Section 2(3) of the Act states that a replacement facility can consist of either replacement or restoration.

Section 3(5) of the Act defines replacement as " the complete or partial demolition of obsolete industrial property and the complete or partial reconstruction or installation of new property of similar utility. "Replacement" usually involves the construction of a new building or part of a building. "Restoration", as defined as section 3(6) of the Act involves the restoration of an existing building rather than the construction of a new building.

When replacement includes additional floor space, it can still be a replacement facility provided that the building does not exceed the size of the original building by more than 10%.

If the replacement building exceeds the size of the original building by more than 10%, the additional space over 10% must be treated as a new facility. The tax on a new facility is calculated differently from the tax on a replacement facility. See section 14 of the Act regarding the calculation of the industrial facility tax for new and replacement facilities. When restoration includes more floor space than the original building, ALL of the additional floor space is treated as a new facility.