1 2007 - 2013 Article 55 of Council Regulation (EC) No 1083/2006: Revenue-generating projects Impact of the revision 2010 Presented by Anton Schrag DG.

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2007 - 20132007 - 2013

Article 55 of Council Regulation (EC) No 1083/2006: Revenue-

generating projectsImpact of the revision 2010

Presented by Anton SchragDG Regional Policy

Article 55 of Council Regulation (EC) No 1083/2006: Revenue-

generating projectsImpact of the revision 2010

Presented by Anton SchragDG Regional Policy

Programme coordination, relations with other Institutions and NGOs, solidarity fund

Seminar “Train the trainers” - Brussels, 17 June 2010

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Introduction

Revenue-generating projects

• The “funding-gap” method is confirmed as the basis for calculating the EU grant for revenue-generating projects.

• Legal basis:– Article 55 of Council Regulation (EC) No 1083/2006– Article 150 of Commission Regulation (EC) No

718/2007

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Modifications of Article 55

• 2008: Article 55 (5)

- Threshold 1 Million Euro for ERDF and Cohesion Fund

- Non applicable to ESF projects

• 2009/2010: Article 55 (3) and (4)

– Deductions until the closure of the OP

– Monitoring of revenue until the closure of the OP

– Cancellation of refunds

Introduction

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Categories of Revenue-generating Projects

• Charges paid by users for the use of the infrastructure

• Sale or rent of land or building

• Services against payment

Categories of Revenue-generating Projects

• Charges paid by users for the use of the infrastructure

• Sale or rent of land or building

• Services against payment

Revenue-generating

Projects

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Cash in-flows

Revenue: cash in-flows directly paid by users

Other cash in-flows

Charges borne directly by users for the use of infrastructure, sale or rent of land or buildings, or

payments for services

Private and public contributions and/or financial gains that do not stem from tariffs, tolls, fees, rents or any other form of charge directly borne by the

users

Investment Financial Profitability and Funding-gap

Financial Profitability of the National Capital

Classification of Cash In-Flows

Categories of revenue-generating projects

Article 55(1)

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Factors to consider in Calculation of the Factors to consider in Calculation of the Funding-gapFunding-gap

• Reference Period for the Category of InvestmentReference Period for the Category of Investment

• Normally Expected ProfitabilityNormally Expected Profitability

• AffordabilityAffordability

• Polluter-pays PrinciplePolluter-pays Principle

Factors to consider in Calculation of the Factors to consider in Calculation of the Funding-gapFunding-gap

• Reference Period for the Category of InvestmentReference Period for the Category of Investment

• Normally Expected ProfitabilityNormally Expected Profitability

• AffordabilityAffordability

• Polluter-pays PrinciplePolluter-pays Principle

Article 55(2)

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Reference Period for the Category of Investment

•The reference period or project time horizon: the number of years of the profit economic life, that is, the time period beyond which the investment needs to be replaced.

•Examples are given in the context of guidance on the Cost Benefit Analysis

Article 55(2)

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Equity (affordability):• The Commission encourages MS to provide

information about affordability ratios.• Tariffs should ideally be levied up to the affordable

level.

Polluter-pays Principle:• The Commission encourages MS to adopt charging

systems which "internalise" the environmental costs of pollution.

• No "modified" funding-gap formula is proposed.

Article 55(2)

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Deductions

tt

IC/NRIC/NR

20072007 20112011 20162016

ProjectProject

Operational ProgrammeOperational Programme

31.12.201531.12.2015

Final Date for Eligibility of Expenditure

ttLatest Date for

Deductions

Final Closure of the Operational Programme

20132013

Article 55(3)

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Arrangements for Monitoring Revenue

Article 55(5)

• Monitoring systems: to be decided upon by Managing Authorities;

• Commission recommendation: Managing Authority set system for monitoring revenue

• Proportionality: less onerous arrangements for smaller projects (i.e. lower frequency of monitoring revenue).

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Modification of Article 55 in 2008

• The amendment of Article 55(5) of Regulation (EC) No 1083/2006 made by Regulation (EC) No 1341/2008 of 18 December 2008

• Article 55(5): “Paragraphs 1-4 of this Article shall apply only to operations which are co-financed by the ERDF or CF and the total cost of which exceeds 1 000 000 EUR”

• Retroactive application (1 August 2006)

Modification

of Article

55(5)

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Modification of Article 55 in 2009/2010

• Cut off date is submission of closure documentation: – Article 55(3): “Where it is objectively not possible to

estimate the revenue in advance, the net revenue generated within five years of the completion of an operation shall be deducted from the expenditure declared to the Commission.”

– Article 55(4): “Where it is established, that an operation has generated net revenue that has not been taken into account under paragraphs 2 and 3, such net revenue shall be deducted by the certifying authority at the latest at the time of submission of the documents under point (a) of Article 89(1) for the operational programme. The application for payment of the final balance shall be corrected accordingly.”

Modification

of Article

55(3) and (4)

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Article 55(2) Article 55(3) Article 55(4)

Both cases

Not possible to estimate revenue in advance: No Funding-gap

Revenue objectively estimated in

advance: Funding-gap

Up to closure Up to closure Before final date of

eligibility

Deductions Re-funding Reallocations

(possibly)

Article 55

Article 55 overview – after adoption of the amendment of General Regulation in 2010