Good practice:

Financial instruments for urban development

IFRRU 2020 (Instrumento Financeiro para a Reabilitação e Revitalização Urbanas) is a financial instrument that has been established to support urban renewal across the entire Portuguese territory.
IFFRU operates as a Fund of Funds and targets the improvement of buildings that are more than 30 years old, abandoned industrial spaces and units, social housing (including private units within a social housing building) and public space. Typically, the works will improve the general condition of the building and must include interventions to improve its energy efficiency. The financial instruments were launched in October 2017 following selection of the financial intermediaries. The financial intermediaries were chosen through a public tender. The design of the instrument requires that the IFRRU 2020 products are offered by each of the banks across the entire Portuguese territory (in total more than 1000 offices). This generates more competition and therefore ensures that the final recipients can access finance at the most competitive terms. Another feature of the design is how it has made it simple for promoters to access the funds.
Applications for financing are made directly to one of the financial intermediaries without a limit to the number of applications that can be made.
IFRRU 2020 support is provided through two types of financial products: LOANS made up of public funds and, at least by 50%, of Bank funds and GUARANTEES.

IFFRU uses EUR 102 million of ESI Funds resources to mobilize € 1.4 billion of public and private financing for urban development, with the aim of generating a total investment of around EUR 2 billion.

By December 2020, IFFRU had received 556 applications that generated 276 funding contracts with a total value of investment of € 777 million. Projects have been approved for support in 54 different cities demonstrating how the financial instrument is successful at delivering finance to support urban development across a range of different localities and projects.

The case study follows a less common focus on what concerns financial instruments. It has been a very important initiative in combining urban regeneration with new economic dynamics, mostly associated with tourism. The IFRRU 2020 intends, therefore, to facilitate access to financing by investment promoters in the area of urban rehabilitation, improving financing conditions appropriate to the circumstances and specificities of the projects, and diversifying the offer of funding solutions under more favorable conditions than those available on the market.
IFRRU 2020 is, therefore, a lever for the sustainability of cities and for the improvement of people's quality of life, creating new opportunities for economic and social development in urban centers.