Subsection 3: Equalisation allowance.

Departments with a population density of more than 100 inhabitants per square kilometre and an urbanisation rate of more than 65% are considered to be urban departments for the purposes of this article. The urbanisation rate is determined on the basis of the density grid established by the Institut national de la statistique et des études économiques.

Urban departments whose per capita financial potential is less than or equal to 1.5 times the average per capita financial potential of urban departments and whose per capita income is less than 1.4 times the average per capita income of urban departments benefit from an urban equalisation grant.

A synthetic index of resources and charges for eligible urban departments is calculated for each eligible department, taking into account:

1° The ratio between the per capita financial potential of all urban departments and the per capita financial potential of the department, as defined in article L. 3334-6 ;

2° The ratio between the proportion of total recipients of housing benefit, as defined in Article L. 2334-17, in the total number of dwellings in the department and this same proportion recorded in all urban departments;

3° The ratio between the proportion of total beneficiaries of the active solidarity income mentioned in article L. 262-1 of the Code de l'action sociale et des familles in the department and this same proportion recorded in all urban departments, calculated by taking into account the population defined in the first paragraph of article L. 3334-2 ;

4° The ratio between the average per capita income of all the urban départements and the per capita income of the département, calculated by taking into account the population defined in the first paragraph of article L. 3334-2. The income taken into consideration is the last known taxable income.

The départements are ranked according to the decreasing value of their synthetic index, in accordance with procedures defined by decree in the Conseil d'Etat and taking into account the amounts referred to in 1°, 2°, 3° and 4°. The allocation for each eligible urban department is determined on the basis of its population and its synthetic index.

The allocation for urban departments that cease to meet the eligibility conditions is equal, in the first year, to two thirds of the allocation received the previous year and, in the second year, to one third of this same allocation. The necessary sums are taken from the amounts allocated by the Local Finance Committee to the urban equalisation grant. For the application of this provision in 2005 and 2006, the amounts received in 2004 in respect of the equalisation allowance provided for in article L. 3334-4 in its wording prior to the Finance Act for 2005 (n° 2004-1484 of 30 December 2004) are taken into account. This provision does not apply to departments which cease to meet the demographic conditions set out in the first paragraph and which receive an allocation under the minimum operating allocation in the same year.

From 2005, eligible urban departments may not receive, under the urban equalisation allocation, a per capita allocation greater than 120% of the allocation received the previous year. For the application of this provision in 2005, the amounts received in 2004 in respect of the equalisation allowance provided for in article L. 3334-4 in its wording prior to the aforementioned 2005 Finance Act are taken into account.

The available funds released by the implementation of the previous paragraph are distributed to all departments except those subject to a capping in application of this paragraph.

For 2005, when the allocation due to a département is lower than that received in 2004 under the equalisation allocation provided for in article L. 3334-6 as it stood prior to the aforementioned 2005 Finance Act, this département receives, as a non-renewable guarantee, an allocation equal to the amount of the equalisation allocation received in 2004. The necessary sums are taken from the appropriations allocated to the urban equalisation grant.

From 2012, eligible departments may not receive an urban equalisation grant that is less than the amount of the urban equalisation grant received the previous year. If the sum allocated to metropolitan départements as part of the urban equalisation grant is insufficient to finance the guarantees provided for in the second sentence of the sixth paragraph of article L. 3334-4 and in the first sentence of this paragraph, the aforementioned sum is increased by a sum enabling these guarantees to be financed. This increase is financed under the conditions provided for in II of article L. 3334-3.