The Urban Development Funds (UDFs) are a financial instrument under the Operational Programme “Regions in Growth” (OPRG) 2014–2020, co-financed by the European Regional Development Fund (ERDF), building on the experience of the JESSICA initiative (2007–2013). They combine public resources from OPRG with private financing with the objective of supporting sustainable urban projects and achieving the goals of EU Regional Policy. In 2018, the Sustainable Cities Fund was selected as a financial intermediary for the implementation of the Urban Development Funds (UDF)  for the Sofia and Southern Bulgaria regions, following a procurement procedure conducted by the Fund Manager of Financial Instruments in Bulgaria EAD (FMFIB).

Compared to JESSICA, the 2014–2020 UDFs dispose of a significantly larger public resource – over BGN 200 million/EUR 100 mln from OPRG for the Sofia and Southern Bulgaria regions, complemented by 41% co-financing from the Sustainable Cities Fund. The scope of eligible investments has been expanded compared to JESSICA: in addition to projects for sustainable and integrated urban development, projects for regional tourism and cultural heritage are now also financed. The Urban Development Funds (UDFs) for the Sofia and Southern Bulgaria regions cover a total of 22 eligible cities for urban development, as well as the territory of the respective districts for projects in tourism and cultural heritage. Financing is provided under more favourable terms for final recipients, including through an embedded guarantee, the benefits of which are passed directly on to the final recipients.