There will be no tax concessions for the Spencer Dock project or any further developments in Dublin's docklands, the Department of Finance has decided.
Plans to introduce amendments to the Finance Bill tomorrow, which would have allowed tax and rates relief on a range of schemes, have now been abandoned, according to Government sources.
The Dublin Docklands Development Authority (DDDA) had identified 10 projects for which it sought tax breaks and a remission of rates. But the Department has ruled out any special treatment, saying that with interest in the docks already pushing up property values, there is no longer a need for further tax incentives.
Even sites on the south side of the city quays with no prospect of attracting tax incentives have been making record prices. Earlier this month a business consortium paid £8 million (€10.2 million) at auction for a half-acre office site on the south city quays. Last week, development company Hardwicke bought 1.33 acres at Ringsend Road for the equivalent of £12 million.
In the same week more than 1,000 people, most investors looking for a tax shelter, queued to buy 98 new apartments on the site of the former Sheriff Street flats.
Even with the present buoyant property market, the DDDA has argued that tax incentives are necessary to kick start the next round of developments mainly between the extension to the International Financial Services Centre and the Point. Its list of schemes needing priority treatment included the 51-acre Spencer Dock development - currently the subject of a planning appeal - Connolly railway station, Stack A, the early 19th century warehouse in the IFSC, and the campshire, or walk, along the quays where it is planned to develop pavilion-style restaurants. The docks authority also sought an extension of the Section 23 tax reliefs for the final phase of 60 apartments in the 600-unit Chesterbridge scheme on the old Sheriff Street site.
The developers behind the £1.2 billion Spencer Dock development - Treasury Holdings and businessman Harry Crosbie - stand to lose most from the Department's decision not to endorse a programme of tax reliefs for the remaining 1,600-acres in the docklands due to be redeveloped over the next two decades.
The 26 buildings earmarked for Spencer Dock were planned on the basis that the promoters would secure a £26 million grant towards the National Conference Centre which would anchor the scheme as well as IFSC-type incentives including capital allowances, double rent relief and a remission of rates.
But these incentives have been in doubt since the European Commission ruled shortly before Christmas that rent and rates relief for new commercial traders in the 12-acre extension of the IFSC must be phased out by 2003. The Commission regards such reliefs as operational subsidies inimical to open market competition. The present system of capital allowances is also of little value to the Spencer Dock developers since the Government introduced a £25,000 limit on individual investments. Treasury is expected to push ahead with the development if it gets planning approval.
Although the Department of Finance is reluctant to extend the Section 23 tax incentives for residential schemes in the docks at this stage, it would be no surprise should these reliefs be reintroduced for future developments. The Commission does not apparently object to tax concessions for residential schemes.
