‘Truly extraordinary’ situation as councils sit on nearly €600m

Deficit targets prevent local authorities from spending as they wish

Cash-strapped local authorities are sitting on or are owed almost €600m in development contributions, new figures show, but strict Government deficit targets are preventing them from spending it as they wish.

Fianna Fáil finance spokesman Michael McGrath described the situation as “truly extraordinary”.

“Every public representative around the country is inundated with requests for funding for speed ramps, for road repairs, or for new footpaths,” said Mr McGrath.

“And the consistent message from our local authorities is that they do not have the money.

“But it is hard to square that with the data which the minister has made available which shows that, collectively, they are sitting on a vast amount of money.”

He also criticised the Department of the Environment’s accounting practices, which put the outstanding balance at €717m, even though the department says a more realistic figure is €592m.

Development contributions have been a part of Ireland’s planning system since 1963. They are paid by developers on foot of the granting of planning permissions, which allow local authorities to recoup some costs of servicing land for private development.

The contributions must be ringfenced for spending on particular projects.

Figures released to Mr McGrath from the Department of the Environment show that, as of December 2012 — the most recently audited figures — the combined development levy balance of all local authorities was €717,260,663.

This figure includes cash and debtors, and adjustments for movements in bad debt provisions, the department said. It shows that €288m is being held or is owed to Dublin’s city and county councils while, in Cork, the figure is €41m.

A department spokesman said it would be “grossly misleading” to interpret the figures as local authorities having that amount of money available to spend.

He said the figure had been accrued over a number of years, with a major portion billed by local authorities in respect of developments which will never be built and the money never realised. He said the actual amount regarded as collectable as of December 2012 is actually closer to €360m, with €232m set aside for bad and doubtful debts — a combined total of €592m.

Mr McGrath criticised the department’s accounting practices for allowing such a discrepancy, and the absence of a system for tracking the value of development contributions collected at the end of a year but not spent.

Given the Government’s deficit targets, he said he has suspicions that pressure is being brought to bear on local authorities to hold on to as much of this cash as possible to give the best possible gloss to the national figures.

“My fear is that the councils may not have the freedom, in reality, to spend these development contributions on projects as they see fit,” Mr McGrath said.

“I can see no other logical explanation for councils to be sitting on such a vast sum of money while at the same time they claim to lack funding and many services are inadequate.

“It is a disgrace that local authorities are hoarding this amount of funding at a time when there is such a deficit of essential infrastructure in communities around the country.

“We have also seen examples where contributions have been returned to developers because they have not been spent on time.

“This is absolutely incomprehensible and there has to be accountability for such a waste of resources.”


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