- A municipality that develops commercial infrastructure engages in an economic activity.
- A municipality that finances the development of commercially used infrastructure may grant state aid to itself.
- The selection of the operator of commercial infrastructure on the basis of a competitive procedure eliminates any advantage for the operator.
- The users of a commercially operated infrastructure do not receive state aid if they pay prices at market rates.
Introduction
Recently, the Commission authorised a Polish measure [SA.114923] to support the establishment of a “green economy hub” in the town of Tychy in Silesia.1
The region is expected to experience significant economic upheaval with the prospective closure of three coal mines and large job losses. Therefore, the purpose of the measure is to launch the region on a different and more sustainable economic path.
This measure is very similar to another one [SA.114301], that was also approved by the Commission and reviewed here on 30 December 2025, for the creation of a technology hub in the coalmining region of Katowice. It can be accessed at: https://www.lexxion.eu/en/stateaidpost/state-aid-to-support-a-technology-hub/
Rationale of the project
As explained in the Commission decision “(6) the notified measure concerns an individual aid for a project that involves a rehabilitation of an existing underdeveloped building and its transformation into a unique facility dedicated to green economy related activities.”
“(7) The term “green economy” covers, for the purposes of the project, the economic sectors, jobs and activities that will ‘contribute to preserving or restoring the environment, whether in traditional or new developing sectors, will improve energy and resource efficiency, reduce greenhouse gas emissions, minimise waste and pollution, protect and restore ecosystems and support adaptation to the impacts of climate change’ (including activities linked to the so called ‘blue-green infrastructure’ i.e. solutions of different scales to manage rainwater).”
“(8) The Polish authorities explain that there is no similar facility in the region dedicated to the green economy. Hubs and parks active in the Silesian Voivodeship and neighbouring municipalities are mainly industrial or scientific-technical/technological parks focused on IT, medical and municipal waste management and some of them offer office spaces to rent. However, a specific need for additional office accommodation and business incubator services in the green economy field has been identified in the sub-region.”
Scope of the project
“(11) The Hub will encompass three centres:
(a) the Centre for the Development of Entrepreneurship is dedicated to start-ups targeting the green economy sector, or established SMEs and large enterprises interested in changing their business profile; it will offer them space for offices (open space, coworking space, offices equipped with modern infrastructure), incubation and support services, including mentors and investors, access to training, regular industry events, closed workshops, conferences, networking meetings, assistance in promotional activities and in attracting investors, access to cooperation with research organisations;
(b) the Professional Competence Centre will organise training activities towards (i) workers in employment affected by the transition intending to reskill their existing qualifications or upgrade their professional skills to adapt to new employment opportunities, as well as those at risk of dismissal, for whom outplacement support programmes are envisaged, (ii) graduates in industry-specific fields, (iii) entrepreneurs in mining and mining-related industries, in need of specialised courses and career guidance for re-skilling or re-designing activities, (iv) businesses in industries linked to the green economy who intend to expand their activities with additional innovative solutions;
(c) the Information and Advisory Centre on Green Economy will provide interested residents of the Tyski sub-region with (i) support in obtaining subsidies for the replacement of a heat generator and/or improving the energy efficiency of a building, including information on available forms of support and assistance in correctly completing grant applications, (ii) expert technical advice on replacing a heat generator and improving the energy efficiency of a building, including assistance in the selection of an optimal heat source, (iii) information and education activities on improving air quality.”
Specifics of the project
The project involves the renovation of an existing, abandoned building in the city centre of Tychy, with a useful floor area of about 5 000 m². The building is owned by the municipality. The project covers architectural and construction works, electrical and sanitary installations, purchase of equipment, a photovoltaic installation and heat pumps. The total cost of the project amounts to PLN 116 196 125 [about EUR 27.1 million]. Both the Katowice hub and the Tychy hub are financed by the EU’s Just Transition Fund.
The Polish authorities “(13) considered that not investing in the project, which is a facility designed to help the population mitigate the effects of structural deficiencies caused by the presence of mining industry in the region, would not be an option in light of the needs for increased employment and economic diversification. In addition, the continued abandonment of an unfinished building in the town would result in its gradual degradation and, consequently, over the years, an inability to adapt the facility to any purpose whatsoever.”
Of course, it is unlikely that the expected large job losses will be effectively mitigated by investment in a single building. It is, of course, possible that the hub can contribute to the diversification of the economic base of the region. The relevant question, therefore, is whether the project is value for money, given that its costs is rather substantial at more than EUR 27 million. Unfortunately, state aid procedures do not require Member States to demonstrate value for money.
The beneficiary
The project will be implemented by the municipality. It will the owner and the developer of the hub. The costs of the project will be borne by the municipality, which will keep separate accounts for the project.
The operator
The management of the hub will be entrusted to a manager who will be selected on the basis of a competitive procedure and will be awarded a concession contract. The main criterion for selecting the winner, in addition to qualitative criteria such as experience, will be the bidder that will offer the highest concession fee, expressed as a percentage of future revenues. The fee will be at minimum equal to 20% of the future revenue of the operator. The 20% benchmark reflects market conditions in the area. The revenue will be generated by rent from office spaces, conference and meeting rooms, by income from exhibition areas and catering spaces, co-working areas, and multifunctional rooms, and from training organised by the operator.
Funding gap
In the absence of aid, the project would not be carried out, given that financial analysis, using a discount rate of 4%, has shown that the project would remain unprofitable for “several years”. While the cost, in nominal terms, is about EUR 27.1 million, the expected revenue for the municipality is only about EUR 1.7 million. At the same time, the municipality, as the owner of the hub, will incur operating costs for the whole period of about EUR 1.4 million in nominal terms. The operating costs will “(36) consist of the costs related to the maintenance of the greenery, the contribution of the owner to the common costs in proportion to its space occupancy and the financial costs of a loan drawn at market conditions”.
The financial analysis was prepared over a reference period of 15 years: four years of the project’s implementation phase (2024-2028) and 11 years of operation of the project from the start of the concession agreement until its end (2029-2038). Accordingly, the funding gap was calculated to be PLN 97 585 598 or EUR 22.8 million.
“(38) The notified measure, of an amount of PLN 110 535 949 (EUR 25.8 million) in nominal value and PLN 97 550 754 (EUR 22.8 million) in discounted value consists of two elements: (a) A direct grant of up to PLN 93 955 557 in nominal value. Discounted at a rate of 4%, this amounts to PLN 82 947 759. The direct grant will be provided by the Managing Authority for the European Funds for Silesia 2021-2027 programme and will be financed by JTF. (b) A co-funding own contribution in the form of a grant from the municipality of Tychy amounting to PLN 16 580 392 in nominal value. Discounted at a rate of 4%, this amounts to PLN 14 602 996.”
Commission assessment of the presence of state aid
With respect to the municipality – the owner/developer of the hub – the Commission, first, pointed out that “(50) as noted in paragraph 202 of the Commission Notice on the Notion of State aid (“NoA”), while those judgments [on transport infrastructure] relate specifically to airports, the principles developed by the Union Courts are also applicable to the construction of other infrastructures that are indissociably linked to an economic activity.”
Then it added that “(51) though part of its use will be dedicated to non-economic activities, the Hub will be mainly used to provide services on a market, such as renting of space for offices (open space, coworking space, offices), conference rooms and space for training and incubation services, thus economic activities. It follows from the Leipzig Halle judgment that the construction of the facility constitutes an economic activity, and thus its financing may involve State aid. Therefore, the municipality of Tychy, as owner of the infrastructure has to be considered as an undertaking for the purposes of Article 107(1) TFEU in respect of the construction of the infrastructure.”
Since, the measure provided individual funding with resources provided by the JTF, the Commission concluded that it constituted state aid.
With respect to the operator of the hub, the Commission explained that “(60) in order to establish whether the operator of the aided infrastructure receives an advantage, the Commission needs to assess if the use of the infrastructure provides it with an economic benefit that it would not have obtained under normal market conditions.” It then found that “(63) the tender conditions ensure the market conformity of the concession fee and the absence of an advantage to the operator.”
With respect to the users of the hub, the Commission also concluded that there will be no state aid for them because the rent and prices charged by the operator will correspond to market rates.
Commission assessment of the compatibility of the aid with the internal market
The Commission noted that the aid would be capable of supporting the development of an economic activity in line with Article 107(3)(c) TFEU and that it would not breach any relevant provision of other EU law.
With respect to the incentive effect of the aid, the project would be loss-making without the aid. Therefore, the municipality would not undertake the project without the aid, had it acted as an undertaking.
The Commission also considered the aid to be necessary for the re-development of the region and proportional, as it did not exceed the funding gap.
The Commission concluded that the positive effects of the aid outweighed its negative effects. “(96) Taking into account the necessity and proportionality of the aid in order to limit the advantages to the municipality of Tychy as owner of the Hub to what is strictly necessary for the project to be carried out, the possible distortion of competition and trade can be considered as limited. In light of the above, the positive impact of the notified measure in developing the targeted economic activities and the relevant region outweighs any potential negative effects on competition and trade. On balance, the notified measure is in line with the objectives of Article 107(3)(c) TFEU as it facilitates the development of certain activities and the relevant region. Moreover, such aid does not adversely affect competition to an extent contrary to the common interest. The negative effects on competition, if any, would be limited.”
