Regional Development Incentives Regulations, 1974 (C.R.C., c. 1388)

23 Subject to section 26, 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 included in the approved capital costs on which the amount of development incentive is based cease to be used in the facility, the applicant ceases to be eligible to receive any further payment on account of the assets that have ceased to be so used, and shall repay to Her Majesty such amount of the development incentive as may be determined by the Minister to be the same proportion of the development incentive as the approved capital costs of the eligible assets that have ceased to be so used are of the total approved capital costs.

• 24 (1) Subject to section 26, 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 payment on account of the development incentive is 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.

• (2) Subject to section 26 and notwithstanding the provisions of subsection (1), if all eligible assets comprised in the approved capital costs on which the development incentive is based cease to be used in the operation, no direct jobs shall be deemed to have been created for the purposes of section 7.

• 25 (1) Subject to subsection (2), 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,

  the facility is sold or otherwise disposed of,

  • (c) neither the applicant nor the successor to the applicant is eligible to receive any further payment on account of the development incentive,

  • (d) the applicant shall repay to Her Majesty such amount of the development incentive as may be determined by the Minister to be the same proportion of the 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 unless during the period referred to in paragraph (a) or (b), whichever is applicable, the operation has been carried on in the same manner as planned at the time of the application, and

  • (e) in the case of a development incentive that is based in part on the number of jobs created directly in the operation, if the number of jobs is less than the estimated number of jobs on which payment on account of the development incentive is 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.

• (2) Where a facility is sold or otherwise disposed of in the circumstances described in paragraph (1)(a) or (b) and the Minister is satisfied that

  • (a) the operation will continue to be carried on in substantially the same manner as planned at the time of the application,

  • (b) the applicant and his successor will, at or about the time control over the facility is assumed by the successor, assume joint and several liability to repay any amounts received by the applicant on account of the development incentive in the event of cessation of use of the assets in the operation during the period referred to in paragraph (1)(a) or (b), whichever is applicable, and

  • (c) the successor will carry out all other terms and conditions relating to the development incentive,

  the Minister may waive conditionally the requirements of subsection (1), and may direct that such balance of the development incentive as would be payable to the applicant pursuant to section 29 be paid to the successor.

26 If the Minister determines that, due to circumstances beyond the control of the applicant that could not have been anticipated at the time of the authorization,

• (a) the applicant has been prevented from carrying out his plans as identified in the offer of the development incentive, or

• (b) the results identified in the offer of the development incentive have not been achieved,

the Minister may

• (c) waive, in whole or in part, the provisions of sections 23 and 24, and

• (d) if a substantial proportion, being not less than 50 per cent by value, of the eligible assets is in use in the operation and the Minister is satisfied that such proportion will continue to be so used, direct that, in calculating interim and final payments,

  • (i) the approved capital costs of eligible assets not in use shall be included in the calculation of the part of the payment relating to approved capital costs, and

  • (ii) abnormal or temporary circumstances shall be taken into account in calculating the portion of the payment relating to the number of jobs created directly in the operation,

but the total of all payments on account of the development incentive shall not exceed the amount estimated at the time the development incentive was authorized.

27 The applicant shall

• (a) forthwith notify the Minister of

  • (i) the cessation of use of any eligible assets under the circumstances described in paragraph 23(a) or (b),

  • (ii) the sale or other disposition of the facility under the circumstances described in paragraph 25(1)(a) or (b),

  • (iii) the destruction or damage of the facility or part of the facility under the circumstances described in subsection 21(1), or

  • (iv) the failure to comply with the condition set out in subsection 22(1); and

• (b) unless otherwise directed by the Minister, repay all amounts required to be repaid by him, pursuant to sections 21 to 25, not later than four months after the date on which the eligible assets ceased to be used.

Payment of Development Incentives

28 The Minister may determine that a new, expanded or modernized facility has been brought into commercial production when he is satisfied that

• (a) the facility has been utilized in the continuous production of marketable goods in commercial quantities for a period of not less than 30 days; and

• (b) more than 50 per cent by value of the eligible assets, as forecast for purposes of the authorization of the development incentive, are being and will continue to be used in the manufacturing or processing of those goods.

• 29 (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 authorized development incentive as calculated at that time without taking into account

  • (a) the approved capital costs of any eligible assets not at that time in use in the operation; or

  • (b) jobs forecast for purposes of the authorization that, in the opinion of the Minister at that time, will not be created in the operation.

• (2) Subject to subsection (3), the Minister may,

  • (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,

  make an interim payment on account of the development incentive if such payment is greater than 25 per cent of the amount of the initial payment made pursuant to subsection (1).

• (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 estimated development incentive as calculated by the Minister at the time of the initial or interim payments.

• (4) The final payment on account of a development incentive shall take into account the approved capital cost and jobs created as determined by the Minister at the expiration of the period referred to in paragraph (3)(a) or (b), whichever is applicable.

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

Loan Guarantees

31 A loan guarantee may be authorized by the Minister in respect of the establishment of a commercial facility in the areas comprised by the regions designated as designated regions for the purposes of the Act by the Regional Development Incentives Designated Region Order, 1974 that provides commercial services of one or more of the following classes:

• (a) business offices;

• (b) warehousing and freight-handling facilities;

• (c) shopping centres;

• (d) convention facilities;

• (e) hotel accommodation;

• (f) recreational facilities; and

• (g) research facilities.

32 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, be at least $100,000.

• 33 (1) The maximum proportion of any loan the repayment of which and the payment of the interest on which may be guaranteed shall be 90 per cent and Her Majesty’s liability under any loan guarantee shall not exceed 90 per cent of the original principal amount of the loan.

• (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 is deemed to be in default.

• 34 (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 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 one per cent per annum calculated on the outstanding portion of the loan guaranteed by Her Majesty in right of Canada as of the last day of each month of the period covered by the report.

35 A loan guarantee agreement shall contain conditions respecting

• (a) the notification to be given to the Minister where the borrower is in default;

• (b) the terms and conditions under which the loan guarantee may be invoked;

• (c) the manner in which any assets of the borrower may be taken or seized by the lender;

• (d) the disposition or management of assets taken or seized by the lender;

• (e) the payments to the Receiver General to be made by the lender out of the disposition or management of assets taken or seized by the lender; and

• (f) such other terms and conditions as the Minister considers appropriate.