ECONOMICS UNIQUENESS

FINANCIAL MECHANISMS FOR HISTORIC CITY ■ 235
One of the features of this specifi c urban development fund is the capacity to
use the SF contribution, thereby ensuring long-term sustainability for the urban
development. By leveraging additional resources from the private sector, the fund
is able to create stronger incentives for better performance of the fi nal recipients,
increasing the effi ciency and eff ectiveness of public resources. However, JESSICA
represents a specifi c policy tool whose wider fi nancial impact would need to be
tailored if it were to be implemented in countries outside the European Union.
Taking the above into consideration, signifi cant potential exists for the creation
of urban development funds dedicated to urban heritage brownfi elds that
would provide both appropriate funding for the project and risk coverage for
investors. Several fi nancial mechanisms may be considered:
• Guarantee fund, which could act as a guarantee to fi nanciers in case a developer
should prove unable to meet his obligations (for example, the European
Agricultural Guidance and Guarantee Fund).
• Insurance program, which could provide security by protecting against cost
overruns and unforeseen risks.
• Revolving fund from which a developer could obtain low-interest loans;
redemption and interest fl ow back into the fund and could cover residual
risks and institutional controls aft er remediation is completed (for example,
the National Restoration Fund in the Netherlands).
Urban development funds based on a revolving fi nancial mechanism could
make funds available at a low interest rate to attract investors, and these funds,
through self-supporting mechanisms, may be reinvested or made available to
cover residual risks. Th e revolving funds could supplement already existing traditional
urban development instruments such as grants and loans, particularly
in developing countries. Th e establishment of a revolving fund within the structure
of an urban development fund for historic urban heritage projects could
signifi cantly improve both the quantity and duration of urban brownfi eld redevelopment.
Case Study: Silesia and Other Regions in Poland
Poland is investing in JESSICA in four of its regions: Wielkopolska, West
Pomerania, Pomerania, and Silesia. It decided to create revolving vehicles and
dedicate part of the SFs to fi nance urban renewal and regeneration projects in
the cities of these regions, particularly historic districts. Because of its history,
for many years Poland did not participate in the debate over regeneration needs
and policies in Europe.
Th e Silesia region is a highly industrialized area with numerous postproduction
and postindustrial sites, many of which have high historical value;