The Government has decided to proceed with the designation of a "new generation" of urban renewal areas in advance of a final decision by the European Commission on the scope of Irish tax incentives.
The Minister of State for Housing and Urban Renewal, Mr Robert Molloy, said yesterday that there were "a lot of development proposals in the pipeline", and the Government felt it would not be right to delay designation any longer.
From March 1st a new scheme of urban renewal incentives will apply to designated areas in Dublin, Cork, Limerick, Galway, Waterford and 38 provincial towns, in line with the recommendations of an expert advisory panel.
Initially, the incentives will be confined to residential development, pending the European Commission's decision on whether double-rent allowances and rates remission for commercial premises constitute unfair State aid to the business sector.
Mr Molloy said his Department was responding to a list of queries from Brussels and he expected that the issue would be resolved by June. It was possible the Commission would approve capital allowances in lieu of the disputed subsidies to tenants.
He announced that tax incentives would be extended to smaller provincial towns under a new townscape restoration scheme aimed at upgrading derelict or disused buildings. Guidelines are being drawn up and the scheme may start next October.
The latest urban renewal package, he said, represented a radical departure from previous schemes because it adopted a "more targeted approach", based on integrated area plans submitted by the local authorities and vetted by the advisory panel.
Many of these plans were turned down by the panel and others had their proposed tax incentive zones substantially reduced. In line with the Bacon report on house prices, the Section 23 incentive for rental accommodation will not be widely available.
Mr Molloy said the most compelling reason for proceeding with urban renewal designation was to maximise the supply of housing and assist in stabilising prices by doing "everything possible to bring forward development of all sites on which housing is planned".
For the first time, a number of outer suburban areas will qualify for tax incentives - such as Tallaght, north Clondalkin and north-west Blanchardstown on the outskirts of Dublin and three local authority housing estates on the fringes of Galway.
Although Mr Molloy acknowledged that the existing urban renewal scheme had its faults, notably in urban design and architectural standards, he said it had levered £2.5 billion worth of investment and made "huge strides" in combating urban dereliction.
"Most of all, we have seen people returning to live in town and city centres," the Minister said. "We have seen what we thought had been lost and consigned to the social history books - revitalised towns and cities which now beat to the rhythm of downtown life." He noted, however, that the refurbishment of existing buildings accounted for only 12 per cent of residential investment under previous schemes.
