A cash-strapped local authority has forked out almost €3m in interest payments to service debts linked to the purchase of idle landbanks.
And Cork City Council, which is also facing a €600,000 pay restoration bill, could be hit with penalties of up to €2m if development work doesn’t start on the landbanks before the end of the year.
The situation was branded “farcical” by Fianna Fáil Councillor Seán Martin, who raised the issue after figures on the landbanks and the associated loan costs were revealed this week.
“You couldn’t dream it up. The waste of time, money, and effort in all of this has been incredible,” he said. “And if work doesn’t start on some of these lands by the end of the year, we will be looking at an average of €2m in principle and interest.”
The local authority, like others around the country, was encouraged to buy land during the boom to facilitate social housing development.
It spent €34m buying land at Nash’s Boreen, and on four sites off the Old Whitechurch Rd, including Geaney’s Field, McElhinney’s land, Na Piarsaigh land, and O’Mullane lands. The O’Mullane site alone cost €22m. But when the economy crashed, any hope of development on the sites vanished.
The lands have been lying idle since but the council has been saddled with interest repayments on the outstanding loan balances, which range from €760,000 for a site known as Ledgewood lands to between €2.2m and €3.4m on the other sites.
The figures show that the council has, between 2013 and 2016, paid out €2.8m interest on the combined loans — with €1.6m paid out in interest on the O’Mullane site loan alone.
The Government recently sanctioned almost €10m to service the site and prime it for development. There are also hopes that work on the neighbouring Geaney’s, McElhinney’s and Na Piarsaigh sites will start before the end of the year.
But Mr Martin said it is absolutely ludicrous that during a social housing crisis, one local authority would be paying interest on landbank loans to one arm of the State, while another arm of the State pays out grants to the council to service the sites for development.
“There seems to be no joined-up thinking in housing provision at all,” he said.
Meanwhile, city officials confirmed that following weeks of discussion, central Government has refused to cover the council’s increased payroll costs associated with the restoration of public servants’ pay.
The council will now have to find €575,000 from its own resources to fund the increased payroll costs as pay cuts introduced under the emergency Fempi legislation are reversed.
The city’s head of finance John Hallahan, said he is confident, however, that the council will be able to find the money required thanks to “buoyancy” in receipts from the Non Principal Private Residence charge (NPPR).
But Mr Martin said councillors had hoped to earmark this increase in NPPR receipts for other uses, such as roads resurfacing.
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