European Commission to examine Land Development Agency

Government is planning a ‘structured engagement’ with Commission, says official

The Commission’s verdict on the Land Development Agency could prove vital for the agency’s development, as a finding that the agency is an anti-competitive state aid could lead to a curtailment of its powers. Photograph: iStock

The Commission’s verdict on the Land Development Agency could prove vital for the agency’s development, as a finding that the agency is an anti-competitive state aid could lead to a curtailment of its powers. Photograph: iStock

 

The European Commission is set to examine the State’s flagship Land Development Agency (LDA), an Oireachtas Committee has heard.

Maria Graham, assistant secretary at the Department of Housing, that the government is planning a “structured engagement” with the Commission. This will take place through what Ms Graham said would be an “informal preliminary procedure”.

The Commission’s verdict on the LDA could prove vital for the agency’s development, as a finding that the agency is an anti-competitive state aid could lead to a curtailment of its powers.

Its ability to attract funding from the private sector to deliver tens of thousands of homes could also be limited if it is considered to be “on balance sheet”, with its borrowings counted as part of the general government debt.

The committee heard today that the LDA has plans to marshall up to a combined €45 billion in public and private money into Irish housing projects during its lifetime.

Ms Graham told the committee that the Department had held off on engaging with the Commmission until the Department had “a very formed idea of what [the LDA] does”, including the drafting of supporting legislation and several technical reports. She said that intervention in the housing market such as the LDA “invariably gives rise to considerations regarding State Aid”, and said that the Department is working with the agency’s legal team and the Attorney General on the issue.

Compulsory Purchase Order

The committee has been told by its own legal advisor that the LDA “appears to fall squarely within the definition of state aid”, and that the State is putting in place measures for the agency that “will put it in a more advantageous position than other developers in the agency”.

The committee also heard concerns that the LDA might only have limited Compulsory Purchase Order (CPO) powers, which could make its stated ambition of assembling large land banks for housing more difficult to achieve.

Sinn Féin housing spokesman Eoin Ó Broin said limited CPO powers, similar to those which were afforded to Nama to ensure it stayed inside state aid rules, were his “biggest concern”.

“If the LDA wants to sit down with the HSE, a port authority, or Dublin Bus, and it doesn’t have the ability to threaten to CPO, it’ll have a very weak hand in terms of the eventual outcome,” he said.

John Coleman, the LDA chief executive, agreed that the agency needed to have such powers, even if it didn’t have to resort to losing them, in order to function effectively.

Committee chairman Noel Rock raised concerns with the LDA about the proposed exemption of large parts of the agency’s work from transparency laws such as Freedom of Information and lobbying legislation.

“There is a concern, and it is a legitimate concern . . . that this organisation will be living in the shadows,” Mr Rock said. Such laws, he said “maintain public trust in an organisation and the LDA is going to be charged with a lot of funding and resources”.