Sunday 23 April 2017

Councils renting out properties for €10 a year... despite being owed €300m in loans

In Cork city valuable properties were leased to a medical practice and credit union for just €10 a year for eight years when the properties could have fetched market rents of €27,500. Photo: AFP/Getty Images
In Cork city valuable properties were leased to a medical practice and credit union for just €10 a year for eight years when the properties could have fetched market rents of €27,500. Photo: AFP/Getty Images
Paul Melia

Paul Melia

A building rented to a Cork medical practice for just €10 a year and council staff on 'acting up' allowances paid without sanction by the Government are among a litany of problems identified in a probe of our local authorities.

An audit of the country's city and county councils also shows that some €300m in unpaid rates, rents and housing loans remain outstanding, with some owed the money for four years or more.

Reports from the Local Government Audit Service reveal major concerns about how some councils manage their finances, with a lack of internal financial controls in some cases, goods and services being purchased without going through property tendering procedures and some projects going over budget and subject to legal disputes.

Staff in two councils - Dún Laoghaire Rathdown and Kilkenny - are being paid "acting up" allowances without sanction, while in Cork city valuable properties were leased to a medical practice and credit union for just €10 a year for eight years when the properties could have fetched market rents of €27,500.

There is also concern across a number of councils about loans being repaid on an interest-only basis. In Galway, this includes €32.3m drawn down to buy land.

"When the principal becomes repayable for these loans, this cost will have a significant adverse effect on both the council's revenue account and its cash flow position," the auditor said.

The audit reports from 2015, the most recent year available, have been published in recent weeks by the Department of Housing, Planning, Community and Local Government.

They reveal that councils are owed €291m in unpaid bills. Some €218m is owed in unpaid rates, with the highest amount owed to Dublin City Council at €51.1m. Another €48m is owed in unpaid rents, and €24.2m in unpaid housing loans.

Dublin city is owed a total of €84.9m, followed by South Dublin (€35m), Dún Laoghaire Rathdown (€24m) and Louth (€22m).

While councils are making efforts to reduce the debt, including taking legal action, the auditors noted that in some cases "weaknesses continue to be identified".

They also raise concern about low collection rates of these charges in some authorities.

Deficit

The audits also show that Donegal County Council has a deficit of €14.3m, which although reducing, is the highest in the 20 of the 31 local authorities for which information is available.

"Reducing the accumulated revenue deficit remains a key priority," the council said. "As the auditor has recognised, the council has taken positive steps in this regard in recent years, and the improving financial position is the result of strict budgetary control and dedicated financial oversight."

The reports also set out issues where many councils have failed over years to properly record ownership of land, properties and other assets.

Less than half of the 368 water 'assets', or pieces of infrastructure, in Meath have been transferred to Irish Water due to "complications" around mapping, unregistered lands or third-party interests. There are also instances of council-owned properties being rented for just €10 per year, way below the market rents.

Concerns are also noted in relation to council ventures with companies operating public facilities on their behalf. They include delays in producing financial accounts, and a reliance on the local authority to provide day-to-day funding.

Licensing agreements in relation to two leisure centres in Arklow and Wicklow were not signed by both parties, the auditor said, exposing the council to "unnecessary risk".

Consultants are currently reviewing the governance of leisure centres across the county.

Irish Independent

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