DCC leaving door open to using taxpayer funds to further boost developer's profits from public land site
DUBLIN City Council is leaving the door open to using taxpayer funds to further boost the profits of developer Bartra Capital after it hands over the publicly-owned site at O’Devaney Gardens for development.
Bartra, which is behind the controversial plan for a co-living development in Dún Laoghaire, has been chosen as the preferred bidder to develop 769 homes at the site - including 411 to be sold privately, 192 social units and 165 “affordable” units.
Last week Independent.ie revealed how the developer could make up to €67m profit on the back of the public land, if it sold all the properties at their highest estimated value.
The company refused to release its estimate, saying the procurement process was not complete and its plan "was deemed to be most economically advantageous by the city council".
Bartra will benefit from around €50,000-per-unit from the Serviced Site Fund for the affordable houses and a development levy of around €10,000 will be waived for the social units and deferred for the affordable ones.
However it has now emerged it could also benefit from further payments from the council, not contained in a report by deputy chief executive Brendan Kenny, presented to councillors last week.
The council said "at the moment" it was not the intention to pay Bartra any more for the affordable homes to make up the difference between the ‘affordable’ price and the perceived market value at the time of sale.
But a spokeswoman added: "It is not possible to confirm this will always be the case."
The project has come under criticism because at the top end of the "affordable" scale, a household would have to earn at least €108,000 a year and have savings of €42,000 to buy a €420,000 three-bedroom house at the development.
Central Bank lending rules mean a first-time buyer can only borrow 3.5 times their salary and must have a deposit of at least 10pc. CSO figures show that only 14.1pc of all households have an income over €100,000.
The council has also now admitted Central Bank lending rules were ignored when determining the price of "affordable" housing at the proposed redevelopment.
"The Central Bank lending rules are not part of the consideration when arriving at an Affordable Purchase Figure," a statement said.
"Basing any house price on the vagaries of Central Bank lending rules ie., how much potential buyers could borrow , carries with it the supposition that a discount could be provided no matter what the price. Which is patently not the case."
It said most of the affordable units come under the threshold of the rebuilding Ireland loan, a maximum purchase price of €320,000 with a corresponding loan of €288,000.
"We anticipate that while these prices are fixed over the five year term of the contract the Rebuilding Ireland loan will most likely be index linked over the same period.
"We do not anticipate that the first units will be occupied for at least another three years as per the development phasing, so fixing the price accrues an even bigger discount over the term of the development, this allied with the possibility of even more generous re-building Ireland loan terms will improve accessibility to finance to for those eligible purchasers."
Councillors will vote next month on whether to give the land to Bartra for the development, which will likely then make tens of millions on the back of the public asset.
Some have raised concerns about the proposal.
"It is absolute madness for councillors to agree to give away prime public lands in the middle of the worst housing crisis this country has ever seen while we have over 10,000 people in emergency homeless accommodation," said local councillor Anthony Flynn.
However, others have seen it as the only option on the table to develop much needed housing in the area.