Written Answers. - Town Renewal Scheme.

Cecilia Keaveney

Question:

279 Cecilia Keaveney asked the Minister for Finance when he envisages receiving sanction for the commercial aspects of the town renewal scheme; and if he will make a statement on the matter. [7916/01]

Agreement has now been reached with the European Commission to allow the application of commercial and industrial incentives to the majority of projects under the town renewal scheme. Details of the new arrangements, which are tailored to meet the Commission's requirements on State aids, were announced by the Minister of State at the Department of the Environment and Local Government on 16 March 2001.

Incentives will be available to small and medium enterprises, SMEs, that is enterprises defined by the EU as having certain characteristics, including a staff of fewer than 250 employees with either an annual turnover not exceeding 40 million euro or an annual balance sheet totalling 27 million euro. In detail, the range of projects that have been cleared to proceed from 6 April 2001 following discussions with the European Commission are: all new build SME projects – such projects will be eligible for both commercial and industrial incentives; refurbishment projects in the following categories: SME projects where the expenditure incurred is below 800,000 euro, (£630,051) will qualify for the full range of commercial and industrial incentives; SME projects, which involve both expenditure on refurbishment and the provision of an extension where the cost of the extension is at least 25% of the market value of the existing building – this category will also qualify for commercial and industrial incentives; local retail SME projects, excluding mail order and financial services. Incentives for office and industrial development are therefore excluded under this category.

Projects which qualify under any of the three refurbishment categories outlined above will be eligible under the scheme. Refurbishment projects which do not fall within these categories are the subject of ongoing discussions with the European Commission. In view of the delay in reaching agreement with the Commission on the commencement of the commercial and industrial element of the scheme, the termination date of the scheme has been extended from 31 March 2003 to 31 December 2003.

Provision to allow the implementation of these arrangements has been included on Report Stage of the Finance Bill, 2001, which is being circulated in the Dáil today. The provision will also provide that capital allowances will not apply in respect of expenditure incurred, on or after 6 April 2001, on industrial and commercial premises in designated areas under this scheme, where any part of that expenditure is met by way of grant assistance from State bodies or elsewhere. This amendment is being made in order to ensure that the scheme complies with the European Commission's regional aid guidelines for the period to 2006 and similar amendments were made on Committee Stage in respect of the urban and rural renewal schemes.