The purpose of the Project is to increase the tourism potential for socio-economic growth and sustainable urban development of the Participating Cities with a focus on preservation and development of cultural heritage to drive tourism related revenues and improve the municipal economy. The Project envisages (i) restoration of cultural heritage sites in order to create tourist focal points, (ii) construction and modernization of related auxiliary infrastructure, and (iii) development of marketing strategies in the Participating Cities.

The Project consists of the following components:

COMPONENT 1. Establishment of Historic Settlement Culture Centers Based on Selected Urban Fragments in Historic City Centers (in Azov, Belyov, Yelets, Zaraysk, Kasimov, and Shuya)

This component includes comprehensive activities in parts of the historic settlements to establish their culture and tourism development centers. The funds shall be used, inter alia, to: rehabilitate cultural heritage sites, including those owned by the regions and municipalities; reconstruct and construct other sites to recover lost historic development patterns in the protected zones; adapt the rehabilitated, reconstructed and newly constructed facilities, including installation of necessary service and support equipment; perform landscaping works and local improvements; and upgrade related utilities and transport infrastructure.

COMPONENT 2. Urban Infrastructure and Ecological Improvement to Increase the Attractiveness of Historic Settlement for Visitors and Local Population (in Galich and Kineshma)

This component shall finance small municipal infrastructure subprojects to increase tourism attractiveness of the historic settlements. The funds shall be used, inter alia, to: perform landscaping works and local improvements; establish pedestrian routes, architectural lighting of buildings/facilities, and a visitor navigation system; rehabilitate cultural heritage sites, including those owned by the regions and municipalities; and establish (construct/reconstruct/rehabilitate) infrastructure assets, including parking lots, pedestrian zones, embankments, quays and bridges.

COMPONENT 3. Marketing Strategies for the Participating Cities

This component shall support development and implementation of a marketing strategy for each historic settlement to promote the destination as a tourism center. The strategies shall be developed in four key areas:

• Image marketing: to create a positive image and reputation of the destination;

Attractiveness marketing: to develop and promote the destination's specific features that make it attractive to visitors and local population;

•  Infrastructure marketing: to increase the destination's attractiveness for businesses and attract investments; and

 Population marketing: to ensure local residents' loyalty to interventions within the Project, foster and maintain local residents' hospitable attitudes to visitors, and involve local residents in the tourism industry.

The funds shall be used, inter alia, to: brand or rebrand the historic settlement; design a website; create television and radio programs; make presentations and organize promotional events; print advertising materials; produce souvenirs; ensure participation in exhibitions and fairs; and organize roundtables and conferences.

COMPONENT 4. Project Management and Monitoring

This component is to provide support to the Implementation Agency through financing of the Project Management and Monitoring Costs.

Project Funding Sources and Implementation Period:

The funding sources for the Project include the following:

•  the NDB Loan — Euro 205 million (for financing components 1, 2 and 4 above);  the federal budget — Euro 8 million (for financing component 3 above).
•  Besides, based on the Sub-Project Implementation Agreements, the administrations of the participating regions shall allocate counterpart funds from the respective regional budgets and/or ensure co-financing of the Project from local budgets and other sources, including private investments. The funds shall be used, inter alia, to: repair roads and buildings; restore parks; and improve other public spaces. The amount of such counterpart funds shall be determined by the need to implement specific interventions in each historic settlement proposed by the Project Beneficiaries, but shall not be less than 25% (twenty five percent) of NDB Loan proceeds allocated to each Participating City's historic settlement activities (component 1 and 2 above).

The Project shall be carried out within the Project Implementation Period.