Special rates and rent tax reliefs to corporate tenants in the enlarged Dublin Customs House Docks site will be ended by December 31st, 2003, under an agreement between the Government and the European Commission, formally approved in Brussels yesterday.
The decision ends months of uncertainty and will come as some relief to tenants of the docks in not requiring the repayment of the value of the special benefits some have enjoyed since 1993, running into many millions of pounds.
Crucially, those who entered into leasing contracts between January 1993 and the end of December 1998 will be able to continue to avail of 10 years' relief if their building was completed before April 1998, or it was started before then and was occupied by February 9th, 1999.
In effect, the majority of occupants of the old 27-acre site keep their rights while those who moved in to the six-acre extension see theirs curtailed to 2003. No further rights to the two reliefs were or will be allowed after December 1998.
The Commission ruling bodes ill for identical tax reliefs for the Spencer Dock project, including the National Conference Centre, whose consideration is still in the pipeline. Its developers, Mr Harry Crosbie and Treasury Holdings, have in the past insisted that its viability depends on the double rent and rates relief. Sources here say approval for that is now virtually ruled out as the Commission has taken a very strong line on "operational aid" of this type.
The conference centre project has been complicated yet again, sources say, by the decision of the Department of Tourism some 10 days ago to seek the removal of the centre from the list of EU structural funds projects in the current operational programme. There were fears that the delays in the project meant the money would be lost. Now it can be reallocated to other projects.
The Government is understood to be willing to find the £26 million (€33 million) that the EU would have contributed, but will have to apply for permission to the Commission to do so, as such a capital grant will be regarded as a state aid.
Subject to a number of other criteria, the Government is allowed to advance up to 17.5 per cent of the capital of a project in the Dublin area under new "regional aid" guidelines. Significantly, last January the Commission approved the granting of capital allowances to developers in the Customs House Docks site when it announced the inquiry into the special tax provisions for double rent allowances and rates relief on the old and then extended site.
While the former were seen as a standard form of state aid, or "regional aid", to a depressed area, the latter are regarded as day-to-day or "operational" aid which is prohibited under the regional aid guidelines. The Government's position was further weakened by its failure in 1993 to notify the Commission of the provisions and by the fact that Dublin is now losing its full Objective One status.
Foreseeing a problem the Government had already announced that the rent and rates reliefs were no longer available to new tenants and set about negotiating with the Commission to minimise the cost for those already there.
Yesterday the Commission, which has been increasingly vigilant in rooting out improper state aids, used its discretion to declare the modified version of the schemes compatible with its new aid rules and suspended its inquiry.
While potentially within its rights to demand the repayment of all benefits accrued to tenants from the two reliefs since 1993, the Commission will be satisfied to have put an end to the practice without the necessity for an expensive and time-consuming law suit.
