Doomed land swap deal to cost State more than €33m
The High Court last year awarded developers Durkan New Homes €32.6m arising from the failure to transfer to the firm a site on Harcourt Terrace in Dublin in return for the building of 215 affordable homes.
An additional €860,000 has also been paid towards Durkan’s legal fees but the full legal bill has yet to be submitted and will bring the total bill even higher. In the meantime, the Harcourt Terrace site, valued at the time of the deal at around €18m, was last year heard by the High Court to be worth just €2.8m.
Probing how the deal collapsed, the Comptroller and Auditor General found the Office of Public Works which owned the site which was occupied by one of Dublin’s busiest Garda stations, warned the Department of the Environment in 2006 that it could take at least three years to move the Garda station to a proposed new station at nearby Kevin Street.
Despite this, the department proceeded with a deal to provide Durkan with vacant possession of the site by the end of 2008, a target which was not met.
During 2009, with the Garda station still occupying the site, an attempt was made to strike another deal where the site would be legally transferred to Durkan but leased back to the State for five years.
In 2010, however, Durkan grew tired waiting for legal documentation to formalise the arrangement and issued a completion notice for the original deal, seeking payment for the 215 affordable houses in lieu of the site. It subsequently went to the High Court and won its case.
The Department of the Environment told the C&AG it had made repeated requests to the OPW to finalise the transfer deed before the end of 2008 and “made clear the potential costs to the State for the failure to close the negotiations”.
The OPW told the C&AG it had engaged in extensive dealings in an attempt to complete the transfer but pointed out that the Garda station was not vacated until 2012 when it was closed as part of the closure of 90 Garda stations nationwide.
The €32.6m and as yet undetermined legal costs are being paid back on a 60-40 split between the OPW and the Department of the Environment over a five-year period.
