Council land loans cost millions
Debt-ridden local authorities spent €606m on sites that were never developed
Published 07/01/2011 | 05:00
THE State could be forced to spend hundreds of millions of euro repaying loans taken out by local authorities to buy housing land at the height of the boom.
The Department of the Environment has already spent €32m repaying loans on land which may never be developed.
And it could be hit with an eventual bill of more than €300m, the Irish Independent has learned.
The department last night confirmed it had taken over five prime sites in Wicklow, Dublin and Sligo and could spend another €343m buying more unneeded land banks.
Some €25m was set aside to meet the demand for 2010, but this has already been exceeded.
The move comes after local authorities spent millions of euro building up landbanks to be used for social and affordable housing. These are now unlikely to be developed over the next decade because of the collapse in the housing market, and because councils intend to lease or rent homes instead of building new estates.
Details of the first payments under the Land Aggregation Scheme show that local authorities spent €606m buying up over 1,900 hectares of land for housing which was never built.
Under the scheme, taxpayers will be repaying the loans. First revealed in the Irish Independent last May, the scheme allows local authorities to apply to have these housing-land bank loans repaid by the department to stop interest bills from mounting up.
The land will be transferred to the recently established Housing and Sustainable Communities Agency, which will work with NAMA to see if some sites should be developed or sold off.
Figures show that up to €343m of these loans could be taken over by the Government to stop escalating interest payments. The department confirmed that 10 applications had been made so far to take over 40 sites, on which loans of €90m were outstanding.
Five applications have been approved, and payments of €32m made. These include:
- A 24-hectare site at Hampton, Balbriggan, owned by Fingal County Council valued at €19.2m.
- A 2.9-hectare site at Hillview in Ballynerrin bought by Wicklow Town Council for almost €1.4m.
- Two sites owned by Sligo County Council in Tubbercurry and Ballingother, valued at €310,000.
- A 8.2 hectare site at Ballyard in Tralee, valued at €5.6m.
Councils sent details of all land assets they owned to the Department of the Environment.
Then they applied for loans to be repaid. A spokesman said there would be a saving for local authorities because they wouldn't have to make repayments.
"The land aggregation scheme is an economic instrument," he added.
"We can't allow local authorities to run up interest payments on land banks that will not be developed in the short, medium or even long term.
"We're dealing with it now rather than later. Every one of those decisions (to take over the loans) will be made on a case by case basis."