A scheme to bail out local authorities who bought land during the Celtic Tiger and were unable to repay the loans to the Housing Finance Agency (HFA) has resulted in a potential loss of €80 million to the taxpayer, the Public Accounts Committee (PAC) has heard.
At a meeting of the committee on Thursday, Comptroller and Auditor General Séamus McCarthy outlined a report his office completed on the Land Aggregation Scheme.
The scheme was established in 2010 to alleviate the financial burden on local authorities related to maturing HFA loans. The loans had been taken out by local authorities during the property boom years to buy land for future social housing development.
However, the developments never proceeded and the councils found themselves unable to repay the loans.
In all, 73 sites were accepted into the scheme on the basis that they had reasonable development potential for social housing. Some €132 million was paid for the sites. The lands have since been transferred to the Housing Agency, which is separate to the HFA. As of August 31st, 2023, the Housing Agency retained ownership of 60 sites, with an estimated market value of just over €56 million, having disposed of a number of sites with no development potential. Its officials said that the gap between what has been paid and their value, plus other costs to the State, could be in the region of €80 million.
In all, only 736 homes have been developed on the sites over the past 13 years. Fine Gael TD Colm Burke pointed out that was only 56 houses annually. He asked why it had taken so long.
The Housing Agency’s chief executive Bob Jordan and senior official Jim Baneham told the committee that the Land Development Agency plans to build 1,400 units on the sites between now and 2026. Overall there are plans to develop 5,365 units on the land in the long-term.
However, the C&AG told the committee that almost half of the site area acquired under the scheme still had no development plans or proposals for delivery of social or affordable housing. He said that it is anticipated that 28 of the sites will be liable to the new residential zoned land tax being introduced in 2025. This, he said, would cost the Housing Agency about €1.5 million a year.
Mr McCarthy concluded that the apparent unsuitability of a significant part of the land area for social housing cast doubt over the value for money of the scheme.
Green Party TD Marc Ó Cathasaoigh pointed out that at least 40 of the sites purchased into the scheme from local authorities had shown no movement at all over the past 13 years. “We have kissed a lot of frogs here,” he said
Mr Jordan said that the authority would look to dispose of lands with no potential over the next 12 months as it was not its policy to hold on to land, especially if it was liable to the new zoned land tax from 2025.
Asked by Cormac Devlin of Fianna Fáil why the sites were not developed, the officials said that there were reasons such as not being in suitable locations for social housing, lack of services and infrastructure, topography, change zoning or conservation issues. Some sites had been used for sports grounds, others for biodiversity purposes.
Nine sites had been offered to accommodate Ukrainian refugees and one site in Rathdowney, Co Laois, was now the location of 42 modular units, the officials said.
Independent TD Verona Murphy said it was not right to house Ukrainians in sites that were not deemed suitable as sites for social housing. She said the sites being offered for Ukrainians were “generally in the arsehole of nowhere”.
Committee chair Brian Stanley said the people of Rathdowney would take issue with that description of their town. Ms Murphy said she was not referring specifically to Co Laois.
In a separate line of inquiry, Alan Dillon of Fine Gael was told that the Department of Housing budget for emergency accommodation would be €317 million for 2023, some €102 million higher than the money allocated for the year. Some 13,179 people are deemed as homeless at present, including 4,000 children.
He was also told by a senior official in the Department of Housing, David Kelly, that the provisional budget for 2024 for this service was €242 million. Mr Kelly said the he cost of hotel accommodation had increased and that conditions were not good for getting good value from hotels. He said an additional 1,000 beds had been needed during 2023.
* This article was amended on December 15th as the Housing Agency was incorrectly referenced in parts of the article as the “HFA” (Housing Finance Agency)
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