€260m debt on unused council lands
LOCAL AUTHORITIES are seeking approximately €260 million from the Government to pay off loan debts on land bought for social and affordable housing that was never built.
The Department of the Environment has received applications in relation to 115 sites that city, county and town councils want to offload. The sites were bought for housing, many at the height of the property market, but have now plummeted in value.
The department has so far agreed to pay off €110 million in loans on 47 sites. The largest sum went to pay a Fingal County Council loan of just under €26.5 million for a 24-hectare plot near Balbriggan. The land was originally bought in 2000 for just over €19 million.
Under the Land Aggregation Scheme established in 2010, the Government has agreed to pay off the loans of local authorities on lands they are now unlikely to develop, in order to stop the escalating interest payments.
When an application is approved, the local authority’s loan is repaid and the land is transferred to the Housing and Sustainable Communities Agency, which has responsibility for the management and maintenance of the land.
The agency will consult the National Asset Management Agency to determine the best use of all land banks controlled or owned by the State.
In some cases, Nama may advise that lands originally bought by private developers could be combined with adjacent lands bought by local authorities, for better returns. It is also possible that some of the land will be used for social housing in the future, the department has said.
The local authorities can only redeem the loans if they have fallen due for repayment; if a county council has secured a long-term loan, it must wait for it to mature before it can submit it to the scheme.
Local authorities are not obliged to take part in the scheme and can keep paying the loans if they think they will be able to make use of the land.
The department’s initial assessment was that 180 sites with loans of €220 million were due to mature by 2011. Fewer applications have been made by local authorities, with just 115 sites submitted. However, with mounting interest payments, the loan debts are higher than expected at €260 million.
Collectively, local authorities have housing loans totalling €499.5 million, but not all are yet due for repayment and it is not known how many local authorities will seek to offload the land.
In some cases, the amounts sought by the local authorities are less than the purchase price of the site; generally this happens where the council has been paying off its loans, or only a portion of the site was being transferred to the scheme.
However, in most cases the loan debts were higher than the original purchase price.
Tralee Town Council bought 14.3 hectares of land in 2001 and has transferred 8.2 hectares to the scheme, but the loan on that portion has risen to €5.58 million.
Dún Laoghaire Rathdown County Council bought 3.2 hectares for €8.8 million and transferred 2.8 hectares now carrying loan debts of €10.25 million. Galway City Council spent €6.25 million on 5.4 hectares – it transferred just 2.4 hectares of that site but the loan had grown to €7 million.