Regional Development Incentives Regulations (C.R.C., c. 1386)

12 It is a condition of a development incentive in respect of a facility that the applicant shall undertake to train and employ to the maximum extent practicable persons resident at the time of application for the development incentive in the designated region in which the facility is located.

13 It is a condition of a development incentive in respect of a facility that the applicant shall provide reasonable opportunities to Canadian manufacturers to supply the machinery and equipment included in the eligible assets of the facility, where such machinery and equipment are competitive in performance, price and delivery.

• 14 (1) It is a condition of a development incentive in respect of a facility that, if the amount or present value of assistance referred to in paragraph 6(c) of the Act is changed from the amount or present value that was taken into consideration by the Minister when authorizing the development incentive, the amount of the development incentive may be varied to the extent of the change in that assistance.

• (2) Assistance taken into consideration in accordance with paragraph 6(c) of the Act shall be deemed to include the present value of any difference between prevailing market terms for loans or leases and any more favourable terms on which loans or leases are made to the applicant.

15 It is a condition of a development incentive in respect of a facility that if,

• (a) during the 30 months immediately following the day on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based only on the approved capital costs, or

• (b) during the 42 months immediately following the day on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based in part on the number of jobs created in the operation,

the facility or part of the facility is destroyed by fire, flood or other act beyond the control of the applicant, the applicant shall pay to Her Majesty such amount of the insurance proceeds as may be determined by the Minister to be the same proportion of the whole of the insurance proceeds as the development incentive paid in respect of the destroyed assets is of the aggregate of the approved capital costs of the destroyed eligible assets and the book value of other destroyed assets in respect of which the insurance is paid.

• 16 (1) Unless otherwise specified in the authorization by the Minister, it is a condition of a development incentive in respect of a new facility that the applicant for the development incentive shall, for a period of at least 36 months after the day the facility was brought into commercial production, continue to carry on, at substantially the same rate as at the time of his application in respect of the new facility, every other operation utilizing a facility in any designated region whereby a product is manufactured or processed that is the same as or similar to a product manufactured or processed in the operation of which the new facility constitutes the necessary components.

• (2) Where an applicant who is subject to the condition referred to in subsection (1) fails to comply with that subsection, he thereupon ceases to be eligible to be paid the amount of the incentive that was based on the number of jobs created directly in the operation, and shall repay to Her Majesty any amount paid on account thereof.

• 17 (1) It is a condition of a development incentive in respect of a facility that, if

  • (a) during the 24 months immediately following the date on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based only on the approved capital costs, or

  • (b) during the 36 months immediately following the date on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based in part on the number of jobs created in the operation,

  eligible assets comprised in the approved capital costs on which the amount of development incentive is based cease to be used in the facility, the applicant shall, unless the Minister determines that the cessation of use was unavoidable, repay to Her Majesty such amount of the development incentive as may be determined by the Minister to be the same proportion of the total development incentive as the approved capital costs of the eligible assets that have ceased to be used in the facility are of the total approved capital costs.

• (2) An applicant shall

  • (a) notify the Minister forthwith upon ceasing to use eligible assets under the circumstances referred to in subsection (1); and

  • (b) repay any amount required to be repaid by him pursuant to subsection (1) not later than four months from the date on which he ceased to use the eligible assets.

18 It is a condition of any development incentive that is based in part on the number of jobs created in the operation that, if during the second and third years immediately following the date on which the facility is brought into commercial production, the number of jobs created directly in the operation is less than the estimated number of jobs on which payments, on account of the development incentive are based, the applicant shall repay to Her Majesty the amount paid on account of the development incentive that was related to the number of jobs that were not so created.

Payment of Development Incentives

19 The Minister may determine that a new, expanded or modernized facility has been brought into commercial production when he is satisfied that the facility has been utilized in the continuous production of quantities of goods for a period of not less than 30 days and that most, by value, of the eligible assets approved by the Minister in respect of the facility are being utilized in the manufacturing or processing of those goods and will continue to be so utilized.

• 20 (1) The amount that the Minister shall, pursuant to section 10 of the Act, pay on account of a development incentive at the time he is satisfied that the facility has been brought into commercial production shall not exceed an amount equal to 80 per cent of the total development incentive calculated without taking into account the approved capital costs of any eligible assets not then in use in the operation.

• (2) Subject to subsection (3), where

  • (a) during the 30 months following the date on which a facility is brought into commercial production, in the case of a facility in respect of which a development incentive is based only on the approved capital costs, or

  • (b) during the 42 months following the date on which the facility is brought into commercial production, in the case of a facility in respect of which a development incentive is based in part on the number of jobs created in the operation,

  the Minister is satisfied that 80 per cent of the development incentive will be greater by at least 25 per cent than the amount of the payment made in accordance with subsection (1), he may make to the applicant a further payment or payments on account of the development incentive.

• (3) The total of all payments made on account of a development incentive in respect of a facility prior to the expiration of

  • (a) 24 months from the date on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based only on the approved capital costs, or

  • (b) 36 months from the date on which the facility is brought into commercial production, in the case of a facility in respect of which the development incentive is based in part on the number of jobs created in the operation,

  shall not exceed 80 per cent of the development incentive that the Minister estimates that he will pay after the expiration of such period.

Regions

• 21 (1) The Minister shall not authorize a primary development incentive, a secondary development incentive or a special development incentive with respect to a facility located in the region designated in the Designated Region Order 1970-1Footnote ¹.

• (2) The Minister shall not authorize a special development incentive with respect to a facility located in any region designated in the Regional Development Incentives Designated Region Order, 1974 that is within the Province of Quebec, Ontario, Manitoba, Saskatchewan, Alberta or British Columbia.

  • Return to footnote ¹SOR/71-9

Loan Guarantees

22 A loan guarantee may be authorized by the Minister in respect of the establishment in the areas comprised by

• (a) the regions designated as designated regions for the purposes of the Act by the Regional Development Incentives Designated Region Order, 1974, and

• (b) the region designated as a designated region for the purposes of the Act by the Designated Region Order 1970-1Footnote ¹,

of a commercial facility that provides commercial services of one or more of the following classes:

• (c) business offices;

• (d) warehousing and freight-handling facilities;

• (e) shopping centres;

• (f) convention facilities;

• (g) hotel accommodation; or

• (h) recreational facilities.

  • Return to footnote ¹SOR/71-9

23 A loan guarantee shall not be authorized in respect of a commercial facility unless the total capital costs of the commercial facility will, in the opinion of the Minister, exceed

• (a) $2,500,000 if the commercial facility is located in the metropolitan area of Montreal;

• (b) $500,000 if the commercial facility is located in the metropolitan area of Winnipeg or Quebec City; or

• (c) $250,000 if the commercial facility is located in any other place within the areas prescribed by section 22.

• 24 (1) A loan guarantee shall not exceed 90 per cent of the total amount of the advances made by the lender to the borrower plus the interest thereon.

• (2) The Minister shall not authorize a loan guarantee unless he is satisfied that the terms and conditions of the loan are in accordance with reasonable commercial practice with respect to

  • (a) the security provided for the loan; and

  • (b) the circumstances in which the borrower shall be in default.

• 25 (1) It is a condition of any loan guarantee that the lender shall, semi-annually or at such shorter intervals as may be specified in the loan guarantee agreement, provide the Minister with a report showing

  • (a) the amount and date of any advances made under the loan;

  • (b) the amount and date of any payment received on account of principal or interest on the loan;

  • (c) any amount due on the last day of each month of the period covered by the report; and

  • (d) the amount and type of insurance carried on the facility or commercial facility.

• (2) It is a condition of any incremental loan guarantee that the lender pay to the Receiver General, at the time he provides the Minister with a report pursuant to subsection (1), a guarantee fee of two per cent per annum, calculated on the guaranteed portion of the loan outstanding as of the last day of each month of the period covered by the report.

• (3) It is a condition of any shared-risk loan guarantee that the lender pay to the Receiver General, at the time he provides the Minister with a report pursuant to subsection (1),

  • (a) where the percentage guaranteed does not exceed 50 per cent of the loan, a guarantee fee of one per cent per annum calculated on the guaranteed portion of the loan outstanding as of the last day of each month of the period covered by the report; and

  • (b) where the percentage guaranteed exceeds 50 per cent of the loan, a guarantee fee of

    • (i) one per cent per annum, calculated on the first 50 per cent of the guaranteed portion of the loan outstanding as of the last day of each month of the period covered by the report,

    • (ii) two per cent of the percentage guaranteed that exceeds 50 per cent but does not exceed 70 per cent of the guaranteed portion of the loan outstanding as of the last day of each month of the period covered by the report, and

    • (iii) three per cent of the percentage guaranteed that exceeds 70 per cent of the guaranteed portion of the loan outstanding as of the last day of each month of the period covered by the report.

• (4) For the purposes of this section,

  incremental loan guarantee

  incremental loan guarantee means a guarantee under which, after default by the borrower, the lender is entitled to apply any proceeds obtained from the realization of the security firstly in satisfaction of that portion of the unpaid balance of the loan that is not guaranteed by Her Majesty; (garantie croissante d’un prêt)

  shared-risk loan guarantee

  shared-risk loan guarantee means a guarantee under which, after default by the borrower and before Her Majesty’s liability is determined, the lender is required to apply any proceeds obtained from realization of the security in satisfaction of the loan. (garantie d’un prêt à risques partagés)