New Urban Development Finance Instrument Presented by HBOR and the Ministry of Regional Development and EU Funds
As part of the “Urban Agenda for Croatia” conference, held in Zagreb on 3 April 2024, a new financial instrument was presented: Urban Development Fund.
The Urban Development Fund is intended for investments by public sector entities, and it enables for the first time the use of the EU funds for enriching public infrastructure projects with commercial contents, which implies the realisation of revenues from the collection of usage fees, with an objective of promoting the projects of environmental protection, energy efficiency and renewable energy sources as well as, in general, the construction of multi-purpose, sports, tourist, socio-cultural, business and similar infrastructure.
Hrvoje Čuvalo, President of the Management Board of HBOR, pointed out that HBOR had been active in the management of financial instruments since 2016, and had, in the previous EU programming period, successfully implemented 5 financial instruments with a total allocation of EUR 323 million and had supported more than 530 projects.
“The amount of more than EUR 170 million will be available to borrowers under the Urban Development Fund. The financing will be in the form of direct lending, whereas the financial instrument itself will be a combination of loans and grants in the form of capital discount. The programme will become operational very soon, by the end of the second quarter at the latest, so that the potential borrowers can already start preparing their projects,” said Hrvoje Čuvalo.
Minister Šime Erlić said that the goal of this instrument was to enable even development of cities in all regions of Croatia.
“In partnership with HBOR, we have developed a new financial instrument intended exclusively for the financing of development projects of cities that will be in the function of developing green and technologically advanced cities. With EUR 680 million from the ITI mechanism and 250 projects that are in the start-up phase, and now with the new Urban Development Fund worth EUR 172 million, we have never supported the development of cities so strongly,” said minister Erlić.
This type of financing will offer the principal write-off of up to 50% of the loan amount for projects that will include elements relating to sustainability, aesthetics and inclusiveness prescribed in advance.
The Urban Development Fund is intended for investments by public sector entities, and it enables for the first time the use of the EU funds for enriching public infrastructure projects with commercial contents, which implies the realisation of revenues from the collection of usage fees, with an objective of promoting the projects of environmental protection, energy efficiency and renewable energy sources as well as, in general, the construction of multi-purpose, sports, tourist, socio-cultural, business and similar infrastructure.
Hrvoje Čuvalo, President of the Management Board of HBOR, pointed out that HBOR had been active in the management of financial instruments since 2016, and had, in the previous EU programming period, successfully implemented 5 financial instruments with a total allocation of EUR 323 million and had supported more than 530 projects.
“The amount of more than EUR 170 million will be available to borrowers under the Urban Development Fund. The financing will be in the form of direct lending, whereas the financial instrument itself will be a combination of loans and grants in the form of capital discount. The programme will become operational very soon, by the end of the second quarter at the latest, so that the potential borrowers can already start preparing their projects,” said Hrvoje Čuvalo.
Minister Šime Erlić said that the goal of this instrument was to enable even development of cities in all regions of Croatia.
“In partnership with HBOR, we have developed a new financial instrument intended exclusively for the financing of development projects of cities that will be in the function of developing green and technologically advanced cities. With EUR 680 million from the ITI mechanism and 250 projects that are in the start-up phase, and now with the new Urban Development Fund worth EUR 172 million, we have never supported the development of cities so strongly,” said minister Erlić.
This type of financing will offer the principal write-off of up to 50% of the loan amount for projects that will include elements relating to sustainability, aesthetics and inclusiveness prescribed in advance.