Financing options for Zagreb Judicial Square Complex (HR)

For the Ministry of Justice of Croatia Rebel established the funding and financing gap for the procurement of the Zagreb Judicial Square, a new Justice complex hosting courts, administrative offices in a single site in the centre of Zagreb. With an unexpected result.

Ministry of Justice Croatia modernises judicial department
The Zagreb Judicial Square is a project which aims at grouping the various courts and branches of the justice system. Besides, the project will help modernise and enhance the working condition and efficiency of the Justice department at the time where Croatia is applying to become an EU member, which entails significant modernisation and restructuring of its Justice system to match the criteria for membership.

World Bank helped to set up a DBFMO
While the current real estate pool is a combination of State-owned, municipality owned and rented buildings, the new complex will be under ownership of the Ministry of Justice. The World Bank assisted the Ministry of Justice in estimating the funding gap and financing sources (public, private and blending instruments) necessary to procure the project, including development of a DBFMO scheme for alternative PPP route.

Rebel wanted to follow up in Croatia
Having already been involved in a capacity building program for the Ministry of Finance in Croatia, where we gave training in Fiscal risk management in engaging in PPP – we saw this opportunity as a follow up with a focus on a concrete project where procurement and financing are under review. Rebel is a strong advocate for PPP and we like to get it right from the beginning, therefore this project gave us the possibility to help local Authorities in developing workable PPP structures to set the future standard, compose with their visions on PPP and the best way to execute these kind of projects.

And laid out the honest truth about PPP in a roadmap
In this Croatian case we identified the necessary amount of financing and made a roadmap with possible financing tools. We laid out the options: if you want to do a PPP, this is how it really works. As a benchmark we used Dutch examples of Public building procurement structures used by the National building Agency (Rijksgebouwdienst), such as the renovation of the Ministry of Finance and the relocation and construction of the new Supreme Court. In result the Ministry of Justice changed its expectations about PPP. It may have seemed like a disappointing result compared to the initial ambitions, but we really believe it’s important to stick to the honest story: that as a governmental institution being the only user of the new asset, you’re paying for it in the end and PPP in this case is more relevant for speed of delivery, life-cycle integration, quality, cost-efficiency and transfer of construction and maintenance risk. The project is set to continue its course while another Public Agency has been put in charge of developing the transaction path.

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