Councils forced to revise €136m of loan deals

Struggling local authorities had to renegotiate more than €136m worth of loans last year as they worked to cope with boom-time debts.

The figures represented an increase of €104m on the value of similar deals threshed out in 2012.

The arrangements were made with the Housing Finance Agency, which has €4.3bn worth of loans to local authorities on its books.

In notes attached to its accounts, the Housing Finance Agency said the new arrangements were made because of “budgetary circumstances” and that concessions had been made that “it would not otherwise consider”.

“The HFA endeavours to work with the local authorities to develop appropriate loan structures for them in order to match their financial circumstances.

“In this regard, the HFA may extend loan terms, offer interest free periods or offer other re-negotiations as appropriate,” it said.

The bulk of the revised deals (€108m) related to non-housing loans.

However, the €28.6m in housing loans were moved onto new terms compared with a zero figure in 2012.

The debt-deals of individual authorities were not disclosed.

Overall the agency’s largest debtors are Dublin City Council (€817m), Cork County Council (€405m), Fingal County Council (€364m) and South Dublin County Council (€239m).

Originally a Nama- style plan to relieve councils of development debts, by housing them in a separate body, was set up under the 2010 Land Aggregation Scheme.

However, this was scaled back in 2012 and councils were told to pay back loans over the course of 25 years.

In July 2013, the Department of Public Expenditure and Reform decided to discontinue the scheme altogether and this left many loans still on the local authorities’ balance sheets.

The agency’s accounts have said the loans that did not make it into the Land Aggregation Scheme can be switched to five-year interest only terms to allow councils breathing space to find other uses for surplus sites.

Figures on the agency also indicated the likely value of liabilities which local authorities will be looking to move onto the books of Irish Water later this year.

Negotiations are still ongoing about the overall amount of debt, related to water development projects, which Irish Water will accept from local authorities.

The agency’s accounts show that it had €355m worth of debt outstanding to councils for water, waste and environment projects at the end of December 2013.

Last month it was revealed that many councils were burdened by large debts brought on by cost overruns on water projects.