Dáil Éireann debate -
Tuesday, 22 Feb 1994

Vol. 439 No. 2

Adjournment Debate. - Designated Areas Scheme.

Mrs. Doyle

I welcome the extension of the urban renewal scheme, particularly for those who genuinely need extra time to complete the development. I wish to raise the issue of interpretation difficulties with the guidelines on the extension of the designated areas scheme published on 27 January following the budget announcement to get specific answers to questions in relation to them. It appears that a Fianna Fáil Minister — I cannot be sure which — tipped off his pals in the construction industry that an extension of the scheme would be announced in the budget in spite of the fact that all correspondence prior to the budget from the Department of the Environment to the Construction Industry Federation indicated clearly that no extension would be available and that the Minister for Finance in abolishing the 30 November 1993 foundation laying deadline emphasised that the overall deadline for the scheme would remain 31 July 1994. He also said that urban renewal incentives would be available in respect of whatever qualifying expenditure has been incurred during the qualifying period to that date in July 1994.

A builder closely associated with the Fianna Fáil Party said, three weeks before the budget, that the scheme would be extended. Given the time the planning process takes, assuming that no additional information is requested by the planning authority and that no objections to the application are lodged necessitating a trip to An Bord Pleanála, it takes 60 days plus a further 28 days determination period, almost three months, to get permission in the normal process. Given the high cost of commercial planning applications, no developer in his right mind would waste thousands of pounds in submitting new planning applications in designated areas two days before the budget. I have a list of the planning applications and I invite the Minister to check with other relevant planning authorities for applications submitted a matter of days or weeks before the budget. An application was submitted on 24 January 1994 for 64 apartments in an area covered by the designated areas scheme which would have cost a minimum of £20,000 to lodge. It would have been a waste of money if the builder did not know the scheme was being extended two days later in the budget. At the very least these last minute applications do not pass the "smell test".

I will now turn my attention to the published guidelines. Will the Minister clarify the meaning of paragraph 3 (1)? Prior to that, paragraph 2 (2) states that any submission by a developer wishing to avail of the extension should include certificates from a professionally qualified quantity surveyor or valuer incorporating the following information "a detailed breakdown of expenditure incurred on the project before 26 January — budget day and that expenditure must show as per paragraph 3 (1) that at least 15 per cent of the total project cost will be assessed". Does that mean 15 per cent of the site purchase cost, 15 per cent of the contract to purchase price or 15 per cent of the total cost? Will the Minister please clarify this?

Questions have also been raised about the ambiguity of paragraph 1 (4) which says that the formal notification by the developer wishing to avail of the extension should include the following information: "Planning permission reference number and date of issue". Does this refer to the date of issue of the planning permission which must be included in the formal notification to be made by 3 February last to the appropriate authority? If so, all those last minute applications made on the basis of a tip-off could not have come through the due planning process. Does it refer to the date of issue of the planning reference number? We need clarification.

These schemes have been very successful in stimulating construction activity and renewing rundown parts of designated towns and cities since their initial introduction in 1985 by a Fine Gael Minister for the Environment. There must, however, be a level playing field so that all involved in the construction industry can avail of the incentives in this scheme in addition to the extra benefits from related budget announcements of accelerated capital allowances for industrial buildings, the doubling of the existing residential owner-occupier allowance for construction expenditure in the case of refurbishment work, rates relief on a sliding scale for ten years and the continuation of the allowance for rented residential accommodation.

The old pals act is not acceptable, nor should those involved in the construction industry need to be card carrying members of a Fianna Fáil cumann to benefit. There is a lesson in this — the leopard does not change his spots.

Minister of State at the Department of the Environment (Mr. Stagg)

A new urban renewal scheme will come into effect on 1 August 1994. In his Budget Statement and in the Principal Features the Minister for Finance announced certain transitional arrangements between the existing scheme and the new scheme. The purpose of the arrangements is to give a short extension to the closing date for the existing scheme in cases where developments were well advanced but which, for one reason or another, might not be in a position to make the 31 July 1994 closing date. Specifically, the arrangements provided that where 15 per cent or more of the costs of a development project have been incurred in an existing designated area before budget day 26 January, as certified by the relevant local authority before 23 February 1994, on the basis of guidelines drawn up by my Department, the closing date for the existing scheme will be extended from 31 July 1994 to 31 December 1994.

This is a generous gesture by Government towards people involved in development projects in designated areas. The areas have been designated for some considerable time and the termination dates had been extended on a blanket basis before.

In some cases, such as in Wexford, the original deadline of 31 May 1991 was extended to 31 May 1993 to 31 May 1994 and to 31 July 1994. In the case of the five county boroughs the original deadline was as far back as 1989. I do not think that anybody can justifiably claim that they were not given a fair crack of the whip in so far as the time constraints applying to the scheme are concerned.

To ensure that there was an awareness of the transitional arrangements, my Department took out advertisements in the daily newspapers on 28 January 1994 informing people of the availability of the time extension and advising them to contact their local authority for certification.

The Department of the Environment wrote to local authorities on 27 January 1994 asking that they ensure developers who may need to avail of the extension were contacted and advised of the procedures and giving the local authorities guidelines to assist in the certification procedure.

Mrs. Doyle

Those who had not heard beforehand.

Mr. Stagg

The local authorities could issue a certificate to developers where they were satisfied that at least 15 per cent of the total cost of a project was incurred before 26 January 1994 — in other words that there was a real and substantial commitment to the project.

In assessing the total cost of a project the guidelines allowed a wide degree of latitude. The total cost includes not only construction costs but all other development costs such as land acquisition costs, planning application fees, development charges and professional fees. The one restriction we applied was that payment had to have been made; contracts to purchase were not acceptable. Is it not reasonable to assume that a person who had not even purchased land by 26 February 1994 could justifiably claim that he had taken all reasonable steps to complete his scheme by the deadline of 31 July 1994? I am satisfied that the wide interpretation of "total cost" which the guidelines permit is fair and allows those who had taken all reasonable steps to ensure completion of their development by 31 July 1994, a little extra time to cover unforeseen delays.

It is not a prerequisite of the transitional arrangements that planning permission should have been received by budget day. It is conceivable that an individual could have purchased land and applied for planning permission which, for one reason or another such as a third party objection, may not have come through. The guidelines issued by the Department of the Environment ask the developer to submit details of the development, including the planning permission reference, commencement notice under the Building Control Act, 1990, and, where relevant, photographs of the development in progress. This is not to suggest that all these are a prerequisite to the issue of a certificate. A developer whose planning permission had not yet come through, but who otherwise met the 15 per cent requirement is entitled to a certificate from the local authority and clearly would not be expected to produce documents he had not got. The information requested was required merely to assist local authorities in reaching a decision. The acid test to qualify for certification was whether 15 per cent of the cost had actually been incurred.

I am entirely happy that the guidelines were clear and fair and allowed those who were fully committed to projects a short few months of grace to complete them. I reject the inference in the Deputy's speech that there was sleight of hand or favouritism to certain individuals. This area comes within my remit in the Department and I assure the House that there was no tip-off or that anyone had special advantages.