Goodwill payments added €29m to roads

The payment of a €5,000 goodwill fee to landowners for every acre of agricultural land sold for road projects added an estimated €29 million to the €1.32 billion paid by the State for land under the first National Development Plan (NDP).

According to figures obtained by The Irish Times, these goodwill payments were paid after the purchase of approximately four out of every five of the 7,100 acres bought by the State for road projects during the first NDP between 2001 and 2006.

A goodwill payment is made in return for co-operation from farmers whose land is being compulsorily purchased, and is an incentive payment to smooth the purchase process under the terms of an agreement signed in December 2001.

In some cases it acts as compensation for the landowner for allowing access to their land by engineer and surveyors before the compulsory purchase process is complete.

This agreement was renewed earlier this year by the National Roads Authority (NRA), the Department of Transport and the Irish Farmers Association (IFA) on the same terms, and will cover land acquisitions for the duration of the second National Development Plan, 2007 to 2013.

The agreement is not without its critics. A study by the NRA last year found that land costs now consume 23 per cent of the construction cost of new roads - the highest percentage in Europe. This is more than double the 10 per cent of a road project that land costs consumed in 2001.

In 2004 the Comptroller and Auditor General identified this deal as being "instrumental" to land price inflation when he examined cost inflation associated with the projects to build motorways linking Dublin to the State's other main cities.

However, NRA spokesman Sean O'Neill said having such an agreement in place, which included a payment for co-operation, "allowed us to buy the peace".

"On a cost benefit analysis, the result is fewer delays to the construction and planning process which can result in significantly higher costs." The NRA said the goodwill payment had been made in most, but not all, land purchases.

Prior to the agreement being signed, a dispute with farmers over compensation for land required for road building was estimated to be costing up to a IR£1 million a week in project delays.

Up to 30 NRA road projects were delayed by between five and 12 months before the first agreement was signed in December 2001. The IFA action saw access being denied to land for ground condition surveys and archeological work.

In a statement to The Irish Times, IFA president Padraig Walshe said the roads agreement provided "a defined framework for the successful conclusion of negotiations between landowners and local authorities, on behalf of the NRA."

"The new agreement continues to recognise the imposition on, and inconvenience to, landowners caused by road development. It includes a co-operation element which makes provision for improved site investigation works," he said. The first agreement was negotiated by the then Minister for the Environment Noel Dempsey, and the then IFA president Tom Parlon.

Despite land costs having more than doubled since 2001, the goodwill fee for the second agreement remains fixed at €5,000.

According to the latest survey of agricultural land prices by property consultants Ganly Walters, the average price of an acre of agricultural land has increased from €7,917 in 2001 to €20,782 in 2006. The average price paid for farmland in counties Dublin, Kildare and Wicklow last year was €34,959 per acre.

Any goodwill payment received by a landowner is considered part of the purchase price, and is therefore subject to capital gains.