Tuesday 6 December 2016

Taxpayer may foot €650m council land bill

Local authorities borrowed hundreds of millions to fund the purchase of land they earmarked for social and affordable that were never built

Published 19/09/2010 | 05:00

DESPITE a record demand for social housing and thousands of homeless people around the country, taxpayers could lose up to €650m on land bought by local authorities for social and affordable homes that were never built.

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While they are struggling to provide many services or to cut verges or repair roads because of depleted budgets, the Sunday Independent has established that seven local authorities may seek to offload loans of up to €151.5m that were used to buy land to a new agency set up by the Department of the Environment called the Housing and Sustainable Communities Agency (HSCA).

It has been set up to manage the land in question and the department will pay off the loans on it that are owed to another State agency, the Housing Finance Agency (HFA). Local authorities owe a total of €650m to the HFA -- which the taxpayer funds -- but not all of this amount will be eligible for repayment, meaning the debt and interest repayments will remain the responsibility of county and city councils.

The HSCA will also consult with Nama -- the National Asset Management Agency that has bailed out the banks -- to see how the land can best be used. But unless the land has some economic or social benefit in the future that justifies its cost, the taxpayer is ultimately on the hook for money that has been wasted.

Although landowners would have pocketed the money in question, having sold it while land values were increasing, because of the property crash much of the land is now worthless.

Wicklow Town Council has been the first to benefit from the scheme, and a loan plus interest of almost €1.4m for a 2.9-hectare site will be paid by the agency.

Earlier this week, Fingal County Council approved the transfer of 85 acres of land on three plots in Balbriggan, Skerries and Garristown. The total value of these three plots, plus the interest that has accrued since they were bought in 2000, 2001 and 2002, is €34.7m.

A source at Offaly County Council said it only had one plot of land that was currently eligible for the scheme. The loan plus interest amounted to €420,000 he said, adding that it had nine separate loans outstanding with the HFA with a total value of €3.5m.

Dublin City Council estimates it will seek to transfer loans of about €30m to the agency, while Dun Laoghaire Rathdown has sought to transfer loans of €22m to it. Meanwhile, a source at Wexford County Council said it would seek to transfer loans of up to €20m to the HSCA.

In the case of Galway City Council, it is understood that councillors have yet to decide whether to seek to transfer 21 acres of land to the agency. Bought close to when prices peaked, the loans and outstanding interest on them amount to €29.5m.

However, independent councillor Catherine Connolly has questioned why the city council aims to build a new town for 10,000 residents in the Ardaun area of the city while at the same time it may transfer the land on the other side of the city to the HSCA.

Fine Gael environment spokesman Phil Hogan also criticised the strategy, arguing: "This smacks of property centralisation by the State. It will cost the taxpayer a lot more money than is necessary, for a lot longer than is necessary."

A spokesman for the Department of the Environment said: "There is nothing unusual about the manner in which councils purchased land. For many years now, it has been an accepted practice that local authorities build up land banks to ensure that they have available a sufficient supply of lands to meet social housing need that arises in the future.

"If local authorities had not had this land available for social housing purposes then they would have come under criticism for that as well."

Sunday Independent

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