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City council set to ask for €50m bail-out bond

DUBLIN City Council is considering asking the Government to raise €50m to allow stalled housing projects to be built, a councillor has said.

The council's finance committee chairman, Killian Forde, said the local authority is looking at having the money raised on its behalf through the issuing of a bond.

Mr Forde said that the law was changed a number of years ago, depriving city and county councils of the ability to borrow in this way.

Five social housing schemes in Dublin were halted in 2008 after builder Michael McNamara & Co pulled the plug on the projects.

Mr Forde (Lab) said the council is now seeking to bankroll three of the complexes, including O'Devaney Gardens in Dublin 7, with the bond cash.

He added that the local authority would have to approach Environment Minister John Gormley with the proposal.

Mr Forde said the council's large-scale borrowing must be done through the National Treasury Management Agency (NTMA) and the liability becomes part of the debt.

"Dublin City Council would have to pay 5pc interest on the bond (per year) and at the end of 10 or 20 years you have to redeem it," he added.

A council report states: "It would be necessary to approach the NTMA to issue a bond on behalf of Dublin City Council or to include the funding requirements of Dublin City Council in a future bond issue."

The document points out the NTMA issued bonds in January at a rate of 5.091pc.

The report's author Kathy Quinn, the council's head of finance, questioned whether there is "a valid basis to pay an additional premium for funds secured through a bond issue".

The housing projects stalled after builder Bernard McNamara, through his Michael McNamara company, announced in 2008 that he was pulling out of the public- private partnership deal due to the economic downturn.

Despite the blow, the regeneration of St Michael's Estate in Inchicore is to go ahead after the Government granted more than €7m to cover the initial costs.

O'Devaney Gardens looks unlikely to get off the ground without a cash injection.