Council criticised for selling land in Cork worth €3.8m for €440k

A spending watchdog has criticised Cork County Council for selling land in Kinsale to an approved housing body for social housing for a fraction of its real value.

The site at Ballynaccubby, Kinsale was sold in 2018 for €440,000 at a time when its estimated value was €3.8m.

The Local Government Audit Service claimed a professional valuation of the council-owned site was not carried out in advance of the sale of the property.

An audit of Cork County Council’s accounts for 2018 by the LGAS revealed the 4.78 acre site was estimated to be worth €3.8m on its fixed asset register.

LGAS auditor, Colin Nolan, said the residual loan balance of the land had been used as a basis for determining the sale price.

The land was sold to Clúid Housing Association which is developing 40 social housing units on the site in a development called Radharc an tSáile at an estimated cost of €9.7m.

Mr Nolan said Cork County Council should in future ensure compliance with a Department of Public Expenditure and Reform circular governing the disposal of lands prior to any sale of council property.

The LGAS has requested council management to review procedures relating to the disposal of council land to ensure that councillors were provided with more detailed information such as valuations, business cases and management views before any decision was taken to go ahead with a sale.

In reply to the LGAS, the council’s chief executive, Tim Lucey, said the site at Ballynacubby had originally been acquired by the former Kinsale Town Council for the provision of much-needed housing in the area.

“This remains the position but the method of delivery has now changed from direct construction by the council to delivery by an AHB,” said Mr Lucey.

He claimed making council-owned land available to approved housing bodies to maximise output was encouraged by the Department of Housing, Planning and Local Government.

The scheme will be occupied by approved applicants from Cork County Council’s social housing list.

Mr Lucey said the council had taken the view that, for the transaction to take place, any outstanding loan amounts would be cleared.

He pointed out that if the council were to develop the scheme, the land costs that could be claimed from the Department of Housing would be based on the outstanding value of loans rather than the valuation of the lands.

“While the overall outcome is the same as if the scheme was being built by the local authority, it was felt that the Ballynacubby site was particularly suited to delivery of a scheme by an AHB.” Mr Lucey said.

He acknowledged that the Department of Public Expenditure and Reform’s circular would have been applicable if the property had been placed for sale on the open market.

In that scenario, Mr Lucey said the council would have sought the optimum market price.

However, he added: “The site in this case could not be considered to be surplus land.” Mr Lucey said an external review of the council’s finance function was about to commence which would include a review of its corporate financial system and future system requirements.

Mr Lucey said the review would involve how fixed assets were managed and recorded across the organisation.

Among a number of interim measures being taken, Mr Lucey said there would be increased integration of the council’s fixed asset register, property register and insurance database to facilitate improved reconciliations as well as a new verification process for all assets under the control of its municipal districts.