Council opts for bailout on lands

Clare County Council has defended its decision to pay €1.9 million for undeveloped social housing land in Lisdoonvarna. This is in response to claims the council paid inflated prices for land during the economic boom.

Newly elected Senator Martin Conway said local authorities, including Clare County Council, lost the run of themselves during the Celtic Tiger years by paying far too much for social housing land.
The council recently transferred land designed for social housing at Mountshannon House, which cost €444,408 and 4.247 hectares at Rooska, Lisdoonvarna costing €1.9 million, to the Land Aggregation Scheme (LAGS), which has been described as a National Asset Management Agency (NAMA) bailout for local authorities.
In 2007, the council purchased land from John O’Loughlin to meet future social housing needs and paid €1,928, 942, which included legal and auctioneering fees. Interest on the loan for the undeveloped land amounted to €184,138 by the end of 2009 and interest charges for 2010 are estimated at €29,000.
The council also got approval from the Department of the Environment in March 2003 to draw down a loan of €444,408 as an advance to voluntary housing agency Respond for the purchase of Mountshannon House on a half-acre site. The site was supposed to be developed as a facility for the elderly but never proceeded. Interest on the loan of €89,643 for this idle asset has been charged to the end of 2009.
No provision was made in Budget 2011 for the payment of charges on the loan drawn for these lands.
The Department of Environment previously recouped the cost of the interest on loans for social housing for seven years.
Senator Conway said the council is now effectively washing its hands of these two sites by passing them on to the LAGS. While the council would not have to pay the interest any longer, he expressed concern that the taxpayer would eventually foot the bill for this land purchase.
“It is regrettable that this land at Rooska was bought by council management at the time. This land should never have been bought at that price. It is a pity that a new NAMA-type structure had to be set up because of the amount of undeveloped local authority land throughout the country,” he said.
The LAGS, introduced in 2010, sets out revised arrangements for the funding of land for social housing purposes. The scheme allows local authorities to transfer land to the Housing and Sustainable Communities Agency, which will be responsible for their ongoing management and maintenance pending a decision on future use.
A council spokesperson said the authority acquired lands at different locations throughout the county over the years, having regard to assessment of housing needs at a given time.
“The lands were acquired having regard to market value and based on independent valuations provided by competent persons.
“There is no onus on Clare County Council to partake in the scheme but the council, in agreeing to transfer the lands, identified the benefit to the council who are servicing land loans where it is now unlikely that the lands in question will be developed in the short to medium term, given the over-supply on the housing market and the shift in Government policy towards RAS and leasing to meet housing demand, instead of new build,” she said.