Plans for a €40m long-term loan to fund repairs and upgrades to Cork City’s public realm have been shot down.
Councillors rejected city council chief executive Ann Doherty’s idea, first reported by the Irish Examiner two weeks ago, because the annual repayments would have been linked to possible increases in commercial rates or local property tax rates.
Ms Doherty spelled out her proposal in a detailed report to councillors during an in-camera council meeting last week. She said investment in the city’s public realm had declined in the last decade as a result of the economic downturn, and the deterioration in the condition of roads and footpaths had led to increased compensation payouts.
Despite the risks during the recession, she said the private sector had invested heavily in the city in recent years, and there was now a chance for the city to “demonstrate strong leadership, vision, and ambition” to complement the private sector investment and confidence in the city. She said the public realm needs immediate investment to ensure continued growth of the city as a second-tier European city.
Because the city has very low levels of borrowing, she said it was in a position to borrow significant funds which could be repaid over a 25 to 30-year period at very low interest rates.
She suggested borrowing up to €40m but told councillors that additional income would be required to fund the annual loan repayments, which could be sourced through either increases in the local property tax, by using a portion of additional rates income, or by a combination of both.
“This proposal is innovative and the city council would be the first local authority in the country to champion this source of funding,” she said.
“The city council needs to be seen to make big decisions in the long-term interest of the city as a drive for the region.”
However, councillors who had flagged concerns about the loan repayments being linked to possible increases in rates or local property tax rates rejected the idea in its current format.
Fianna Fáil’s Ken O’Flynn said there was no appetite on the part of councillors to source a loan, given the repayment suggestions.
“I agree with the suggestion that the public realm, in particular our roads and footpaths, need immediate investment,” he said.
“But this loan proposal would be effectively leaving the Government off the hook in terms of providing funding to local government.
“This proposal would also have effectively tied the hands of every council for the next 30 years. We need to find a far more imaginative way of resolving our funding issues.”
Lord Mayor Des Cahill said he was disappointed that councillors had rejected the idea, but understood their concerns.
“The availability of extremely low-cost finance was there for Cork City. This facility may not be available in two or three years but at least the conversation was started,” he said.
Councillors are in the process of negotiating the city’s 2017 budget, which will be signed off in December.
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