Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

This section introduces a scheme of tax incentives focusing on the regeneration of the historic centres of some of our main cities. The scheme which will be introduced by ministerial order is entitled the living city initiative and will apply in the first instance on a pilot basis to specified regeneration areas in Waterford and Limerick.

My Department has prepared an information note on this incentive which was published on the Department's website on 13 February last. The historic centres of some of our cities have suffered for a long time from gradual depopulation and the relocation of family homes and businesses to the suburbs, particularly during the period of the Celtic Tiger. These centres have also suffered greatly from the general economic downturn of the past few years. While I am not suggesting that this scheme is capable on its own of reversing that trend, I am convinced that it has a part to play. The particular focus of the scheme is as follows: to encourage people back to the centres of Irish cities to live in historical buildings, in particular Georgian houses; and to encourage the regeneration of the retail heartland of central city business districts.

I indicated in my budget speech in December last year that I would examine proposals for a targeted incentive for already identified regeneration areas. The tax relief that will apply under this scheme will operate for five years from the date of commencement. However, it is my intention that before it begins, the scheme will be subject to an ex ante cost benefit analysis and, subject to a positive outcome from the analysis, I will seek EU approval under state aid rules for this initiated to be commenced for Limerick and Waterford cities. I have not yet decided on the exact boundaries of the regeneration areas in these cities but I will be consulting with my Government colleagues and the relevant local authorities beforehand before I make any final decision.

There are two strands to the scheme. The first involves a tax relief for the refurbishment or conversion of Georgian houses for residential purposes. The relief will only apply to owner occupiers and not for rented residential accommodation. It is not a section 23 provision, which was relief for investors. This is a scheme for people who will live in the cities and move back from the suburbs and make living cities out of the derelict areas again. The relief will be spread over ten years at a rate of 10% of the expenditure per annum, provided the property is occupied as the principal private residence of the individual during that time. No relief can be transferred to any subsequent purchaser or to offset rent from any other building, which was a big feature of the previous tax incentives. It will be necessary for the individual to have received confirmation from the relevant local authority that the property conforms to planning permission if required, appropriate building regulations and floor area limits and the costs of works seem reasonable before the relief can be claimed.

The second strand is a scheme of accelerated industrial buildings allowances for the conversion and refurbishment of retail premises although other business services will also be allowed where the premises is a Georgian building. In such cases the commercial element will be confined to the ground floor or basement with a residential element upstairs. The allowance is at a rate of 15% per annum for six years and 10% in year seven and is subject to the normal balancing charges of allowances if disposed of within that time period.

The standard restrictions on the sideways setting of unused capital allowance against other income will apply. There will be no exemption from the current treatment of the termination of the carry forward of certain unused capital allowances for passive investors. Furthermore the high earners restriction which applies cross the full range of reliefs such as this also applies to this relief.

I hope these reliefs will help to restore some of these inner city areas to their former glory. The prevalence of Georgian houses is a particular characteristic of the built environment of many Irish cities. While some of these Georgian buildings have fallen into a state of disrepair and dereliction, my colleague, the Minister for Arts, Heritage and the Gaeltacht, and I have been exploring ways in which to promote and support the regeneration of these city centres. The reliefs I am introducing are an attempt to encourage people back into the cities to raise their families and if possible to operate their businesses from there. It will not be possible to revitalise these inner city areas without this happening. Pobal, the State agency that supports local communities, has developed a sophisticated index which measures deprivation in different local areas across Ireland. Taking into account the deprivation statistics from the 2011 census, both Limerick and Waterford scored as the most disadvantaged of our major cities. Furthermore unemployment rates in these cities are also the highest, significantly worse than the national average. Both have their own unique problems regarding unemployment and social problems and for these reasons I have selected them for the pilot phase of this initiative.

I understand Limerick better than I understand Waterford but the Government has decided that these two cities need to be treated with special measures to see what will work out. What has happened in Limerick is that a very imaginative regeneration scheme was brought in for local authority suburbs in the outer margins of the city which is beginning to work.

The regeneration of equally derelict areas of the inner city is important as well. Like some other towns, Limerick has developed like a doughnut as a result of bad planning practices that took a great deal of activity to the suburbs. In Limerick, the suburbs are administered by a different local authority. The hole in the doughnut - Limerick city centre - has nothing happening in it.