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

Short Title

1 These Regulations may be cited as the Regional Development Incentives Regulations, 1974.

Interpretation

• 2 (1) In these Regulations,

  Act

  Act means the Regional Development Incentives Act; (Loi)

  eligible assets

  eligible assets means the assets approved by the Minister as forming the whole or a part of a facility or commercial facility but does not include

  • (a) land,

  • (b) passenger motor vehicles as determined by the Minister,

  • (c) means of transportation other than passenger motor vehicles as determined by the Minister that, in the opinion of the Minister, are not used primarily for the facility or commercial facility,

  • (d) assets that, in the opinion of the Minister, are normally considered to be a charge against income in the year in which they are acquired, and

  • (e) patents, franchises, copyrights and goodwill; (actif admissible)

  equity

  equity means the aggregate of

  • (a) the share capital,

  • (b) earned surplus,

  • (c) contributed surplus,

  • (d) other surplus or deficit accounts,

  • (e) shareholders’ loans that are subordinated to all other liabilities, and

  • (f) the proprietor’s or partner capital accounts, less such accounts as, in the opinion of the Minister, unreasonably inflate the net worth of the applicant; (capital effectif)

  lessor

  lessor means a lessor that is a company incorporated in Canada and subject to Canadian income tax law and that is the owner of assets leased to an applicant. (bailleur)

• (2) For the purposes of the Act and these Regulations,

  commercial operation

  commercial operation means any commercial undertaking other than

  • (a) an initial processing operation or any operation described in paragraphs (a) to (d) of the definition initial processing operation,

  • (b) a manufacturing or processing operation or any operation described in paragraphs (a) to (l) of the definition manufacturing or processing operation, or

  • (c) an operation in a resource-based industry; (entreprise commerciale)

  initial processing operation

  initial processing operation means an operation the product of which is a fossil fuel or a material mainly used for further processing or manufacturing, and includes the refining of petroleum, the production of newsprint and the processing of ores to form mineral concentrates, but does not include

  • (a) the processing by roasting, leaching or smelting of mineral concentrates to produce metals,

  • (b) the processing of wood by the sulphite process into bleached sulphite pulp in a pulp mill that prior to January 1, 1972 produced dissolving and high alpha cellulose pulp on a regular basis,

  • (c) the converting of wood pulp into paperboard or paper other than newsprint, or

  • (d) the processing, other than petroleum refining, of a product resulting in a significant chemical change in the principal material used; (entreprise de transformation initiale)

  manufacturing or processing operation

  manufacturing or processing operation means an operation whereby any goods, products, commodities or wares are created, fabricated, refined or made more marketable, but does not include

  • (a) the merchandising of any goods, products, commodities or wares except where they are products of, and their merchandising is integral with, an operation whereby they are created, fabricated, refined or made more marketable,

  • (b) the growing, catching or harvesting of any natural or cultivated product of nature,

  • (c) the extracting of minerals by any method,

  • (d) the production of energy except as an integral part of and solely for use in an operation whereby any goods, products, commodities or wares are created, fabricated, refined or made more marketable,

  • (e) the mixing of concrete or asphalt if, in the opinion of the Minister, such operation is carried out to a significant degree for direct application in plastic form to roadway paving or for direct use in construction in metropolitan and surrounding areas,

  • (f) salt or potash extraction,

  • (g) any mobile manufacturing or processing operation, except where the applicant agrees to use the assets of the operation for a period of at least five years in such area of the designated region as is specified by the Minister,

  • (h) construction work,

    • (i) repairing as distinct from rebuilding,

  • (j) the rendering of consumer services,

  • (k) publishing other than printing, and

    • (l) the manufacture of primary petrochemicals from any source of hydrocarbon including the manufacture of methanol, ethanol, ethylene, propylene, butadiene, butylenes, benzene, toluene, xylenes and ammonia; (entreprise de fabrication ou de transformation)

  resource-based industry

  resource-based industry means an industry that uses as a principal material a material

  • (a) the original location of which is not the consequence of human design, and

  • (b) that is in or close to its natural state. (industrie basée sur une ressource naturelle)

Application

3 These Regulations apply to any application for a development incentive received by the Minister

• (a) on or after the date these Regulations are registered under section 6 of the Statutory Instruments Act and before April 1, 1974, where the applicant has, pursuant to subsection 4(1) of the Regional Development Incentives Regulations, opted for the application to be dealt with under the Regional Development Incentives Regulations, 1974;

• (b) on or after April 1, 1974 and within two months after the date these Regulations are registered under section 6 of the Statutory Instruments Act, where the applicant has not, pursuant to subsection 4(2) of the Regional Development Incentives Regulations, opted for the application to be dealt with under those Regulations; and

• (c) more than two months after the date these Regulations are registered under section 6 of the Statutory Instruments Act.

Foreign Investment Review Act

4 The Minister shall not authorize a development incentive or loan guarantee to a person who is a noneligible person as defined in the Foreign Investment Review Act, unless that person has complied with the requirements of that Act.

Product Not Previously Manufactured or Processed in an Operation

5 No product shall be determined to be a product not previously manufactured or processed in an operation unless, in the opinion of the Minister, on the date of application for a development incentive for the expansion of a facility to enable the manufacturing or processing of the product,

• (a) the product is significantly different from any product that on that date is, or within the three years immediately preceding that date was, being manufactured or processed in the operation of which the facility constitutes the necessary components; and

• (b) the product cannot be economically manufactured or processed in that operation without the acquisition of additional assets.

Approved Capital Costs

• 6 (1) If the amount of a development incentive is based only on approved capital costs, those costs shall include only the approved capital costs of the eligible assets that are installed and utilized in a facility not later than 24 months after the date on which the facility, as established, expanded or modernized, is brought into commercial production.

• (2) If the amount of a development incentive is based in part on the number of jobs created directly in the operation of a facility that is established or expanded to enable the manufacturing or processing of a product not previously manufactured or processed in the operation, the approved capital costs of the facility shall include only the approved capital costs of the eligible assets that are installed and utilized therein not later than 36 months after the date on which the facility, as established or expanded, is brought into commercial production.

• (3) Subject to subsection (4), the approved capital costs of eligible assets shall be determined by aggregating

  • (a) the cost to the applicant of each asset to the extent that the cost does not, in the opinion of the Minister, exceed the fair market value of the asset;

  • (b) such capital expenditures as, in the opinion of the Minister, have been or are to be reasonably incurred and paid by the applicant as direct costs of designing, acquiring, constructing, transporting and installing the asset, and of insuring the asset during the construction period; and

  • (c) such capital expenditures as, in the opinion of the Minister, have been or are to be reasonably incurred and paid by the applicant or a lessor as

    • (i) direct costs of design, acquisition, construction, transportation and installation, and

    • (ii) insurance during the construction period,

    of machinery and equipment leased by the applicant, where

    • (iii) the machinery and equipment is leased for its economic life,

    • (iv) the lease includes an option to purchase the machinery and equipment at the fair market value prevailing at the time of exercising the option, and

    • (v) in the opinion of the Minister, the inclusion of such leased machinery and equipment as eligible assets for the purpose of a development incentive or a loan guarantee will result in an appropriately lower leasing charge to the applicant.

• (4) Where a development incentive has been authorized in respect of a facility, the Minister shall not approve any capital costs of that facility that are in excess of 125 per cent of the capital costs that were accepted by the Minister for the purpose of the authorization unless the applicant, before incurring such excess capital costs, obtained the agreement of the Minister to include such excess capital costs in determining the amount of the approved capital costs.

• (5) If, in the opinion of the Minister, the eligible assets installed or to be installed in a facility create a significant change in the plan proposed at the time of authorization of the development incentive, the Minister may reconsider the authorization and amend or withdraw the development incentive previously authorized.

Jobs Created Directly in an Operation

7 The number of jobs created directly in the operation on which a development incentive is based shall

• (a) include only those involving employment that relates to the manufacturing or processing of products for the production of which the facility is established or expanded; or

• (b) in the case of the expansion of a facility, be equal to the number of jobs included in paragraph (a) minus

  • (i) the number of persons normally employed in or based upon the facility as it was constituted at the date of the application for the development incentive, or

  • (ii) such number of persons as the Minister considers could reasonably have been expected to continue in that facility if the expansion had not taken place,

  whichever is the lesser.

Maximum Number of Jobs

• 8 (1) Notwithstanding section 7, for the purposes of paragraph 5(4)(a) of the Act, the number of jobs determined by the Minister to have been created directly in an operation shall be the greater quotient obtained by dividing

  • (a) the number of man days or fractions thereof, determined by the Minister to have been paid, or deemed by the Minister pursuant to section 10 to have been paid, by the applicant with respect to the employment of persons in or based on the facility during the third year after the date on which the facility is brought into commercial production,

  by

  • (b) the number of days that the facility is determined by the Minister to have been in operation during the third year referred to in paragraph (a), or

  by dividing

  • (c) the average of the number of man days or fractions thereof, determined by the Minister to have been paid, or deemed by the Minister pursuant to section 10 to have been paid, by the applicant with respect to the employment of persons in or based on the facility during the second and third years after the date on which the facility is brought into commercial production,

  by

  • (d) the average of the number of days that the facility is determined by the Minister to have been in operation during the second and third years referred to in paragraph (c).

• (2) In determining the number of man days and the number of days that the facility has been in operation for the purposes of subsection (1), the Minister may make the necessary adjustments to take into account such circumstances as he determines to be appropriate.

Determination of Amounts of Development Incentives

• 9 (1) Subject to subsection (2), in determining the amount of a development incentive that has been authorized under these Regulations, the Minister shall take into account

  • (a) the number of jobs created, or

  • (b) the wages and salaries determined by him to have been paid by the applicant with respect to the employment of persons in or based on the facility,

  averaged over the second and third years after the date on which the facility is brought into commercial production and adjusted to take into account such circumstances as he determines to be appropriate.

• (2) In determining the amount of a development incentive, the Minister shall not take into account

  • (a) any wages or salaries that, in his opinion, are excessive for the purposes of this section; or

  • (b) any amounts that increase the number of jobs or the total wage and salary bill of the applicant to an amount that is in excess of 125 per cent of the amount specified by the Minister for the number of jobs or the wage and salary bill in the authorization of the development incentive unless the creation of such jobs or the expenditure of such amounts was given approval by the Minister prior to the undertaking of the proposed plan or change thereto.

10 For the purposes of sections 7, 8 and 9, man days and wages and salaries paid by an assignee of the applicant’s rights, or by a person having a management or service contract with the applicant or such assignee, may be deemed by the Minister to have been paid by the applicant.

Working Capital and Capitalized Expenses

• 11 (1) The amount of working capital to be included in the capital to be employed in an operation shall be such amount of the excess of current assets over current liabilities other than loans as, in the opinion of the Minister, will be required for the operation when the operation is in production at its intended full capacity.

• (2) The amount of capitalized expenses that may be included in the total capital costs of a facility or commercial facility shall be such expenditures, other than the costs of fixed assets, as in the opinion of the Minister are

  • (a) necessarily incurred in bringing the facility or commercial facility into commercial production or operation; and

  • (b) in accordance with normal accounting practice, treated as capital expenditures and not as charges against income.

Conditions and Limitations

• 12 (1) A development incentive for an undertaking that the Minister determines to be an undertaking described in subsection (2) may only be authorized on condition that the development incentive is repayable in whole or in part at such time or times as the Minister prescribes in the offer of the development incentive and subject to the Act and the other provisions of these Regulations.

• (2) For the purposes of subsection (1), an undertaking described in this subsection is an undertaking

  • (a) that has a high risk of failure but for which there is a commensurate opportunity to achieve a high rate of return;

  • (b) whose rate of return would be too marginal without a development incentive but for which the authorizing of a development incentive that is not repayable would not be justifiable, taking into account the possible rate of return;

  • (c) that is not capable of proceeding because reasonable arrangements cannot be made for adequate financing by means of a loan guarantee under the Act or by other means; or

  • (d) that is of such a nature that it merits the offer of a development incentive but for which

    • (i) the authorizing of a development incentive that is not repayable would not be in the public interest, or

    • (ii) the applicant does not wish to receive a development incentive that is not repayable.

• 13 (1) Any offer of a development incentive or loan guarantee shall remain open for acceptance by the applicant for a period of 90 days from the day on which the offer is made by the Minister.

• (2) Any offer of a development incentive shall specify the date by which the construction or installation of the fixed assets of a facility must begin and the date by which the facility must be brought into commercial production.

• (3) The Minister may, if he is satisfied that the circumstances justify it, substitute a later date for either date specified in the offer in accordance with subsection (2).

• (4) If an applicant fails to meet a date specified in an offer of a development incentive in accordance with subsection (2) or a later date substituted therefor pursuant to subsection (3), the development incentive offered to the applicant shall be withdrawn.

14 It is a condition of the payment of a development incentive that is based in part on the number of jobs created directly in the operation that the applicant shall maintain payroll records adequate to permit verification of all wages and salaries paid in respect of the operation.

• 15 (1) Subject to subsection (2), no development incentive shall be authorized in respect of any facility unless the approved capital costs will, in the opinion of the Minister, be at least $25,000.

• (2) In the case of a proposal to establish a new facility or expand an existing facility to enable the manufacturing or processing of a product not previously manufactured or processed in the operation, a development incentive may be authorized, if

  • (a) the number of jobs to be created directly in the operation will, in the opinion of the Minister, be at least five; and

  • (b) the capital costs of the facility will be commensurate with the nature of the undertaking and at least $5,000.

• 16 (1) As a condition of authorizing a development incentive in respect of a facility, the Minister shall specify the minimum amount of the equity of the applicant in the operation, which amount shall be not less than 20 per cent of

  • (a) the approved capital costs of the facility as forecast for the purpose of the authorization, in the case of the establishment of the facility, or

  • (b) the approved capital costs of the facility as forecast for the purpose of the authorization plus the book value of the assets of the facility at the time of application, in the case of expansion or modernization of the facility.

• (2) Subject to subsection (3), the applicant shall provide the amount of equity specified by the Minister pursuant to subsection (1) on or before the date the facility is brought into commercial production.

• (3) Where the Minister is satisfied that special circumstances exist, he may extend the time for the provision by the applicant of all or part of the equity, specified by the Minister pursuant to subsection (1), but no such extension shall exceed 24 months from the date the facility is brought into commercial production and, notwithstanding section 29, no payment on account of the development incentive shall be made until all the equity has been provided.

• (4) Except for the amount of operational losses, as determined by the Minister, or other reductions effected with the prior concurrence of the Minister, the applicant shall maintain the amount of equity specified by the Minister pursuant to subsection (1) for a period of 24 months after the date the facility is brought into commercial production in the case of a facility in respect of which a development incentive is based on the approved capital costs only, or 36 months after the date 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.

17 It is a condition of a development incentive or a loan guarantee in respect of a facility or commercial facility that the applicant shall

• (a) undertake to train and employ to the maximum extent practicable persons who are, at the time of the application, resident in the designated region in which the facility or commercial facility is located; and

• (b) provide reasonable opportunities to manufacturers in Canada to supply the machinery and equipment included in the eligible assets of the facility or commercial facility, where such machinery and equipment are competitive in performance, price and delivery date.

• 18 (1) It is a condition of a development incentive in respect of a facility or commercial 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, taking into account the extent of the change.

• (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.

• 19 (1) If, in the opinion of the Minister, an applicant makes a significant change in the plans specified in his application without having obtained prior written approval of the Minister, the Minister may re-evaluate the application and amend or withdraw any development incentive previously authorized.

• (2) For the purpose of subsection (1), a change in ownership, management, financing, location, plant size or timing may be deemed by the Minister to constitute a significant change in the plans specified in an application.

20 In the case of an application for a development incentive to purchase the assets of an existing facility, the Minister shall, for the purposes of the Act, deem that a new facility will be established as a result of the purchase, if he is satisfied that

• (a) at the time of his receipt of the application, commercial production in the facility had ceased, or was about to cease;

• (b) the cessation of commercial production in the facility is or was dictated by circumstances clearly beyond the control of the vendor of the facility;

• (c) the purchase of the assets is a bona fide arm’s length transaction and has not been contrived for the purpose of demonstrating eligibility for a development incentive; and

• (d) the purchase price of the facility is calculated only in relation to the fair value of the tangible assets comprising the facility.

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

  • (a) during the 24 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 36 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 or damaged, the applicant shall repay to Her Majesty such part of the development incentive as is determined by the Minister to be

  • (c) the amount of the development incentive paid on account of the approved capital costs of the eligible assets destroyed or damaged, or

  • (d) an amount equivalent to any proceeds of insurance received by the applicant or his assignees that relate to the eligible assets destroyed or damaged,

  whichever is the lesser amount.

• (2) Notwithstanding subsection (1), if the Minister is satisfied that the eligible assets destroyed or damaged have been replaced or repaired or that they will be replaced or repaired without undue delay, he may permit the applicant to retain the amount otherwise repayable.

• (3) Where, subsequent to the making of any repayment pursuant to subsection (1), the applicant replaces or repairs within a reasonable time, as determined by the Minister, all or part of the eligible assets destroyed or damaged, the Minister shall direct that the amount repaid, or the appropriate proportion thereof, be returned to the applicant.

• (4) Where destroyed or damaged assets are replaced or repaired within a time deemed reasonable by the Minister, the new or repaired assets shall be deemed to be the same as those assets originally approved, taking into account such changes in approved capital costs as the Minister deems appropriate.

• 22 (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 is 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 Canada, in which 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 a firm subject to control in common with the applicant manufactures or processes products that are the same as or similar to those products contemplated in the operation of which the new facility constitutes the necessary components, and such firm fails to continue to carry on such manufacturing or processing operations in accordance with subsection (1), the applicant shall be deemed not to have complied with that subsection.

• (3) To the extent that the conditions referred to in subsections (1) and (2) apply to an applicant and such applicant fails to comply with those conditions, he may be deemed to be ineligible to be paid all or part of the development incentive and may be required to repay to Her Majesty such amount paid on account thereof as is determined by the Minister.

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.