The Welsh Assembly will today announce plans to create a multimillion pound urban development fund (UDF) thanks to an EU funding scheme.

The UDF, an alternative to PFI funding, will be a joint venture between with the Welsh Assembly Government and a private sector partner, chosen by tender.

The UDF will make Wales the first European country to make use of the EU’s Joint European Support for Sustainable Investment in City Areas (JESSICA) scheme. Deputy minister for Regeneration, Leighton Andrews, will announce the UDF at the first Wales Regeneration Summit today.

Andrews said: “Negotiations are underway with Brussels, and whilst there is a long way to go, I am optimistic that we will be able to develop one of the first urban development funds in Europe under the EU’s JESSICA Initiative.

“This would be a substantial multimillion pound fund run by a professional fund manager, with the Welsh Assembly Government and a private sector funder having equal stakes. The private sector partner would be chosen by tender.”

The money will be invested in a range of regeneration projects across Wales to go live in 2010. Projects will be promoted and delivered by local project partners from either the public or private sector.

The UDF would invest cash in the form of equity or loans which would be matched by the project partners’ land assets needed to deliver the project.

Andrews added: “More detailed work now needs to be done on the financial structure, governance arrangements and geographic scope of the fund as well as the project selection process. The fund will operate in the context of our strategic investment-based approach to regeneration that I outlined in the Assembly last week."

The Assembly Government’s contribution to the fund will most likely be in the form of ERDF monies and land assets.

At the summit today, key speakers will include Chris Brown, chief executive of Igloo Regeneration, Ros Kerslake from the Prince’s Regeneration Trust, Sir Stuart Lipton, the government’s architecture tsar, Peter Head from Arup and Tim Williams, who advises DCLG Minister Caroline Flint on regeneration, planning and housing policy.