Fás paid double its valuation for 5.6-acre site in Offaly

DECENTRALISATION:FÁS PAID €1.5 million – more than double the initial valuation placed by its own property consultants – to acquire a 5.6-acre site for new headquarters in Birr, Co Offaly.

In August 2004, its consultants concluded that the site’s market value would be about €700,000, equating to €140,000 an acre – mainly because the site was “landlocked”. The price agreed four months later equated to €275,000 an acre.

Fás told the comptroller that the property consultants had subsequently raised their valuation to €300,000 an acre “as a result of further work and analysis” and recommended a price of €275,000 an acre in November 2004.

Although full planning permission was obtained for road access to the site, no further works have been undertaken pending the Government’s review of decentralisation in 2011; the Fás move to Birr is among those “deferred”.

In 2007, Fás entered into a 10- year lease for a 708 sq m building in Birr at an annual cost of €99,000 and spent just over €1 million fitting it out. It was planned that 40 staff would move to these offices, but only 20 staff have moved to date.

“Only one firm, the landlord’s building company, was asked to provide quotes for the fit-out contract,” the report says. Fás stated that the fit-out tender “compared favourably with a cost plan” developed by a quantity surveyor it employed.

However the comptroller’s report says: “Using a 10-year timeframe to write down the fit-out costs incurred, the annual cost of the lease is just over €200,000 per annum – 77 per cent higher than the upper benchmark for leased offices in that area.”

Of almost 11,000 public servants due to be relocated from Dublin, only 3,148 have moved since the programme was announced in 2003.

A further 1,191 are due to move, while the relocation of 6,583 posts have been deferred pending the review.

The report notes that 12 sites costing a total of €43.8 million had been purchased in locations “where the decentralisation programme is not being progressed”, while five office buildings leased for a total of €801,296 a year were left under-occupied.

Two new buildings – the Department of the Environment in Wexford, built at a cost of €19 million, and the Office of Public Works in Trim, Co Meath, costing €32 million – are also under-occupied because staff transfer is still under way.

Contracts totalling €180 million were awarded for new buildings in 12 locations – in addition to €67.4 million spent on the acquisition of 22 sites, 10 of which remain to be developed. In seven cases the price paid exceeded a “benchmark” level.

The OPW stated that the commitment to specific locations meant that it “had to deal with a limited pool of potential vendors who were well aware of its need to acquire a site or building” in these places, and this had an impact on its bargaining position.

On the plus side, the report notes that the OPW netted €374 million between 2004 and 2007 from the sale of State-owned property in Dublin, while leases surrendered on offices in the city until 2009 resulted in annual savings of €10 million.