Law:Regional Development Incentives Act

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R.s.c., 1970, c. R-3

An Act to provide incentives for the development of productive employment opportunities in regions of Canada determined to require special measures to facilitate economic expansion and social adjustment


Contents

Short Title

Short title

1. This Act may be cited as the Regional Development Incentives Act.

1968-69, c. 56, s. 1.


Interpretation

Definitions

2. In this Act

“applicant”

« requérant »

“applicant” means an applicant for a development incentive or an applicant for a loan guarantee under this Act;

“approved capital costs”

« coût d’immobilisation approuvé »

“approved capital costs” means the capital costs, as determined by the Minister, of

(a) establishing, expanding or modernizing a facility in respect of which a development incentive is authorized or a loan guarantee is authorized under this Act, or

(b) establishing a commercial facility in respect of which a loan guarantee is authorized under this Act;

“capital to be employed in the operation”

« capital affecté à l’entreprise »

“capital to be employed in the operation” means, in relation to the establishment or expansion of a facility, the aggregate of

(a) the approved capital costs,

(b) the value, as accepted by the Minister, of the fixed assets that are to be employed in the operation and that are not included in the approved capital costs, and

(c) such amount in respect of the working capital required for the purposes of the operation as is approved by the Minister;

“commercial facility”

« établissement commercial »

“commercial facility” means the structures, machinery and equipment that constitute the necessary components of a commercial operation;

“designated region”

« région désignée »

“designated region” means a region designated pursuant to section 3;

“development incentive”

« subvention au développement »

“development incentive” means a primary development incentive, a secondary development incentive or a special development incentive described in section 4;

“facility”

« établissement »

“facility” means the structures, machinery and equipment that constitute the necessary components of a manufacturing or processing operation, other than an initial processing operation in a resource-based industry;

“Minister”

« minstre »

“Minister”, in relation to any class of matters to which this Act extends in any province or region of a province, means such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act in relation to that class of matters in that province or region of a province;

“operation”

« entreprise »

“operation” means,

(a) in relation to a facility, the manufacturing or processing operation of which the facility constitutes the necessary components, and

(b) in relation to a commercial facility, the commercial undertaking of which the commercial facility constitutes the necessary components;

“total capital costs”

« coût d’immobilisation total »

“total capital costs” means

(a) the approved capital costs,

(b) the value, as accepted by the Minister, of the fixed assets that are to be employed in the operation and that are not included in the approved capital costs, and

(c) the value, as accepted by the Minister, of the capitalized expenses incurred in bringing a new facility or commercial facility into commercial production or operation or in bringing an expanded or modernized facility into commercial production.

R.S., 1970, c. R-3, s. 2; R.S., 1970, c. 25(2nd Supp.), s. 1; 1980-81-82-83, c. 167, s. 34; 1988, c. 17, s. 16.


Designation Of Regions

Designation of regions

3. (1) Subject to subsection (2), the Governor in Council, after consultation with the government of any province or provinces, may for the purposes of this Act by order designate as a designated region, for the period set out in the order, any region comprising the whole of that province or those provinces, or any portion thereof not less than 12 500 square kilometres in size, that is determined to require special measures to facilitate economic expansion and social adjustment.

Criteria for designation

(2) A region may be designated pursuant to subsection (1) only if the Governor in Council, upon the report of the Minister, is satisfied that

(a) existing opportunities for productive employment in the region are exceptionally inadequate; and

(b) the provision of development incentives under this Act for the establishment of new facilities or the expansion or modernization of existing facilities in the region will make a significant contribution to economic expansion and social adjustment within the region.

R.S., 1970, c. R-3, s. 3; 1976-77, c. 55, s. 7.


Development Incentives

Authorization of Incentives

Incentives for new and existing facilities

4. Upon application therefor to the Minister by an applicant proposing to establish a new facility or to expand or modernize an existing facility in a designated region, the Minister may authorize the provision to the applicant, subject to this Act and upon such terms and conditions as are prescribed by the regulations, of

(a) a primary development incentive by way of financial assistance to the applicant for the establishment, expansion or modernization of the facility;

(b) in the case of a proposal to establish a new facility or to expand an existing facility to enable the manufacturing or processing of a product not previously manufactured or processed in the operation, a secondary development incentive by way of additional financial assistance to the applicant for the establishment of the new facility or the expansion of the existing facility for that purpose; and

(c) a special development incentive by way of financial assistance to the applicant for the establishment, expansion or modernization of the facility.

R.S., 1970, c. R-3, s. 4; R.S., 1970, c. 25(2nd Supp.), s. 2.


Maximum Amounts

Maximum primary development incentive

5. (1) The amount of a primary development incentive shall be based on the approved capital costs of establishing, expanding or modernizing the facility in respect of which the primary development incentive is authorized and shall not exceed

(a) 20% of those approved capital costs, or

(b)�$6,000,000,

whichever is the lesser amount.

Maximum secondary development incentive

(2) The amount of a secondary development incentive shall be based on the approved capital costs of establishing or expanding the facility in respect of which the secondary development incentive is authorized and on the number of jobs created directly in the operation and shall not exceed

(a) 5% of those approved capital costs,

plus

(b) $5,000 for each job determined by the Minister to have been created directly in the operation.

Maximum special development incentive

(3) The amount of a special development incentive shall be based

(a) on the approved capital costs of establishing, expanding or modernizing the facility in respect of which the special development incentive is authorized, or

(b) where such incentive is authorized in respect of a new facility or for the expansion of an existing facility to enable the manufacturing or processing of a product not previously manufactured or processed in the operation, on the approved capital costs of establishing or expanding the facility and on the number of jobs created directly in the operation,

and shall not exceed,

(c) in a case to which paragraph (a) applies and to which paragraph (b) does not apply, 10% of those approved capital costs, or

(d) in a case to which paragraph (b) applies,

(i) 10% of those approved capital costs,

plus

(ii) $2,000 for each job determined by the Minister to have been created directly in the operation.

Maximum incentive or combined incentive in certain cases

(4) No development incentive or combination of development incentives authorized in respect of a new facility or for the expansion of an existing facility to enable the manufacturing or processing of a product not previously manufactured or processed in the operation shall exceed the lesser of

(a) $30,000 for each job determined by the Minister to have been created directly in the operation, and

(b) one-half of the capital to be employed in the operation.

R.S., 1970, c. R-3, s. 5; R.S., 1970, c. 25(2nd Supp.), s. 3.


Determination of Amount of Incentive

Criteria for determining amount of incentive

6. Subject to this Act, the Minister may authorize the provision of a development incentive in the maximum amount provided for by this Act or in any lesser amount, and in determining whether to authorize the provision of a development incentive in the maximum amount so provided for or in any lesser amount, the Minister shall take into consideration the following factors:

(a) the extent of the contribution that the establishment, expansion or modernization of the facility would make to economic expansion and social adjustment in the designated region;

(b) the probable cost to provincial, municipal or other public authorities of providing services or utilities required for or in connection with the facility;

(c) the amount or present value of any federal, provincial or municipal assistance given or to be given, other than under this Act, in respect of the establishment, expansion or modernization of the facility;

(d) the probable cost of preventing or eliminating any significant air, water or other pollution that could result from the establishment, expansion or modernization of the facility;

(e) in the case of any proposal to establish or expand a facility constituting the necessary components of a processing operation, whether the resources to be exploited would be adequate, on a sustained-yield basis, to support the facility together with existing facilities that utilize the same resources; and

(f) such other factors relating to the economic and social benefits and costs of the facility as the Minister considers relevant.

1968-69, c. 56, s. 6.


Ineligible Facilities

Ineligible facilities

7. (1) No development incentive may be authorized under this Act for the establishment, expansion or modernization of any facility if, in the opinion of the Minister,

(a) it is probable that the facility would be established, expanded or modernized without the provision of such an incentive; or

(b) the establishment, expansion or modernization of the facility would not make a significant contribution to economic expansion and social adjustment within the designated region.

Idem

(2) No development incentive may be authorized under this Act for the establishment, expansion or modernization of any facility the capital costs of which would not, in the opinion of the Minister, exceed such minimum amount as is prescribed by the regulations.

1968-69, c. 56, s. 7.


Limiting Provisions

Servicing expenditures as approved capital costs

8. (1) In calculating the amount of any development incentive for the establishment, expansion or modernization of any facility, there may be included in the approved capital costs of establishing, expanding or modernizing the facility any capital expenditures made by the applicant to provincial, municipal or other public authorities for the provision of services or utilities required for or in connection with the facility, if the Minister is of the opinion that the expenditures were reasonably and responsibly made, but no such expenditures shall be so included in excess of 20% of the total amount of the approved capital costs of establishing, expanding or modernizing the facility, after deducting from those approved capital costs all federal, provincial and municipal grants or other financial assistance made or to be made in connection therewith or for which the applicant would ordinarily have been eligible by reason of the establishment, expansion or modernization of the facility.

Limitation re capital to be employed in the operation

(2) In calculating the amount of any secondary development incentive for the expansion of any facility, there may be included in the capital to be employed in the operation only such part of that capital as is to be employed in connection with the manufacturing or processing of a product not previously manufactured or processed in the operation.

1968-69, c. 56, s. 8.

Prior contractual commitment

9. (1) No development incentive may be authorized under this Act for the establishment, expansion or modernization of a facility for which a contractual commitment was made, whether or not the commitment remains in force, before

(a) the 1st day of July 1969, or

(b) the day on which an application for the development incentive is received by the Minister,

whichever is the later date.

Exception

(2) Notwithstanding subsection (1), where an application for a development incentive is received by the Minister before the 1st day of January 1970 in respect of a facility for which a contractual commitment was made on or after the 1st day of July 1969, provision of the development incentive may be authorized and the development incentive may be paid in accordance with this Act as if the contractual commitment had not been so made.

Time limitation

(3) No primary development incentive or secondary development incentive may be provided under this Act

(a) for the establishment of a facility that is not brought into commercial production until after the 31st day of December, 1984; or

(b) in the case of the expansion or modernization of a facility, if the expanded or modernized facility is not brought into commercial production until after the 31st day of December, 1984.

Idem

(3.1) No special development incentive may be provided under this Act

(a) for the establishment of a facility that is not brought into commercial production until after the 31st day of December 1973, or

(b) in the case of the expansion or modernization of a facility, if the expanded or modernized facility is not brought into commercial production until after the 31st day of December 1973,

unless, in the opinion of the Minister, the facility or the expanded or modernized facility was not brought into commercial production until after the 31st day of December 1973 for reasons beyond the control of the applicant.

Insurance

(3.2) No development incentive may be provided under this Act unless, at the request of the Minister or at such times as are provided by the regulations, the applicant therefor provides to the Minister evidence that the facility in respect of which the development incentive is authorized is insured to the satisfaction of the Minister or in accordance with the regulations.

Where incentive previously authorized

(4) No development incentive may be authorized for the modernization of any facility in respect of which a development incentive has previously been authorized under this Act.

R.S., 1970, c. R-3, s. 9; R.S., 1970, c. 25(2nd Supp.), s. 4; 1974-75-76, c. 84, s. 1; 1980-81-82-83, c. 14, s. 1.


Payment of Incentives

Time for payment of development incentives

10. When the Minister is satisfied that a facility for the establishment, expansion or modernization of which a development incentive has been authorized, the amount of which was based on

(a) the approved capital costs of establishing, expanding or modernizing the facility, or

(b) the approved capital costs of establishing or expanding the facility and the number of jobs created directly in the operation,

has been brought into commercial production or, in the case of a facility for the expansion or modernization of which a development incentive has been authorized, the expanded or modernized facility has been brought into commercial production, the Minister shall pay to the applicant an amount on account of the development incentive not exceeding 80% of the amount estimated by the Minister to be the amount of the development incentive, and the remainder of the incentive shall be paid in such amounts and within such period,

(c) not longer than 30 months from the day the facility or the expanded or modernized facility was brought into commercial production, in a case to which paragraph (a) applies and to which paragraph (b) does not apply, or

(d) not longer than 42 months from the day the facility or the expanded facility was brought into commercial production, in a case to which paragraph (b) applies,

as are prescribed by the regulations.

R.S., 1970, c. R-3, s. 10; R.S., 1970, c. 25(2nd Supp.), s. 5.

Where region ceases to be designated

11. Where, before a facility for the establishment of which a development incentive was authorized is brought into commercial production or, in the case of a facility for the expansion or modernization of which a development incentive was authorized, before the expanded or modernized facility is brought into commercial production, the region in which the facility or the expanded or modernized facility is or is to be situated ceases to be a designated region, no amount on account of the development incentive shall be paid under this Act

(a) unless the facility or the expanded or modernized facility is brought into commercial production within 18 months after the region ceases to be a designated region; or

(b) in any other case, unless the Minister is satisfied that

(i) substantial progress was made in establishing, expanding or modernizing the facility before the region ceased to be a designated region, and

(ii) after the region ceased to be a designated region, the establishment, expansion or modernization of the facility was completed with all reasonable speed.

R.S., 1970, c. R-3, s. 11; R.S., 1970, c. 25(2nd Supp.), s. 6.


Tax Provisions

Incentive exempt from income tax

12. An amount payable to an applicant on account of a development incentive under this Act is exempt from income tax.

1968-69, c. 56, s. 12.


Manpower Services

Condition respecting utilization of manpower services

13. (1) It is a condition precedent to the payment of any amount on account of a development incentive that the applicant keep the Canada Employment and Immigration Commission informed of the employment vacancies and requirements of the applicant in the designated region in which the facility for the establishment, expansion or modernization of which the development incentive was authorized is or is to be situated, and that the applicant further, from time to time, at the request of that Commission or as required by the regulations,

(a) discuss with the Commission the long-term plans of the applicant for the recruitment and training of employees in the designated region; and

(b) participate in and cooperate with the Commission in respect of any programs of the Commission related to employment counselling, placement and manpower adjustment, mobility and training.

Duration of condition

(2) The condition prescribed by this section shall be effective for the period ending on the day the final payment on account of the development incentive is made or the 31st day of December, 1984, whichever is later.

R.S., 1970, c. R-3, s. 13; 1974-75-76, c. 84, s. 2; 1976-77, c. 54, s. 74; 1980-81-82-83, c. 14, s. 2.


Loan Guarantees

Loan guarantees

13.1 (1) Upon application therefor to the Minister by an applicant proposing to

(a) establish a new facility or to expand or modernize an existing facility, or

(b) establish a commercial facility,

the Minister may, with the concurrence of the Minister of Finance, subject to this Act and upon such terms and conditions as are prescribed by the regulations, authorize the guarantee by Her Majesty in right of Canada of the repayment by the applicant of a proportion of any loan made to him in respect of the establishment, expansion or modernization of the facility or the establishment of the commercial facility and the payment of interest by the applicant on the proportion of the loan so guaranteed.

Ineligible facilities

(2) No loan guarantee may be authorized under this Act in respect of the establishment of a new facility or the expansion or modernization of an existing facility unless

(a) a development incentive

(i) has been or could be authorized under this Act for the establishment of the facility or the expansion or modernization thereof, or

(ii) could not be authorized under this Act for the establishment of the facility or the expansion or modernization thereof by reason only that the Minister is of the opinion that the facility could be established, expanded or modernized without the provision of a development incentive; and

(b) the Minister is of the opinion that

(i) the applicant could not obtain sufficient financing on reasonable terms for the establishment of the facility or the expansion or modernization thereof without such guarantee, and

(ii) in the case of the establishment of a new facility, it will be brought into commercial production on or before the 31st day of December, 1984 and, in the case of the expansion or modernization of a facility, the expanded or modernized facility will be brought into commercial production on or before that date.

Ineligible commercial facilities

(3) No loan guarantee may be authorized under this Act in respect of the establishment of a commercial facility unless

(a) the commercial services to be provided are of a class prescribed by the regulations and the facility will be located within an area prescribed by the regulations for the purposes of this section that is within a designated region; and

(b) the Minister is of the opinion that

(i) the establishment of the commercial facility would make a significant contribution to economic expansion and social adjustment within the designated region,

(ii) the capital costs of the commercial facility will exceed such minimum amount as is prescribed by the regulations,

(iii) the applicant could not obtain sufficient financing on reasonable terms for the establishment of the commercial facility without such guarantee, and

(iv) the commercial facility will be brought into commercial operation on or before the 31st day of December, 1984.

Maximum loan a proportion of which may be guaranteed

(4) No loan guarantee may be authorized under this Act where the amount of the loan to the applicant exceeds 80% of the amount estimated by the Minister to be the total capital costs of establishing, expanding or modernizing the facility or of establishing the commercial facility in respect of which the loan is mde minus an amount estimated by the Minister to be the aggregate of any development incentive and all other federal, provincial and municipal grants or other financial assistance given or to be given in connection therewith or for which the applicant would ordinarily have been eligible by reason of the establishment, expansion or modernization of the facility or of the establishment of the commercial facility.

Insurance

(5) A loan guarantee authorized under this Act ceases to be of any force or effect if the lender by whom the loan was made fails to provide to the Minister, at his request or at such times as are provided by the regulations, evidence that the facility or commercial facility in respect of which the guaranteed loan was made is insured to the satisfaction of the Minister or in accordance with the regulations.

R.S., 1970, c. 25(2nd Supp.), s. 7; 1974-75-76, c. 84, ss. 3, 4; 1980-81-82-83, c. 14, s. 3.


General

Limitations on agreements under Department of Regional Economic Expansion Act

14. Where, in the opinion of the Minister, a development incentive could be provided under this Act in respect of an undertaking referred to in subsection 10(1) of the Special Areas Act, notwithstanding anything in section 10 of that Act,

(a) an agreement providing for a guarantee described in paragraph 10(1)(a) of that Act may be entered into only if, in the opinion of the Minister, the approved capital costs of the undertaking would exceed

(i) $75,000 for each job that the Minister estimates would be created directly in the undertaking, or

(ii) $30,000,000; and

(b) no agreement providing for a payment described in paragraph 10(1)(b) or (c) of that Act may be entered into in respect of the undertaking.

R.S., 1970, c. R-3, s. 14; 1980-81-82-83, c. 167, s. 34.


Regulations

Regulations

15. The Governor in Council may make regulations

(a) defining for the purposes of this Act the expressions "manufacturing or processing operation", "initial processing operation", "resource-based industry" and "commercial operation";

(b) prescribing, for any designated region or for any class of manufacturing or processing operation, an amount less than the maximum amount of a development incentive provided for by this Act, which lesser amount shall, in relation to that region or any manufacturing or processing operation of that class, be deemed to be the maximum amount provided for by this Act;

(b.1) prescribing any one or more development incentives that may not be authorized by the Minister in respect of facilities within a designated region or regions prescribed for the purposes of this paragraph;

(c) prescribing classes of fixed assets the value of which may be included in the capital to be employed in the operation or in the total capital costs of a facility or commercial facility;

(d) respecting the determination of

(i) the working capital required for the purposes of any class of operation, and

(ii) the capitalized expenses incurred in bringing a new facility or commercial facility into commercial production or operation or in bringing an expanded or modernized facility into commercial production;

(e) for determining whether a product is a product not previously manufactured or processed in an operation;

(f) respecting the determination of the amount or present value of any federal, provincial or municipal assistance given or to be given in respect of a facility or commercial facility;

(f.1) prescribing terms and conditions on which a guarantee by Her Majesty in right of Canada may be authorized pursuant to section 13.1, including terms and conditions relating to the payment to Her Majesty by any lender of a guarantee fee;

(f.2) prescribing the maximum proportion of any loan the repayment of which and the payment of interest on which may be guaranteed pursuant to section 13.1;

(f.3) prescribing the nature and extent of the insurance to be maintained in force on any facility in respect of which a development incentive is authorized or on any facility or commercial facility in respect of which a loan guarantee is authorized under this Act and the times at which evidence of such insurance shall be provided to the Minister;

(g) respecting the determination of any matter that under this Act is to be determined by the Minister;

(h) respecting any other matter or thing that under this Act is to be prescribed by the regulations; and

(i) generally for carrying into effect the purposes and provisions of this Act.

R.S., 1970, c. R-3, s. 15; R.S., 1970, c. 25(2nd Supp.), s. 8.


Regional Development Incentives Board

Board to be established

15.1 The Minister shall establish a Board to advise him with regard to the administration of this Act.

R.S., 1970, c. 25(2nd Supp.), s. 9.

Report to Parliament

16. The Minister shall, within forty days after the 6th day of August 1969 and monthly thereafter, or, if Parliament is not then sitting, on any of the first five days thereafter that Parliament is sitting, submit to Parliament a report respecting the administration of this Act.

1968-69, c. 56, s. 16.


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