Co-Financing the Investment Projects in the field of Public Space Transformation

Abstract

Introduction. It has become a modern trend to improve the quality of the urban environment using a public-private partnership (PPP) mechanism. By finding a balance between the interests of business and the state on the issues of infrastructure renovation, it is possible to boost the investment processes. Therefore, the PPP as a catalyst for the regional, innovative and social development has been studied in the scientific literature since long ago. Although, many authors recognise the prospects of the PPP efficiency, they still note the need to regularly revise the state support methods and tools, i.e. the existing system of measures requires improvement over time. Special attention has been paid to the models of financing the PPP projects and the ways of investment return. However, the PPP development potential in creation (reconstruction) of the park infrastructure has not been duly revealed yet.Materials and Methods. During the research on identification of the features of the park complex transformation projects reconstructed in the frame of a concession business model, the projects were grouped according to the similarity of features. Then, by comparative analysis method, the problems of full recovery of the investment costs were identified in the selected projects. A hypothesis about the need of using the government budget co-financing for the certain concession agreements targeted at solving the various environmental, educational and awareness-raising issues was put forward.Results. The national practices of transformation of the public spaces, such as parks and park infrastructure, have shown that the most optimal form of the PPP is a concession. The investor uses his funds at the design and construction stages of the creation (reconstruction) of the park complexes. At the stage of facility operation, a private party recovers its costs by collecting fees directly from the consumers. It is important that the expected project profitability should be within 15–25%. Due to the changes in the monetary policy, such profitability at the current key rate is hardly ever possible if the park infrastructure includes a variety of capital-intensive buildings and structures designated not so much for commercial but for social purposes. There arise the risks of receiving less income than expected. Therefore, for such projects, it is necessary to develop the measures expanding the ways of investment return. If a park has a complex infrastructure, which includes the large stadiums, museums, cultural and educational centres, i.e. facilities that are difficult to predict as having a high demand and, thus, not expedient for setting the high fees, it is advisable to combine the direct payment for services with the government budget co-financing. Co-financing is implemented through payment of a capital or operational grants. The variants of a grant can be considered depending on the areas of the park activities (educational, cultural, sport). The operational grant is due to reimburse the operational costs on maintaining the special facilities: adjacent embankments, lighthouses, memorials, etc. For the parks that include the indoor pools, large stadiums, museums, concert halls, it is relevant to use the capital grants to return the investments made into these facilities.Discussion and Conclusion. In the current conditions, the public-private partnership is considered as an alternative to government budget investment into the infrastructure facilities. The transformation of the urban public spaces is also involved in this trend, and there are already positive results achieved. A private party, through investing its own capital, gets the opportunity to operate the created object to recoup its investments. But some projects are difficult in this sense, therefore the interest of the business companies to participate in the improvement of the urban environment quality reduces. In the context of the tight monetary policy, the additional state budgetary measures are needed to stimulate private investments.