Cork County Council could end up in court, trying to recoup millions of euro, if Cork City Council decides not to pay compensation for land it will acquire in its boundary extension.
Nothing is written into the Local Government Act 2018, on the boundary extension, about how the city council would compensate its counterparts in the county.
County council officials estimate they could lose up to €70m in rates, as a result of the city council taking over Cork Airport, Glanmire, Blarney, Tower, and parts of Douglas, Grange, and Rochestown.
However, this will be offset by the county council saving the cost of providing services to those areas.
This would leave a deficit of anything between €25m to €30m.
Uncertainty over compensation could also leave the county council facing problems when putting together its annual budget.
The Irish Examiner has learnt that the Local Government Act 2018 says a review of the financial settlement arrangement must take place after no more than three years.
County councillors have been told by their officials that it could happen after six months and the compensation payable by the city could be reduced.
County council officials do not want any review to take place until after three years.
The act also states that the amount of compensation may vary each year and it has to be agreed by every August 31.
County councillors feel, as do their management, that compensation should be of a fixed amount, should apply in perpetuity, and be index-linked.
There is no legal obligation on Cork City Council to pay the county council.
In a document seen by this newspaper, county council officials have pointed out that if the city council decides it does not want to pay, the county council will be faced with the prospect of taking the city council to court, which has been described as “a nonsense”.
Instead, the county council is proposing that the act make statutory provision for the city council to pay up.
Also, the act makes no reference to a payments schedule. Therefore, it is unclear if the city council has to pay up-front, by instalment, or through a backdated arrears provision.
The county council wants the city council to pay upfront, in quarterly installments.
Another potential stumbling block to the handover of territory, next year, has also been identified by council officials.
In the document, they point out that the act allows for the transfer of assets to the city council, “but, strangely, any liabilities associated with these assets would remain with the county council”.
County council officials say “this makes no sense” and liabilities should be transferred, if assets are transferred.
Cllr Ger Keohane, who represents the Glanmire area, said Cork County Council “cannot be left struggling with such uncertanties” and with the possibility that the city council might decide not to pay anything.
“The potential risk of a local authority bringing another local authority in the same area to court, for payments, is not healthy for economic growth and will send out a negative signal, nationally and internationally,” Mr Keohane said.