Digital Hub boss says project still coming to town

The one million tourists that visit the Guinness storehouse every year can be forgiven for failing to notice they are at the Digital Hub, the State's flagship digital media cluster in Dublin.

The derelict shops that greet the tour buses as they pull up to the Republic's most popular tourist attraction reflect the poverty of 1980s Ireland rather than a high-tech economy that hosts companies such as Microsoft and Google.

Six years have passed since the Taoiseach, Bertie Ahern, and the then US president Bill Clinton visited the Liberties to unveil an ambitious €250 million urban redevelopment project to create a world-class digital media centre. And there are clear signs that the political establishment has lost interest in the project, which is languishing years behind schedule and can't seem to wriggle free of controversy.

Last month it got caught up in the controversy surrounding the closure of Media Lab Europe. But it has also suffered from the bursting of the internet bubble and a perception of cronyism created by the appointment of Laura Magahy's company, Magahy & Co, as management consultants to the project.

In 2001, the Department of Finance cut the Digital Hub's budget and the project has since found it difficult to regain momentum.

Just two acres of the total nine-acre site have been developed by the Digital Hub Development Agency (DHDA), the State agency created to deliver the Digital Hub project. And a tender process to deliver a public/private partnership (PPP) originally scheduled to be completed in late 2003 has still not been concluded.

There now seems little chance that the entire development will be completed by 2010.

"Public/private partnerships are complex," says Philip Flynn, DHDA chief executive.

"We have to ensure that we can deliver the objectives of the agency in creating a viable Digital Hub, that we deliver value for money and generate an income stream that can support the agency's work." DHDA chose a preferred bidder, Manor Park Homes, to develop the remaining seven acres of the hub site last year. However, its board has not yet recommended its bid to the Government. It is now considering an alternative model, whereby it would develop the Digital Hub itself by choosing different developers to work on parts of the Liberties site, which straddles both sides of Meath Street.

Flynn can't say it publicly but the clear implication of assessing this new model is that the original PPP approach has failed.

When asked about the delay to the process, a spokeswoman for Minister for Communications Noel Dempsey, who is responsible for the Digital Hub, said she couldn't comment on the issue. It is a matter for the board of the Digital Hub, she added.

A lack of political leadership on the issue does not auger well for the project.

Last month, one of its anchor tenants, Media Lab Europe, the Government's digital research partnership with the Massachusetts Institute of Technology, was wound up amid recriminations between the two partners.

One of the key themes uncovered in papers released under the Freedom of Information Act is a lack of Government input into the project once it had paid out €35.5 million to the institute.

But the political stakes are even higher with the Digital Hub project, which has received €50 million development from the State and €20 million of public money to develop two acres of the total nine acre site.

A further €150-€200 million is needed from the private sector to develop the remaining seven acres and build the full 23,225 sq m (250,000 sq ft) of office space and a mix of retail and residential property.

The critical question is whether the Digital Hub project can generate enough rental income to offer developers a return while creating enough income for DHDA to deliver its goals, which include a range of enterprise, educational and community-based activities.

The new option of self-development being studied by DHDA board would present a funding challenge for the agency. It can only borrow up to €10 million under the terms of the Act which established the agency and already owes €2 million to its bankers. A request to borrow another €1.5 million is with the Government.

Flynn admits that the agency's financial flexibility may have to be addressed by the Government if the agency chooses the self-development model. But he insists the project will work.

"I'm 100 per cent certain that we will deliver the project," says Flynn, who was appointed chief executive in January 2003.

In fairness, Flynn has done a good job of attracting digital media firms to the hub, which has more than 40 companies resident in the 4,645 sq m of offices already built. The agency has also set up educational schemes for the local community and taken part in an extensive consultation process.

However, there is now a chronic shortage of space at the Digital Hub, where a temporary prefab already houses one firm, and further temporary accommodation is under consideration by DHDA.

To meet the immediate shortage of space, the Government last week sanctioned the use of the building that housed Media Lab Europe for firms to use, at least until a new digital research centre is agreed by the Government. The first tenant, US games developer TKO Software, moves into the former Media Lab site later this month.

"Dublin itself was not a draw for the firm given the high cost of living here," says Will Golby, managing director of TKO Software's Irish subsidiary. "The availability of skilled staff, the facilities at the Digital Hub and flexibility of IDA Ireland were factors for setting up in Dublin."

Five international companies, including online bookseller Amazon, are based at the Digital Hub, and IDA Ireland says it can attract up to four firms a year. More than 30 indigenous firms have already been attracted to the hub cluster and many more want to set up shop.

Flynn says he is confident of attracting enough digital media companies to fill between 3,716-4,645 sq m of office space each year until 2010. Yet, the irony is that the hub project now has no developed land to accommodate these firms.

Due to the delays in choosing a partner to develop the project, a planning application has not yet been submitted. Further delays of at least a year are expected at this stage while refurbishment and building work will also take a considerable amount of time. Few people expect the development to be complete by 2010 and some within the community are naturally becoming frustrated.

"There is a need to get on with the project," says Catherine Byrne, a Fine Gael councillor from the area. "If it doesn't happen soon, there will be a feeling that the community will have been left out of the project."

One of the key community projects, a state-of-the-art digital learning centre, cannot be built until the rest of the development is under way.

However, the Digital hub has done a lot of work with local schools in the area, according to Andrew O'Connell, a local Sinn Féin councillor, who blames the media for hyping the Digital Hub project and linking it unfairly with Media Lab Europe.

"There were some far-fetched expectations created in the media of the whole Digital Hub plan," says O'Connell. "From some of the articles on it, you almost got the feeling it was going to be a kind of futuristic acropolis sitting in the middle of the Liberties."

Perhaps, but unless some added momentum can be given to the Digital Hub project soon, another grandiose State technology project could be lost.