O’Callaghan must pay €6m penalty

ONE of the country’s top developers is to pay a €6 million penalty clause to Cork City Council which will help fund a rival’s development of a conference centre in the city’s docklands.

Details of how Owen O’Callaghan will pay back €6,094,742.78 to the city, following a decision not to build a trade centre at his Mahon Point site, will be unveiled tonight almost eight years after the deal was signed.

Proposals for a 15,200sqm trade centre were included in Mr O’Callaghan’s ultimately successful bid for the 111-acre land bank at Mahon Point which was put up for sale by the then Cork Corporation in the late 1990s.

Mr O’Callaghan has gone on to develop the Mahon Point shopping centre and retail park on the site.

However, the memorandum of agreement on the sale signed in 1999, but subject to planning permission, included a trade centre agreement. It was hoped that European Regional Development Funding could be secured to help fund the project.

In the event the centre was not built, a £4.8m penalty clause was built in, but Mr O’Callaghan would always retain ownership of the land.

Planning permission for his Mahon Point project was not finalised until 2002, at which point the city’s need for a trade centre had been replaced with a need for a conference or events centre.

City manager Joe Gavin indicated earlier this year he would call in the Mahon Point penalty clause and consider other sites for a conference centre.

Last April he invited conference centre proposals from the private sector and said the city would back the project to a maximum of €12m.

A Howard Holdings proposal to build a €33m conference and events centre in the city’s docklands, which sought €8.25m in city funding, was finally backed.

Mr Gavin will tell a council meeting tonight that following months of negotiations between city officials and Mr O’Callaghan, the Mahon Point trade centre issue has been brought to a conclusion.

The immediate payment of €6.1m will be sought from Mr O’Callaghan’s company, Riga Ltd.

“This money will be put towards the new events/conference centre to be built by Howard Holdings in the docklands,” his report says.