each contribution by the JHFA to the UDF as well as obligations in respect of auditing procedures to be complied with by the UDF;

7. The right of the JHFA to recover any losses incurred by the JHFA due to a breach by the UDF of its obligations under the Operational Agreement, in accordance with suitable market-standard clauses;

8. An undertaking by the UDF that all authorisations, licences, permits, approvals, consents, resolutions, exemptions, filings and registrations (howsoever described) (Authorisations), which it requires to carry on business have been obtained or effected and are in full force and effect and no steps have been taken to challenge, revoke, annul or cancel them, together with an obligation to obtain when required and maintain in full force and effect and renew, where necessary, such Authorisations;

9. UDF shall use all reasonable efforts to assess the creditworthiness of Final Beneficiaries. Funding shall be issued only to Final Beneficiaries complying with eligibility criteria established by the UDF in accordance with credit acceptability criteria to be established in the Operational Agreement. The security package requested to the Final Beneficiary should be in line with standard market practice;

2 This information includes accounting and financial datas, phisic execution and verifiaction datas and audits carried out, as well as all support and execution documentation of the operations. The accounting registries shall include the information established in Annex III of Regulation (EC) 1828/2006.

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10. An undertaking by the UDF and UDF Manager that in carrying out their responsibilities they will act as a diligent business entity. In particular, the UDF shall use all reasonable efforts to assess the creditworthiness of Final Beneficiaries. On-Funding Agreements shall be entered into only with Final Beneficiaries which comply with eligibility criteria established by the JHFA in the Operational Agreement;

11. The UDF have a right to issue JHFA funds only after confirmation of compliance of Urban Projects with the legal and technical requirements indicated in the Rules for Providing State aid and/or major project information. It is being understood however that the Managing Authority shall be the sole responsible party for carrying out any notifications towards the Commission in respect of financial operations where such notifications are required under relevant EU Rules (Rules for Provision of State Support).

MINIMUM UNDERTAKINGS FOR THE BENEFICIARY OF THE URBAN PROJECTS (TO BE INCLUDED IN THE ON-FUNDING)

An undertaking that, in every On-Funding Agreement, the UDF shall provide that the Final Beneficiary shall comply with all obligations imposed on it by EU laws and regulations and any other applicable laws and that the Final Beneficiary shall do such things as may be necessary to allow the UDF to comply with its obligations under EU laws and regulations, any other applicable laws and the Operational Agreement. In particular, every On-Funding Agreement shall provide the following, where appropriate and to the extent applicable:

• The UDF shall take all measures in order to assure that the Final Beneficiary will undertake to complete the Urban Project as it was originally appraised and within the time frame agreed;

• The UDF shall take all measures in order to assure that the Final Beneficiary will undertake to use the funds under the On-Funding Agreement exclusively for the execution of the Urban Project;

• the UDF shall collect and keep necessary accounts and other documents evidencing that the funds were used for the Urban Project in accordance with the applicable EU laws and regulations;

• the UDF shall be entitled to recover any losses incurred due to a breach by a Final Beneficiary of its obligations under the relevant On-Funding Agreement;

• the UDF shall diligently, whether by negotiation or legal action, enforce its claims against the Final Beneficiary;

• all Authorisations, which the UDF and/or the Final Beneficiary requires to carry on a Urban Project shall be obtained or effected, together with an obligation to obtain when required and maintain in full force and effect and renew, where necessary, such Authorisations;

• the Final Beneficiary shall engage in no action or decision contrary to applicable law;

• the UDF shall undertake to ensure that Final Beneficiaries implement and operate the Urban Project in conformity with the environmental laws of the European Union and the country in which the Urban Project is implemented;

• the UDF shall undertake to ensure that Final Beneficiaries comply with the regional, national and European policies in relation to the procurement of required works, goods and services for Urban Projects ultimately financed by the JHFA;

• the UDF shall undertake to ensure that Final Beneficiaries comply with other European horizontal policies, as well as with competence and equal opportunities’ rules.

Events of default under On-Funding Agreements

An On-Funding Agreement shall be classified as being in default (On-Funding Agreement Event of Default) if, amongst others usual in market terms, the conditions set out below occur:

• insolvency, reorganisation, rescheduling of debts, suspension of payments and any other pre-insolvency or bankruptcy procedure affecting the Urban Project or the Final Beneficiary under the On-Funding Agreement;

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• appointment of a receiver, liquidator, administrator, administrative receiver or similar officer in respect of the Urban Project or the Final Beneficiary;

• acceleration or cross-default under any external financing of the Urban Project;

• change of status;

• suspension or cancellation of the rights attached to the On-Funding Agreement;

• Other usual events in standard financing.

Inclusion in the Default List. If there is an Event of Default, the UDF shall inform the JHFA accordingly. Any such information (a Default List) shall include a description and the amount of the On-Funding Agreement and the nature of the Event of Default will vary depending on the nature of the financial instrument used in the On-Funding Agreement. Consequences of an Event of Default: If there is an Event of Default, the UDF shall remain responsible for administration and enforcement of any rights and securities in respect of the On-Funding Agreement and shall remain responsible for all tasks listed in this section including administration and utilization of all collateral or other security arrangement in respect of the affected On-Funding Agreement. Inclusion in the Default List will require additional monitoring in respect of the On-Funding Agreement and additional reporting to the JHFA.

Assignment and Transfer

The UDF shall not transfer, assign, syndicate or sub-participate any of its rights and obligations in respect of the On-Funding Agreements or, otherwise, mitigate or transfer the risk occurring in respect of any On-Funding Agreement without the JHFA’s prior written consent.

The JHFA may transfer its rights and obligations in respect of the Operational Agreement to any entity succeeding the JHFA as a manager of the JESSICA initiative.

Information, publicity and visits

Information concerning the Urban Projects. The UDF shall take all measures in order to ensure that the Final Beneficiaries shall:

a) deliver to the UDF: (1) information in content and in form, and at the times, specified in the On-Funding Agreement or otherwise as agreed from time to time by the parties; and (2) any such information or further document available to Final Beneficiary that the UDF may reasonably require;

b) inform the UDF without undue delay of any material change to the facts submitted to the UDF in respect of the Urban Projects;

c) promptly inform the UDF of: (a) any material litigation that is commenced or threatened against the Urban Project or the Final Beneficiary with regard to environmental or other matters affecting the Urban Project; and (b) any fact or event, which may substantially prejudice or affect the conditions of execution or operation of the Project;

d) provide: (a) the annual financial statements audited by an independent auditor for the Urban Project; (b) such further information on the general financial situation of the Urban Projects as the UDF may reasonably require.

Information concerning the UDF.

The UDF shall: a) transmit on a yearly basis to the JHFA in the following month to its publication, the

annual financial statements audited by an independent auditor and will provide to the JHFA all additional information that the JHFA may reasonably request;

b) immediately inform the JHFA of any changes to its statutes, the text defining its management and administration its share capital composition or a change of control of the UDF;

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c) immediately inform the JHFA if it is required to proceed to an early prepayment of any credit or loan;

e) inform the JHFA about all circumstances or events which could negatively affect the ability of the UDF to comply with its obligations under the Operational Agreement.

Visits: the representatives of the Commission, the European Court of Auditors, the JHFA, the Managing Authority and any other national or European institutions or bodies duly empowered by applicable law to carry out audit and/or control activities shall be allowed to have access to the premises and documents of the UDF, the Urban Projects and the Final Beneficiaries for the purpose of ensuring the legality and regularity of the financial contribution. The UDF shall ensure that the Final Beneficiaries allow persons designated by the JHFA to join the UDF in visits to the sites, installations and works comprising Urban Projects and to conduct such checks as they may wish, and shall provide them, or ensure that they are provided, with all necessary assistance for this purpose. Publicity: the UDF and the Urban Projects shall carry out adequate information and publicity measures in accordance with the provisions of the EU Structural Funds Regulations.

Reporting and Monitoring

UDF shall provide the JHFA with periodical information in a standardised form and scope, as agreed earlier by JHFA jointly with monitoring procedures.

Security Assignment of rights under each On-Funding Agreement in favour of the JHFA. Possibly: Pledge over Shares of UDF, Deposits or any kind of reserve Accounts in favour of the JHFA.

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35

APPENDIX C FINANCIAL FORECASTS AND OPERATIONAL BUDGET OF THE UDF General comments:

• The results and assumptions should be provided on an annual basis (the projections may be prepared for shorter periods, but the results should be aggregated);

• The assumption items listed are a minimum set; if there are any other assumptions with material impact, they should be included.

The attached template consists of the following sections:

The information provided by the UDF applicant in this section includes the assumptions on which the financial projections of the UDF applicant are based. This will enable an evaluation of whether the forecasts are realistic, as well as full comparison of the results of the projections.

I. Macroeconomic assumptions

a) The UDF applicant should provide all the macroeconomic variables taken into account

in the forecast that have an impact on the results;

b) In particular, the UDF applicant must show the forecasted levels of the key interest rate on which the cost of financing the Urban Projects will be based (if there is more than one rate, all rates should be provided);

c) The variables listed are a minimum set and if there are other macroeconomic

variables that have an impact on the results, they should be included.

II. Urban Project financing assumptions

a) The projection should include the assumptions adopted for the purpose of the financial projection;

b) There will be no default assumptions on loans/equity operations;

c) The assumptions concerning the terms of financing the Urban Projects should be

supplemented with other financing parameters if used in the projection, e.g. commission for granting the financing, commitment fee etc;

d) Average equity IRR required, financing costs and guarantee fees are to be in line with

the requirements set out in other sections of this EoI.

e) Other assumptions:

� The projection should include all other assumptions that the bidder considers relevant to the results of the financial projections;

� The amount of external financing obtained by the UDF should be provided on a per year basis;

� The assumed rate of return of the UDF should take into account all cashflows of the

UDF and be calculated using Internal Rate of Return (IRR) methodology.

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III. Results of the projection This section should include all the results of the projection, including:

1. Pro forma balance sheet statements for each year of the projection, which will depend on the final structure of the UDF.

2. Pro forma profit and loss accounts for each year of the projection, which will depend on the final structure of the UDF.

3. Pro forma cash flow statements for each year of the projection.

Example of Projections

During the Preliminary study on the feasibility of the JHFA, AFI has developed a model which can be used as reference for the preparation of the applicants’ Business Plan. Any difference to existing parameters should be clearly justified. Applicants can request a copy of the model (in excel-format) in writing to the following e-mail: clopez@afi.es

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Parameter 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

I-Macroeconomic assumptions CPI (price increase) Interest rate used as the base rate for the financing granted (*) (*) IRS Term, Euribor, Treasury II-Project financing assumptions JFHA Funds Management fee ( % Jessica balance) (*) Time period for eligibility Structural funds monitoring fee ( % JFHA Funds Managed) (**) Jessica Funds to be Managed

Value of loans Value of equity financing

Jessica Funds Management fee ( % Jessica balance) (*)

Unsettled funds (€) Unsettled funds (%)

Loan financing terms Interest rate used (fix rate)

Average margin above the interest rate (floating rate) Average project loan term

Equity terms Average equity IRR from projects

Expected average Pay-back

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Aditional Funds to be Managed Value of loans

Value of equity financing Unsettled funds (€)

Unsettled funds (%) Loan financing terms

Interest rate used (fix rate) Average margin above the interest rate (floating rate)

Average project loan term Equity terms

Average equity IRR from projects Expected average Pay-back

Expected Pay-Back (commissions and costs) Expected Pay-Back(without commissions and costs) III- Results of the projection 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Outgoing Funds

Jessica Loan FI Loan

Jessica Equity

FI Equity

HF Funds Returns

Incoming Funds

HF Funds

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Jessica Loan

FI Loan Jesssica Loan Interest

FI Loan Interest

Jessica Equity FI Equity

Default (€) Net flows (without costs and commissions) UDF IRR (without commissions and costs) Fees Up-front JFHA Funds Cash-Flow

Structural funds monitoring fee ( % JFHA Funds

Managed) (**)

Net flows UDF IRR (with commissions and costs) Total Fees Fees s/ JFHA Initial Funds (*) It will be paid according to HF projects' cash-flows (**) At the following year of the elegible period, according to cash-flows to be repaid to JFHA

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APPENDIX D

ECONOMIC GROWTH AND QUALITY OF LIFE IMPROVEMENTS The following economic growth and quality of life improvements shall be considered in case of assessing the entire programme comprising Urban Projects proposed to be funded by the future UDF. Contribution to the achievement of quantitative outputs established in Andalusia OP will depend on the character of each of the Urban Projects. It is understood that individual projects will not necessarily address all areas of economic growth and quality of life improvements measures.

Area Indicator

Created UDFs

Private financing Leverage of the UDF

Number of financed Urban Projects General indicators

Generated investment

Number of financed Urban Projects

Number of new created or regenerated public spaces

Number of additional jobs in the performing area

Increase in the use of public transport (*)

Increase in the tourists’ flow (*)

1.Urban infrastructure, including for transport and utilities, and rehabilitation and upgrading of cultural

heritage

Generated investment

Number of financed Urban Projects

Number of new business activities and new services in the performing area

Increase in the area’s attraction as object of investment

2. Readaptation of derelict industrial areas

Generated investment

Number of financed Urban Projects

New created companies

New set up business

Number of generated additional jobs

Spe

cific

indi

cato

rs*

3. Facilities for SMEs and innovative firms

Generated investment

* Indicators marked with an asterisk (*) should be analyzed in the appropriated Urban Projects

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APPENDIX E

Done at ................................................. (date) .................................................

EUROPEAN INVESTMENT BANK For the attention of _________________ Purchasing and Administrative Services Division 98-100 boulevard Konrad Adenauer L-2950 LUXEMBOURG

JESSICA HOLDING FUND FOR ANDALUCIA SELECTION OF URBAN DEVELOPMENT FUNDS

KEY EXPERTS AVAILABILITY DECLARATION

As a legal representative of the company ………………….. seated in …………………..registered in the …………………..register with a registration number ………………….., I hereby confirm that the company …………………..will be authorised to engage the following persons:

1. ……………………. (name, surname)

2. …………………….

(name, surname) 3. …………………….

(name, surname) to execute the role of ………………….., for the JESSICA Holding Fund Andalucía. I confirm that upon signature of the contract between ………………….. and European Investment Bank, the above -mentioned list of persons will be delegated to work on the project tasks. Yours sincerely, ……………………. (name, surname) ……………………. (signature)

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APPENDIX F

GUIDELINES FOR JESSICA-COMPLIANT INTEGRATED PLANS FOR SUSTAINABLE URBAN DEVELOPMENT IN ANDALUCÍA

These Guidelines are directed to potential Urban Development Fund (UDF) Managers such as financial institutions or other parties interested in fulfilling the role of UDF Manager, so that they better understand the tasks involved, more specifically with reference to Section VI and IX of Annex 3 of the Call of Expression of Interest (Call of EoI), and take this into account in submitting their Offer. These Guidelines are of interest also to municipalities and other parties interested in obtaining finance from UDFs for the plans and projects they want to undertake. 1. General framework Regulation (EC) No 1083/2006 on general provisions for the EU Structural Funds for the programming period 2007-2013 emphasises the importance of sustainable urban development and the role of cities in achieving economic and social cohesion objectives. Urban development strategies under the Community cohesion policy are delineated in a number of policy documents, such as the Commission Communication on “Cohesion Policy and the cities: the urban contribution to growth and employment in the regions” COM (2006) 385 and the Leipzig Charter on sustainable urban development (May 2007). The document “Promoting sustainable urban development in Europe: Achievements and Opportunities” (DG-Regio, April 2009) summarizes the current approach to the application of innovative strategies for urban regeneration, including through the use of integrated approaches that jointly address the social, economic and environmental issues of urban renewal and development. An Integrated Plan for Sustainable Urban Development (Integrated Plan) comprises a system of interlinked actions which seeks to bring about a lasting improvement in the economic, physical, social and environmental conditions of a city or an area within the city. Whilst certain conditions, such as public consultation and adequate management schemes, must be ensured, the key to the planning process is “integration”, meaning that relevant policies and associated plans, programmes and projects are approached taking into account their cross-effects in order to effectively capture synergies and achieve balanced outcomes. In this regard, implementing the physically and operationally interlinked elements of an Integrated Plan should lead to its global impact being more intense than the sum of the effects of its components implemented in isolation. In some Member States, city-wide and area-based development plans prepared and adopted in accordance with current planning procedures may satisfy such definition. Less formalised plans and other policy documents approved following public consultation procedures and appropriate community impact assessment might also provide an adequate basis for integrated urban development. The present Guidelines take into account the experience gained through Urban I and Urban II-type urban projects, which developed and consolidated during the programming periods 1994-99 and 2000-06. However, it is important to remember that, while this experience remains an essential point of reference, the “mainstreaming” of the urban dimension into the 2007-2013 Structural Funds programming cycle - i.e. giving the urban agenda a major role in cohesion policy and embedding it within the Operational Programmes - means that the range of urban plans and projects targeted for potential assignment of EU resources has been considerably extended and diversified. This extension encompasses three main directions:

• First, the option to employ repayable resources through Urban Development Funds (i.e. financial engineering instruments for urban development promoted through the JESSICA initiative), which entails the need to address the financial performance of the components of the Integrated Plan. The mix of investment schemes within an Integrated Plan should be established in such a way that, where feasible, projects or packages of jointly implemented projects involve payment mechanisms capable of remunerating investors.

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• Secondly, the territorial scale of the Integrated Plan is not restricted to narrowly localise urban problems. This gives a wider scope than under the URBAN initiative, which had a narrower remit, since it was designed to directly assign Community resources to districts or neighbourhoods suffering from high deprivation levels within cities. The emphasis in the 2007-13 urban agenda is on obtaining sustainable development outcomes for cities and urban areas. This means that often the appropriate spatial scale for effective plans – for instance, those aimed at achieving energy efficiency results – is much larger than a city neighbourhood.

• Finally, while the main focus of URBAN was to eliminate pockets of urban deprivation, the new Structural Funds intervention does not have to focus exclusively on alleviating deprivation, but can support measures enhancing wider competitiveness and employment objectives by investing in urban assets promoting, for instance, high-technology clusters, universities and the knowledge industry, tourism and other service sectors.

Overall, the Structural Funds framework for intervention in urban areas has become wider and much more flexible. However, to qualify for financial assistance through JESSICA financial engineering instruments, Urban Projects must comply with the applicable Regulations. How to apply in practice the regulatory requirements, such as the need for Urban Projects to be included in Integrated Plans, requires further clarification. Within the Regulations and the relevant EU documents the principles are well-articulated in conceptual terms, but their operational interpretation is left to Member States and Managing Authorities, depending on the country’s legal, administrative and cultural set up and the specificities of the relevant Operational Programmes, which constitute the basic reference for Structural Funds support.3 The establishment of specific operational guidelines tailored to countries, regions or groups of regions is therefore needed to enable local stakeholders to properly identify and define which Urban Projects and Integrated Plans can be considered JESSICA-compliant. 2. Operational Framework 2.1 JESSICA support for Urban Projects In order to be considered for financing by an Urban Development Fund, an Urban Project must be included in an Integrated Plan. This is, however, just one of the conditions for a project – more precisely an expenditure incurred to implement an investment project – to be financed. An Urban Project, or Project Expenditure (indicating that the investment represents only part of the expenditures incurred in the implementation of a self-standing project, for instance, a section of a major single construction site), will be “eligible” when it fulfils all conditions specified in the Operational Programme and may, thus, be considered for financing by ERDF funds channelled through JESSICA. Urban investments (projects or projects expenditures) that do not comply with all the ERDF eligibility requirements may still be financed through an UDF, but not through its ERDF-funded resources. In this case an Urban Project can still be considered by an UDF within the scope of its operation, i.e. “suitable” for financing. The presence of suitable, but not eligible projects in the UDF portfolio requires keeping separate track records in the UDF accounts in order to show that EU funding drawn through the HF has been employed by the UDF exclusively for eligible Urban Projects or Project Expenditures. One of the objectives of these Guidelines is to establish with clarity which Urban Projects or Project Expenditures are qualified as eligible and which ones, while not ERDF-eligible, can still fall within the scope of investment of a UDF (i.e. are “suitable”). However, given the complex nature of urban

3 About this, see COCOF Note 08/0002/02-EN, stating that “The Structural Funds regulations for the period 2007-2013 do not include a definition of, or specific requirements for, an “integrated plan for sustainable urban development”. Consequently, these should be defined by Member States and managing authorities, taking account of Article 8 of Regulation (EC) No 1080/2006 and the specific urban, administrative and legal context of each region”. Article 8 states that “…The ERDF may, where appropriate, support the development of participative, integrated and sustainable strategies to tackle the high concentration of economic, environmental and social problems affecting urban areas. These strategies shall promote sustainable urban development through activities such as: strengthening economic growth, the rehabilitation of the physical environment, brownfield redevelopment, the preservation and development of natural and cultural heritage, the promotion of entrepreneurship, local employment and community development, and the provision of services to the population taking account of changing demographic structures.”

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operations, it is possible that the Guidelines do not identify with sufficient clarity all types of investment in urban areas potentially within the scope of UDF operations. For these special cases, the interested institution or promoter can refer to the JESSICA Holding Fund for further clarifications. 2.2 Compliance with the Integrated Plans requirement One of the key conditions for Urban Projects to be financed by UDFs is their inclusion in an Integrated Plan. This document provides guidance on how to deal with this requirement. Key features of an Integrated Plan In line with the subsidiarity principle, the integrated planning requirement should adapt to the legislative context of the country, in particular, regarding land use planning. There are, however, many commonalities in effective urban development policies (incorporated in the EU documents mentioned earlier) and a variety of accepted best practices that allow listing the key conditions that must ideally be fulfilled for an urban planning process to be considered as satisfying the requirements of an Integrated Plan:

• The Integrated Plan should be officially proposed and certified by the relevant local authority or public sector agency (including their consortia), normally a municipality or consortium of municipalities.

• The geographical area of intervention for the Integrated Plan (“Target Area”) should be precisely defined. Depending on the nature and objectives of the Integrated Plan, it could be a neighbourhood, an area surrounding a “flagship project”, a municipality, a city, a metropolitan area, etc.

• The Integrated Plan should be based on a clear strategy, which should justify the need for public intervention (i.e. a planning-driven approach).

• The normal elements of a land-use plan should be included, with sufficient physical definition of any public works to be undertaken to achieve the Plan’s objectives (e.g. infrastructure, utilities) and specification of standard land-use parameters, as well as the minimum level of public services required (e.g. utilities, public transport, health, education, security, etc.) and the associated infrastructure endowment.

• The integration of infrastructure and services into the wider area should be ensured, notably for those being part of networks e.g. transport, electricity, but also for some social and environmental services.

• Any corrective measures following from applicable environmental impact assessment procedures of the Integrated Plan under EU law should be properly included.

• The Integrated Plan should include a study of the needs (including expected demand for urban assets, services) to which the proposed actions should respond. To ensure an efficient use of resources, a socio-economic appraisal of these actions should be systematically carried out and its results duly taken into account.

• The Integrated Plan should include or take into account social objectives (such as social cohesion/mix, job creation, housing provision, etc.) justifying any accompanying social measures with potential effects on the urban social fabric.

• The Integrated Plan should include a governance scheme setting up clearly timetable and responsibilities for its implementation. Where private funding is envisaged, the governance scheme should include ways to represent private stakeholders in the decision-making process. Appropriate public consultation procedures should also be incorporated in the governance process.

• The Integrated Plan has to include a financial analysis and a well-defined funding structure ensuring its implementation and long-term financial sustainability.

• All the above components will be jointly assessed and developed to produce proposals that satisfy the economic, social, environmental and financial requirements of integrated planning.

Fulfilling the above conditions may prove demanding and, in some countries or regions, strategic planning procedures complying with all of them may not be in place, in particular, at the city level. An increasing number of urban areas are in the process of applying the integrated approach to their renewal and development strategies. Setting up an integrated planning process, however, may take

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a long period if the system is not already in place. This is why it is important to set out an approach to adopt when no clearly defined Integrated Plan is currently in existence. Lack of appropriate Integrated Plan in existence In order to reduce the risk of excluding a great number of cities and potentially valuable Urban Projects from using JESSICA instruments, and to facilitate the parallel development of Integrated Plans and of a system of UDFs, a flexible approach should be adopted in cases where appropriate integrated planning procedures are not in place. Urban Projects satisfying requirements other than being part of Integrated Plans should be accepted as candidates for UDF funding when:

1) there is a commitment by the relevant local authorities to engage in a planning process satisfying the Integrated Plan criteria within the period of the current Structural Funds programming period ending in 2013, and

2) the Urban Projects presented for financing by UDFs are expected to be included in the Integrated Plan in preparation.

All Urban Projects included in or coherent with these Integrated Plans – either in place or to be established in the programming period - can be considered within the scope of operation of a UDF (i.e. “suitable” for funding), although only a part of them, or part of the expenditures incurred in implementing them, may turn out to be eligible for ERDF funding. Typical Urban Projects worth considering under the procedure outlined above would be part of urban renewal schemes – typically they will be located in urban brownsites – and relate to the productive, environmental and service sectors typically eligible for ERDF funding such as:

a) Rehabilitation or upgrading of existing basic urban infrastructure, including streets and other public spaces, utilities, public transport stations, parking facilities, etc.

b) Infrastructures and buildings accommodating innovative activities and SMEs, including research centres, office facilities, industrial estates supporting innovation and entrepreneurship, etc.

c) Cultural and historical heritage restoration and re-use. d) Redevelopment of derelict areas (e.g. old industrial and depot sites) for non-residential

purposes e) Clean public transport. f) Local development initiatives and structures providing neighbourhood services and creating

jobs. g) Sustainable tourism investments.

When these Urban Projects are part of greenfield developments, the promoter must demonstrate that they have a clear sustainability objective and would be included in the Integrated Plan in preparation. Other types of Urban Projects might also be eligible, but the promoter should provide appropriate evidence of the eligibility of the project, in particular its compliance with ERDF regulations and its inclusion in the Integrated Plan. In any case the inclusion of, or the commitment to include the candidate Urban Project in the Integrated Plan should be officially certified by the relevant local authority or the Managing Authority, where applicable. Non-eligible projects and project expenditures Besides the eligible projects, the UDF may also finance, with the funding not originating in the HF (and thus from ERDF), Urban Projects or project expenditures included in the Integrated Plan, existing or in preparation that cannot be considered eligible under ERDF rules. A particularly relevant example is residential construction, which is eligible for ERDF funding only in the Member States which have joined the EU after May 2004. While housing may not be eligible in Spain, housing expenditures could constitute an essential component for the achievement of the objectives of an Integrated Plan and would therefore be within the scope of UDF operations. However, given that the general objective of UDFs is to address market failures in urban regeneration, normally the core investment strategy for a UDF would target residential developments not offering attractive rates of return to private operators. Such residential investment could focus, for example, on social and

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affordable housing, residential accommodation for young professionals, for older and special needs residents or other specific residential developments requiring public sector support.4 Target area and project location A UDF will concentrate its financing in Urban Projects located in a clearly defined Target Area that will normally coincide with the area of intervention of an Integrated Urban Plan. Target Areas will usually have spatial continuity but, in some cases, they could include separate zones, for instance, when the reduction of residential density in a Target Area requires relocation of some inhabitants, it could embrace external zones for decanting population excess. The condition that an Urban Project must be part of an Integrated Urban Plan means also that isolated projects (for instance, the construction/renewal of a single building, without actions in the surrounding area) cannot normally be financed under the JESSICA initiative.5 Revenue generation mechanisms UDFs supported by JESSICA are expected to finance revenue-generating investment projects. Many Urban Projects within an Integrated Urban Plan are not typically producing direct earnings to promoters, but they could still be financed by an UDF if they are included in a revenue-generating package (i.e. a set of projects where high yield projects could compensate those that are not self-financing). It should be noted in this context that expenditures for transactions involving transfer of existing assets, i.e. land or property purchases for re-sale without investment (such as real estate speculative operations) are not eligible for ERDF financing and are not expected to be part of the core investment strategy of a UDF, which is to invest in projects involving construction or rehabilitation/ transformation of existing assets. General compliance with EU Rules and policies It is also worth re-emphasising that apart from the necessary compliance with the Integrated Plan requirement, which is specific to the operation of Urban Development Funds, all Urban Projects must also comply with the requirements of applicable EU Rules, notably concerning public procurement, state aid, environmental protection and equal opportunities. 3. Operational procedures in Andalucía 3.1 Integrated Plans in Andalucía The Operational Programme for Andalucía indicates the priorities of the regional government on urban matters: The rehabilitation of dilapidated areas and the improvement of the urban environment and its management, particularly directed to old city centres and public space; the upgrading of public infrastructures for transport and services (utilities); the restoration of historical and cultural heritage sites to attract new forms of tourism; reuse of old industrial brownsites and support of SMEs and innovative enterprises. All these priorities are considered important in defining local strategies, which should be pivotal where applicable in the development and implementation of Integrated

4 It is worth remembering that Regulation 1080/2006 and successive amendments on applicability of ERDF resources to housing, which is eligible, and only in specific conditions spelled out in Article 7, “only for those Member States that acceded to the European Union on or after 1 May 2004”. The exceptions to this rule are investments in energy efficacy and renewable energy for which “… In each Member State, expenditure on energy efficiency improvements and on the use of renewable energy in existing housing shall be eligible up to an amount of 4 % of the total ERDF allocation. Member States shall define categories of eligible housing in national rules, in conformity with Article 56(4) of Regulation (EC) No 1083/2006, in order to support social cohesion.” 5 It would still be possible, to propose for financing on a case-by-case basis a coherent set of physically separated schemes (for instance in the environmental sector), where these are demonstrably capable of generating systemic sustainable impacts on the regional city system.

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Plans, which is expected to take place in parallel with the development of the JESSICA financial engineering instruments in the region. The use of JESSICA financial engineering instruments is explicitly envisaged in the Operational Programme as part of Priority Axis 5 “Sustainable Urban and Rural Development”, and more specifically within Thematic Priority 61 “Integrated Projects for Urban and Rural Regeneration”, including (but are not limited to) projects suitable in the context of an Integrated Plan6. Among them we can highlight:

• Urban infrastructure, including those aiming at improving mobility and utilities and also cultural, tourist, social and educational infrastructures and the rehabilitation and upgrading of cultural heritage.

• Integrated operations for the regeneration of derelict industrial areas and the creation of facilities for SMEs and innovative firms7.

Under this framework, the approach in this document is to adopt a flexible interpretation of the concept of Integrated Plan in order to capitalise, as far as possible, on those plans and strategic urban investment tools already in operation within the region or easily implementable on the basis of existing initiatives. According to this, four types of planning frameworks can be considered as Integrated Plans:

1) Integrated plans produced according to the procedures foreseen under Priority Axis 5 of the Operational Programme for Andalucía, namely the URBANA initiative, managed by the Ministerio de Economía y Hacienda, and the equivalent initiative for small-medium size cities managed by the Ministerio de Administraciones Públicas.

2) Urban plans of a strategic nature, which could include Agenda 21 documents providing a

broad multi-sector approach to a sustainable agenda. Normally it is expected that these strategic documents are complemented with sectoral plans with a more operational content (e.g. land use plans, mobility plans…), required for the implementation of the strategy, giving a proper weight to inter-sectoral linkages.

3) Areas served by dedicated urban renewal/development agencies responsible for managing

comprehensive investment plans in specific urban areas.

4) Plans driven by a “flagship project” including the renewal/development of its surrounding area, i.e. cases where there are large scale projects adopting a multi-use / multi-sector approach and affecting a significant portion of the urban built-up area where complementary investment could satisfy the “integrated plan” requirement.

Other planning formulations may also be considered compliant with JESSICA requirements for Integrated Plans, provided that they comply with their basic requirements. This means, in practice, that if a plan does not clearly fall within one of the four types of Integrated Plans listed above, it could be submitted to the UDF, which will judge its compliance with Integrated Plan requirements on a case-by-case basis.

6 Besides the obligation of being included in an Integrated Plan, the document “Criteria for the Selection of Operations” from the Operational Programme underlines as conditions set forward for the selection of projects its financial (based upon its repayment capacity) and technical feasibility, as well as its economic profitability, which should include the social, environmental and territorial benefits compared to the non-execution of the project. 7 Investments devoted to improve energy efficiency and the use of renewal energies have been excluded, for the moment, from JESSICA Andalucía programme, as they will be financed through other means. As a consequence, all projects under this category WILL NOT be financeable by UDFs constituted as a result of this Call for EoI, which includes these Guidelines.

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3.2 Applications for funding Presentation of Integrated Plans The Integrated Plans referred to in section 3.1 above should be described on the basis of a synthetic document. Where a planning document complying with the Integrated Plan requirements already exists and is in force, the document can simply refer to the plan and present it as Annex to the application, for instance, in the case of Integrated Plans submitted and approved under Priority Axis 5 of the Operational Programme. The synthetic document on the Integrated Plan should, at least, include the following elements:

i. Delimitation of the Target Area The Target Area should normally be the area covered by an Integrated Plan. Following the classification of Priority Axis 5, UDFs are expected to concentrate their financing in one of the three categories of urban areas, normally those over 20.000 inhabitants and in specific cases – to be justified on an ad-hoc basis - smaller urban centres. The target area could also have a region-wide extension if dealing with smaller Urban Projects of a type (energy efficiency, environmental improvement, etc.) that could be considered eligible due to its clear impact on urban sustainability objectives.

Target Areas may be thus quite different depending on the objectives of the Integrated Plans. In any case, any financial proposal to an UDF must include a precise delimitation of the Target Area both through a geographic description and cartography.

ii. SWOT Analysis, Integrated aspects and Investment Plan. The diagnostic of the Target Area should rely on a relevant selection of the indicators under 1) above and include an analysis of strengths, weaknesses, opportunities and threats and the expected impact from the implementation of the portfolio of Urban Projects to be supported by the UDF. This section should refer to existing or planned strategic planning documents to provide a justification of the integrated character of the proposed project / activity portfolio and the associated Investment Plan.

iii. Impact analysis and monitoring In order to create the basis for monitoring the evolving situation, the applicant should propose a set of suitable indicators, showing their current value in the Target Area and its expected improvement due to the impact of the proposed investment strategy. The indicators should be closely linked with the objectives of the JESSICA instruments as implemented in Andalucía and in line with the objectives and (if applicable) indicators in Axis 5 and Thematic Priority 61 of the Operational Programme. Where applicable, Target Area indicators should be compared with their value for the whole city or the wider region.

Presentation of Urban Projects Often the Integrated Plan will include list of Urban Projects, which therefore satisfy the requirement concerning their insertion in Integrated Plans. However, there may be cases where Urban Projects complying with JESSICA requirements within the Target Areas mature and are proposed after the submission of the Plan. And in all circumstances, Urban Project documentation by a project agency applying for funds from the UDF should still demonstrate that the Urban Project fulfils all the requirements to obtain funding under the JESSICA initiative, apart from its insertion in an Integrated Plan. These requirements include an adequate socio-economic performance (i.e. that the investment represents a reasonable use of society’s resources), as well as the capacity to generate a remuneration for the UDF. This capacity should normally be sufficient to attract the interest of a private investor, a public-private partnership or public entities requiring a return on their investment. In this context it is worth, however, remembering that – provided it is compatible with state aid rules –

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an Urban Project can also benefit from subsidies (grants), which may be needed in certain cases to make an Urban Project financially viable for the UDF.8 The broader framework for the selection of Urban Projects by UDFs, in addition to the eligibility criteria explained in these Guidelines, is outlined in Annex 3 of the Call for EoI (“Terms of Reference”). Approval of Integrated Plans and Urban Projects It is also worth underlying that the requirement of these Guidelines and the above Application for Funding procedures will need to be embedded in a governance structure within the UDF, whereas the regional administration is properly implicated in the approval process, for both Integrated Plans and Urban Projects to be funded by the UDF through JESSICA revolving instruments. The description of the organisational form and procedures to achieve this objective in a practical and cost-effective manner is a key part of the offer that candidates for the role of UDF manager are expected to submit in response to the Call for EoI (point 8 of the Business Plan foreseen in the Annex 3 of the Call).

8 See Specifically paragraph 6 of Article 43 of Regulation (EC) 1828/2006 as amended by Commission Regulation (EC) No 846/2009 of 1 September 2009: “Enterprises, as well as public private partnerships and other projects included in an integrated plan for sustainable urban development, which are supported by financial engineering instruments, may also receive a grant or other assistance from an operational programme.”