The Theatre Royal is both an asset and a liability for the Wexford Festival. You don't have to root too far into the festival's past to understand the scarcely credible nature of some of the liabilities.

The non-existence of backstage space meant that, at one time, singers exiting left and re-entering right had to make their backstage journey out-of-doors, in sometimes wet and windy conditions. Those days may be long gone, but the cramped conditions of the pit still create dangers all their own, for both the musicians and their instruments.

Of course, the situation is by no means a static one. Changes and developments have been made on an ongoing basis, with a major extension to the theatre carried out in 1987, a totally refurbished foyer opened in 1993, and increased space created in the pit in 1995. During these years, the length of the festival itself was also extended, from 12 nights to 18.

"The developments in the late 1980s and early 1990s," explains chief executive, Jerome Hynes, "led to an effective doubling of capacity at Wexford from 5,000 opera seats to 10,000 opera seats and the extensions to the festival obviously also led to an extended daytime programme to over 40 events in addition to the 18 performances of opera.

"This was a challenge in terms of capacity and there were many who said we would not achieve it, but thankfully we did - and earlier than most expected. We have being reporting 100 per cent occupancy since 1995. So, around that time, we took ourselves away and debated whether we wanted to do more - whether there was room for further development of the event and, if so, how."

Adding more nights was an option rejected because it would make Wexford "more of a season and less of a festival". It was also felt that it could create unsustainable strains for the festival's voluntary workers. Other factors which would have come in for consideration include the extra demands on the time of the National Symphony Orchestra, which suffers a large gap in its Dublin subscription season in order to service the Wexford Festival. And, even if RTE was prepared to make the sacrifice on behalf of Dublin audiences, there would be extra fees to be paid to both musicians and singers. Put more bums on seats at the existing performances, and the situation looks a lot more attractive.

It may be hard to imagine, but the festival did go through the process of considering moving to a green-field site. "We felt that while this could be glorious in terms of modern facilities, we would be taking something special from the event - the role played by the wonderful Theatre Royal, its sense of history, the town centre location and the essential character which the building brings to the festival."

It was a third option which beckoned most attractively. "As we saw it, the only desirable option was a development on site on High Street. But we were landlocked and adjacent property was not for sale. So over a period of time we had to persuade our neighbours, People Newspapers, to consider a move to a new headquarters, thus allowing us to purchase their 11,000 square feet of property."

It seems a most unlikely route to have followed, but it worked. And Hynes has always maintained that having Tony O'Reilly as festival president played no exceptional part in the deal struck with People Newspapers, part of the Independent group, of which O'Reilly is chairman. "It was a good business deal," says Hynes. The re-locating People Newspapers "were enormously co-operative and, while things naturally took some time to fall into place, they opened their new HQ on Rowe Street last April and we took vacant possession of their old property."

The old problems of in-house access hadn't entirely gone away. "In the September prior to that, we had also secured an additional house on High Street. This afforded us, for the first time in our history, the possibility of direct access from foyer to backstage without the necessity of going either through the auditorium or outside onto the High Street. What we had then amounted to the site necessary for a major development."

Now the challenge is different. With all the property acquisition sorted out, how will the dream of expansion be realised? "We want to extend the Theatre Royal from the current 550 seats to about 750, an increase of some 36 per cent in capacity and in potential revenue. We also want to achieve a second flexible venue in which many festival daytime events could be held. "Both venues would, of course, form the central part of an overall performing arts centre, which would be used all year round. The larger house for concerts and touring shows and the smaller house for a wide variety of events more appropriate to flexible spaces of that size. As part of this, we plan to incorporate a major gallery space and rehearsal rooms for local groups and visiting productions and facilities for other art forms - dance, film and so on."

For opera, there will be "state-of-the-art facilities for artists and crew backstage, plus more comfortable seating, better heating, better bars and foyers for the audience. We plan to create a major new centre operational on a year-round basis, but built around an anchor activity, the festival in the autumn.

"We commissioned a feasibility study and are now setting about securing funding for such a development. It will obviously require Government funding, the support of local authorities and private funding, and this is what we are working on at present." Hynes is very reluctant to talk money at this stage. A proposal has been sent to the Government, and an overall cost of up to £20 million is not out of the question.

"In design terms, we wanted to create a space which will be state of the art but also unique." The vision amounts to a tall order indeed. "It needs to be a first-class development of 21st-century standard and yet at the same time retain for artists and audiences all of the exceptional charm and warmth of the Theatre Royal and Wexford."

In truth, if the festival gets what it has set its sights on, what Hynes calls "the whole nature of our operation" will be radically changed. It will be, he says, "a whole new world in terms of arts infrastructure in this region. We'll be working all year round as a venue. We'll be pro-active, in creating programmes and bringing activities to Wexford that would never have come otherwise."

And the festival, he's absolutely confident, will benefit hugely as an international event at what he's predicting will become "a state-of-the-art facility of national importance".