A row has erupted over a Co Tipperary land deal involving the local authority, a Clonmel hotel and a large real estate company that later made a big return when selling the property.
The transaction took place five years ago when councillors backed a proposal from Tipperary County Council managers to sell the freehold interest in the Clonmel Park Hotel lands free of charge to a division of Tetrarch, one of Ireland’s biggest real estate groups.
The sale went ahead even though the hotel did not comply with planning permission, breaching a requirement of the lease.
An Independent councillor who proposed the December 2019 vote has now expressed anxiety about the deal, saying council information did not set the scene fully.
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“They failed to give me the full facts and I accepted what was given to me in good faith,” said Niall Dennehy, who has been questioning the deal for months. “I feel I wasn’t fully made aware of the full facts of the matter in 2019 and I’m now very concerned.”
The council said the freehold sale was a “tidying up” action required under the terms of an old lease and “did not amount to the acquisition of a valuable interest” in the property. The “peppercorn” rent on the lease meant this was not the sale of an interest in which the council was entitled to a “market-value” rent, it said.
But councillors were never told the lease condition that required the hotel to comply with planning permission was not followed.
Mr Dennehy brought a motion this week to councillors seeking new procedures to give them “independent legal advice” in any future disposals of council land in the area. A vote on this was deferred until the new year.
“I have asked for confirmation from the council executive that the proposition that I proposed in good faith was not flawed in any shape or form. That hasn’t been forthcoming,” Mr Dennehy said
However, the local authority dismissed any suggestion the sale was flawed or inappropriate. “This council would not agree with this characterisation of the transaction.”
The lease’s emphasis “was not on planning compliance” and more on ensuring the hotel was built and open for business, it said.
After paying €4.48 million for the hotel seven months before the council transferred the freehold, Tetrach sold the property to Talbot hotel group in 2022 for €7.95 million. Tetrarch had no comment for this piece. Talbot group did not respond to a request for comment.
At issue is a 999-year lease made in 2003 between the then South Tipperary County Council and the original hotel developer, the Poppyfield Consortium partnership. The councils in south and north Tipperary later merged to form Tipperary County Council.
During the financial crisis Poppyfield’s hotel loans went into the National Asset Management Agency, the State “bad bank”. Poppyfield’s partners included John Fraher, who went bankrupt in Britain in 2013. He has filed a Revenue complaint saying Poppyfield used his tax number without his “knowledge or consent” after his UK bankruptcy.
Tetrarch acquired the hotel in May 2019, moving within weeks to seek the freehold interest that gave it absolute ownership of the lands. The transfer was approved in December that year.
Information has now come to light showing the hotel did not follow certain planning restrictions, meaning there was a breach of some lease terms. Instead of the 96-bedroom foreseen under planning permission, the hotel had 99 bedrooms. The breach was recognised within the local authority. In 2014, a planning official said it “not possible” to state the building was “in line with the permissions”.
However, there was no enforcement action. Tipperary County Council said that was “probably indicative of the relatively minor nature of the variation”. The hotel was “substantially in compliance” with planning.
“While the planner may have commented that it was not possible for him to say that the building was in line with the planning permissions, it is the case that where the purpose of the covenant was to ensure the construction of a sizeable hotel on the site, that compliance with this objective was achieved by the developers.”
The council said the purpose of referring to planning permission in the lease “does not seem to have been focused on planning compliance but in the council’s opinion was to identify the size of the hotel which was to be built to satisfy the terms of the lease”.
In the 2003 lease the council initially disposed of hotel land for €520,837 and an annual rent of five cent.
“The suggestion that the property changed hands at a profit post the acquisition of a freehold suggests that some element of uplift in the market value was achieved by acquiring the freehold. In this instance, that is not the case as the rent was purely a nominal rent and the market value of the right to receive 5 cents per annum was negligible.”
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