The future of the proposed scheme for O'Devaney Gardens is in doubt after the Minister for Housing Eoghan Murphy questioned the basis on which it was approved by Dublin City Council.
Last week city councillors approved by 39 votes to 18 a plan which would see more than 800 new homes on the site of the former flat complex close to the Phoenix Park.
The site, which has been derelict for 10 years, was sold to Bartra Capital for €7 million.
The plan was approved by the Dublin Agreement Group comprising councillors from Fianna Fáil, the Green Party, Labour and the Social Democrats who have a controlling interest on the council.
Of the 800 units, half would be for sale as private dwellings, 30 per cent would be built for social housing and 20 per cent for affordable purchase.
Of the half which the developer Bartra can sell privately, it has offered to sell 60 per cent of those units to an approved housing body, nominated by the council, for use as cost rental housing.
Mr Murphy stated the deal was approved by councillors without any detail as to how an affordable rental scheme, which is integral to it, could be financed.
He said many councillors were under the impression that an affordable rental scheme had been approved and was legally binding between the council and the developer Bartra.
“This is not the case - there has been no new agreement between Dublin City Council and Bartra,” the minister stated in a letter obtained by Sinn Féin housing spokesman Eoin Ó Broin through a Freedom of Information request.
However, in a letter written to Dublin's Lord Mayor Cllr Paul McAuliffe, Mr Murphy has stated that here is no legal basis for the purchase of homes for cost rental housing and "no funding source has been identified".
The minister added: “ I am concerned with the suggestion of the group that the acquisition of private untis from the O’Devaney Gardens development would deliver affordable homes for rent.
“The correspondence from Bartra suggests it is willing to enter into an option agreement with DCC, whereby DCC (or its nominees) will have the right to purchase some or all of the private units as the prices as set out in the tender documents.
“I note discussion in the council chamber which suggested an approved housing body could be offered the units, but no clarity was provided on the source of funding for any purchaser, nor was it clear of any approved housing bodies had agreed to enter into negotiations to secure and manage the houses.”
Mr Murphy went on to state that the purchase of the affordable rental homes would “require very significant capital funding” and therefore, to pay back the money, rents would have to be set at close to market rates.
“This would effectively negate the concept of providing affordable homes for rent.”
Mr Ó Broin accused the Dublin Agreement Group of “misleading fellow councillors and the public on the O’Devaney Gardens development”.
He stated that the minister’s letter shows that no legal advice had been sought by the council as to whether or not the inclusion of affordable rental units would breach the procurement process.
“Crucially Councillors from other parties voted for the deal ‘under the impression’ that a new deal or agreement had been reached when it had not,” he stated.
“There are only two conclusions that could be drawn from the Minister’s letter. Either the Dublin Alliance councillors are incompetent or they deliberately misleaded their fellow councillors and the public.
“They secured a majority of support from their fellow councillors for the transfer of a multi-million euro strategic housing development site to a private developer on the basis of a claim that is completely false.”
Labour councillor Joe Costello said Mr Murphy's intervention was "unacceptable".
Mr Costello suggested it was “perfectly legal and possible for this deal to proceed.”
He added: “The deal is a large improvement on the previous deal which the Minister had approved - the Minister wanted 50 per cent private. We have achieved 50 per cent affordable and reduced the private element to 20 per cent. which is much more suitable for the area, where I live.”
He suggested that the minister should make available €50,000 per unit available to purchase the units in the same way that the department had subsidised the purchase of units in a scheme in Shanganagh.
Dublin City Councillor Mary Fitzpatrick (Fianna Fáil) has said that the agreement reached by the Dublin Agreement Group on O'Devaney Gardens was reached with advice from the law agent of Dublin City Council.
She told RTÉ Radio 1's Today with Seán O'Rourke show that it was inaccurate for the Minister to question the legality of the basis on which the agreement was reached.
Ms Fitzpatrick said that the proposed amendment had been made to include affordable rental units. The new agreement was made through the executive of Dublin City Council. The original deal had not included community facilities, she added.
"The site was lying vacant for years because Fine Gael wouldn't fund its development. We worked with the chief executive (of the council) so that we could deliver a better deal and offer a better social mix."
She called on the Minister to provide the necessary funding for the agreement to be implemented. “We want affordable housing and the Government is not prepared to fund it.”