URBAN renewal tax incentives should be linked in future to area based plans which take into account community development, employment, urban design and conservation, according to a report published yesterday.
Commissioned by the Minister of State for Housing and Urban Renewal, Ms Liz McManus, it says that the cost of tax incentives to the Exchequer meant that they should be aimed only at areas which would not attract development otherwise.
The report says "more stringent" criteria in selecting designated areas should be applied by the Minister for the Environment, aided by a panel of experts.
It would be "essential" for local authorities to give priority to the areas of greatest need. Otherwise market forces would "inevitably favour the least risk option" with the result that development would happen only after more attractive opportunities elsewhere were exhausted.
The consultants - KPMG, architects Murray O'Laoire and the Northern Ireland Economic Research Centre - were appointed last January to carry out a detailed study of the impact, effectiveness and cost of the urban renewal tax incentive scheme, introduced in 1985.
The scheme, aimed at addressing widespread dereliction in cities and towns, was extended over the years to cover more than 100 designated areas in 35 urban centres, leading to major physical renewal which contributed to a growth in economic activity including tourism.
Since 1986, it has generated over £1.7 billion of private sector investment. If the estimated £600 million worth of projects which were being planned at the end of 1995 was included, the total investment levered by the scheme would amount to a potential £2.3 billion.
Most of the development in designated areas has been new buildings, with refurbishment of the existing stock amounting to just 11 per cent of the total. The pattern of development was also piecemeal," with "little prioritisation of overall urban design objectives", the report says.
Though some "excellent" conservation initiatives had been undertaken, the practice in many designated areas "has simply resulted in the gutting of buildings and the retention of facades" - mainly due to cost, mismatch of use and difficulties in complying with building regulations.
Almost £490 million has been invested in residential development in all the designated areas since 1986. In the five cities - Dublin, Cork, Limerick, Galway and Waterford - an estimated 7,600 residential units have been built, of which 5,350 are in the centre of Dublin.
However, the report notes that many of the residential units are "small and spatially repetitive," with "a prevalence of small bathrooms and kitchenettes, many of them internalised with little natural light or ventilation" and also a lack of semi public and private external space.
Office blocks, shopping centres, hotels, restaurants and other commercial projects represent a total investment of £1.26 billion. But since many businesses relocated to designated areas to avail of tax incentives, this "resulted in little additional employment creation".
New shopping centres had made a positive impact in bringing previously run down inner city areas back to life, according to the report. Without the lure of tax incentives, these centres might have been developed on the outskirts of towns and cities instead.
Dealing with Temple Bar, it says the application of an architectural framework plan - drawn up in 1991 - was "in marked contrast to the largely ad hoc development observed in most other designated areas" and could usefully be adopted as a model for integrated planning.
Regarding the Custom House Docks, it notes that £421 million has been invested there. But the "introverted" business park type layout meant that its links with the rest of the city were weak.
The net cost to the Exchequer of the urban renewal scheme as a whole is estimated to be between £367 million and £461 million. The consultants say residential development accounts for only 11 per cent of this cost, though it represents 28 per cent of the overall investment.
In general, the report says, socially deprived inner city communities "are precluded from participating in tax incentive led development", both because they do not have sufficient tax liability or capital to benefit from the scheme and because of escalating land prices in designated areas.
