Taxpayer to bail out council that can't repay €1.4m loan
Published 26/10/2010 | 05:00
A LOCAL authority that cannot afford to repay a loan of €1.4m on land bought for social housing will be bailed out by the taxpayer.
Wicklow Town Council has become the first council to be allowed to transfer loans to the Department of the Environment under the Land Aggregation Scheme.
The scheme effectively operates as a mini-version of the National Asset management Agency (NAMA) for the State's 114 local authorities.
And another four authorities have also applied to the department to repay loans which total €40m.
Dun Laoghaire-Rathdown, Offaly, Sligo and Tralee town councils want to transfer loans drawn down for seven sites, while dozens more applications are expected in the coming months.
This comes after the Irish Independent revealed in May that city and county councils that were unable to repay land loans due this year would be bailed out by the taxpayer.
Councils have borrowed money to buy 639 sites, totalling 2,000 hectares, across the country for housing -- and the amount owed is €650m.
The land was bought for social and affordable housing units. But despite a rise in the number of people on council housing lists, they were never built.
The plots are now lying idle, and are unlikely to be developed in the near future as the Government plans to lease -- instead of build -- new homes.
The money was borrowed from the Housing Finance Agency (HFA), a state company which borrows on the international markets on behalf of the local authorities.
A 2.9-hectare site at Hillview, Ballynerrin, was bought in 2000 by Wicklow Town Council but never developed.
Meanwhile, Dun Laoghaire-Rathdown County Council wants to transfer three plots totalling 15 hectares at Ballyman Road, Lehaunstown and Enniskerry Road, which it bought for almost €22m.
One of the sites on the Enniskerry Road was controversial because the council erected a sign saying "site reserved for social housing" which caused fury among local residents who claimed it was preventing the sale of their homes.
Applications from Sligo, Offaly and Tralee town councils are also being considered.
Housing Minister Michael Finneran confirmed that Wicklow Town Council's application for the site at Ballynerrin had been approved.