State lost ‘tens of millions’ on ‘train crash’ lease deal for Garda buildings
OPW official alleges ‘missed chances’ in renewal of lease for Harcourt Square complex
In late 2016, the OPW agreed to a six-year lease for Harcourt Square for an annual rent of €6.01 million. Image: Google Maps
The State has lost “tens of millions of euro” on a “train crash” property deal for the Garda buildings at Harcourt Square, according to an Office of Public Works (OPW) official who worked on the case.
A dossier on renewal of the lease at Harcourt Square alleges that in 2011 the OPW was approached with a proposal by the then landlord to reduce the rent on the premises by almost €1 million per year. At the time the OPW was paying just less than €5 million a year in rent for the premises, which houses operational facilities for some of the most important Garda units in the force.
In exchange for the reduced rent, the OPW would have had to commit to a five-year extension at a rent of €4 million per annum, which would have taken the lease up to 2020, according to the document. However, according to the dossier, the proposal was not accepted.
Three years later, after loans on the building were sold to US investment firm Starwood, another offer was made. The new owner offered a 10-year lease extension with a rent reduction to €4.4 million, or a five-year extension at the passing rent of €4.9 million, the document says.
However, an agreement was not concluded, according to the dossier, which has been passed to the Public Accounts Committee (PAC). In late 2016, after the building had been purchased by Irish investor Hibernia Reit, the OPW agreed to a six-year lease expiring in 2023 for a rent of €6.01 million, as well as €500,000 in rental arrears.
According to the dossier, compiled by a former valuer in the OPW, “this case, if handled differently, could have saved the taxpayer tens of millions of euro”. It includes a timeline of “missed opportunities” which the author says “would have prevented the train crash which has effectively happened”.
The Garda units based in Harcourt Street will move to their new home, the €80 million command and control centre in the Phoenix Park, when the lease expires. Commenting on the contents of the dossier, a spokesman for the OPW said in all its dealings it “adapts a strong commercial approach when engaging with property matters. The aim always is to maximise the value for the State.”
The OPW said the Harcourt Square building “had reached the end of its useful life and no longer met the operational needs of An Garda Síochána. It was never the intention of the OPW or An Garda Síochána to remain in the building into the long term.”
The spokesman said the 2016 extension to the lease was negotiated to allow for the design and construction of the new premises on Military Road.
“This negotiation was conducted by professional, commercial negotiators retained by OPW in conjunction with its own personnel who were closely involved throughout the process. The short-term new lease negotiated for Harcourt Square represented good value in the market conditions that prevailed at the time.”
The same retired OPW official last month told a private session of the PAC that they wrote several reports while employed by the body “highlighting serious shortcomings and failures in the manner in which OPW conducts its dealings in property”.