Tuesday 22 May 2018

One-size-fits-all system of commercial levies is choking development

An artist's impression of Facebook's Clonee Data Centre (Blue Rubicon/PA)
An artist's impression of Facebook's Clonee Data Centre (Blue Rubicon/PA)

Paul McNeive

I was contacted this week by Seamus Lonergan, managing director of U Store It, the self-storage specialists. The company has six buildings in Ireland, catering for this fast-growing business sector, which has grown from servicing the domestic market into a provider of secure storage space for corporates for longer lease terms. Seamus explained his predicament with the application of development levies at his latest development, and reminded me of what is a grossly unfair system, which is certainly a deterrent to development.

I met him on the site of his latest building, which is under construction in Ballymount, Dublin 12, beside the M50 motorway. U Store It is developing a warehousing building for which development contributions of approximately €950,000 are payable to South Dublin County Council (SDCC), at the rate of €75 per sq m. Because of the strength of enquiries he has, Seamus decided to build a warehouse extension of 778 sq m (8,374 sq ft), and this has attracted a further development contribution of €61,875. Development contributions are payments to the local authority for the provision of roads and services under section 48 of the Development Contribution Schemes 2010-2017, as adopted by the four Dublin local authorities. Water levies are now handled by Irish Water.

In an interesting case, Seamus appealed the application of the development contributions by SDCC to An Bord Pleanala. The main points appealed were that the lack of sub-division in the commercial/industrial category in the section 48 scheme, means that an office development, with a high build cost and high intensity of use, attracts the same development contributions as a warehouse of the same size, with a low build cost, low employment and low intensity of use on roads and drainage. Mr Lonergan argues that this is not justifiable, equitable, or logical.

He also pointed out that there are enormous differences between the development contribution rates adopted by the four Dublin authorities and, for example, neighbouring County Meath. It was noted that the development contribution for U Store It's original warehouse, on an already serviced site, was only €40,000 less than the contributions charged to Facebook for its €200m data centre development on a greenfield site in Clonee, Co Meath. The development contribution rate in Co Meath is only €11 per sq m.

U Store It lost the appeal, essentially on the grounds that the levies had been correctly applied. However, the inspector's report said that Seamus's case had "considerable merit," particularly in regard to his assertion that there should be further differentiation of uses, based on the cost of development and the intensity of use.

I agree that U Store It's case has a lot of merit and the current system is too much of a 'blunt instrument' whereby the development contributions are at similar rates, whether you are building a warehouse in Tallaght, an office block in docklands or a shopping centre in Dundrum.

The planning appeal also points out that a Deloitte report to the local authorities on adopting the scheme, suggested that development contributions should be approximately 3pc of development cost, but that they are closer to 20pc in the appeal case,

Seamus told me that he is considering seeking a judicial review in the matter. He also stated in his appeal that he had contacted several SDCC councillors about the issue and that they were all surprised to hear that there is no differentiation between types of development - despite having voted through the adoption of the scheme. Seamus Lonergan suggests that councillors are not properly briefed on these matters.

I offered SDCC an opportunity to comment but no response was forthcoming.

Beware Japanese Knotweed

I also heard recently from chartered building surveyor Krystyna Rawicz, alerting me to a particularly severe outbreak of Japanese knotweed in the Leinster area. Krystyna told me that she has encountered this deadly plant on three sites this year, which is unprecedented in her experience. Japanese knotweed is an almost indestructible growth that can damage walls and foundations. Property owners can also be liable for damages if they allow it to spread from their property onto a neighbour's.

Attempts to dig it out, or using the wrong poisons, can make it worse, and local authorities in the south-east have posted notices warning people not to attempt this. The best advice is to seek expert help immediately.

Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business