€50m damages claim could affect local businesses

A POTENTIALLY massive damages claim facing Limerick City Council also poses a major threat to shopping in the city, business leaders warned yesterday.

Limerick Chamber of Commerce said the payout hanging over City Hall could decimate business in the city centre if the council resorts to increasing commercial rates to raise the necessary money.

Council bosses were working late last night to assess legal strategies to try and stave off what could amount to a €50 million compensation payment to Uniform Construction Ltd.

A council source said they will now take the fight to the High Court.

Limerick Chamber of Commerce said any damages payment must not be raised by hiking commercial rates in the city.

The council was found to have wrongly fired Uniform Construction Ltd from the city’s main drainage scheme in 2001.

Three years ago a conciliation officer found in favour of the company and proposed a €25m settlement. The council appealed this decision to an arbitrator, whose findings are binding, and he came down in favour of the company on Tuesday.

Council officials are worried that the compensation could now spiral to more than €50m - 80% of the council’s annual budget.

The already cash-strapped council has been under ongoing financial pressure and has sold off various properties to meet day-to-day spending requirements.

Staff numbers at City Hall have been reduced and positions left unfilled.

Cllr Kevin Kiely said yesterday the Exchequer would have to step in if the council was to continue providing basic services in the city.

“But even with this, the Government may insist on the council coming up with a certain percentage of any sum needed to pay out in compensation,” he said.

Chamber of commerce chief executive Maria Kelly said the council cannot come looking for money from city businesses by way of increased in rates.

“Many businesses are barely profitable, due the rates which are the highest in the country. If the rates are increased, many will close down or move out to the suburbs where rates are much lower. It will be the doughnut effect we saw in American cities when businesses moved out to suburban malls, leaving a big hole in the middle,” she said.

Small shops in Limerick pay rates of around €15,000 on average, with one major department store paying about €300,000 a year in rates.