DUBLIN City Council has agreed a deal to sell a site to supermarket chain Lidl at a loss of €3.5m.
The local authority paid €4m for the site on Annamoe Road, Cabra in 2007.
Now it has been proposed to sell the site to Lidl for €500,000.
The contract, that has been drawn up between the city council and Lisney Chartered Surveyors who are acting on behalf of Lidl Ireland GMBH, states that if planning permission is refused both sides may pull out of the deal.
Originally, the council acquired the site with the intention of building affordable housing there but according to City Chief Executive Owen Keegan it is no longer considered suitable for this purpose.
"It's very tight, the building standards have improved," he told councillors at a recent meeting, noting that the site was bought "before my time".
A local builders merchants is set to benefit from the transaction as they have worked out a deal with the supermarket allowing them to stay at the location and keep 22 jobs.
Reaction among local representatives to the potential sale to the retail giant was mixed.
Cabra and Finglas independent councillor Cieran Perry welcomed the new business but said the scale of the loss to the council if the sale proceeds would be "disgraceful".
"It would appear to suggest that Dublin City Council got caught up in the property rush like everyone else - which really isn't their function," he told the Herald.
Council officials pointed out during the meeting that the cost of property purchases by the local authority reflect market values at all times.
The clause making the sale dependent on planning permission raised concerns among representatives about whether planners would come under undue pressure to grant permission, knowing that to refuse it will cost the council half a million euro.
"Planning should be above board but more importantly it should be seen to be above board," Independent Cllr Damian O'Farrell said, commenting on the potential for a conflict of interest.
The council's planning chief Jim Keogan told councillors that the clause is a common aspect of arrangements like the one for the Annamoe Road site.
He assured those present that staff in the planning department worked to a high professional standard and that there were no grounds to fear any conflicts of this nature.
Councillors were told that the proceeds of the sale will go into the local authority's capital fund to be used across the city council area.