Garda HQ mystery raises further questions about litany of OPW overspending

Garda HQ mystery raises further questions about litany of OPW overspending

Its absence from the shortlist is just one of the issues around the development of the garda HQ on Military Rd in Kilmainham, Dublin: It'll also be too small to accommodate the staff, and the OPW may incur a penalty payout if gardaí can't move out of Harcourt Square in time. Picture: Moya Nolan

Cianan Brennan looks at the extraordinary saga of the new HQ — and eight further cases where the Office of Public Works has not delivered value for taxpayers' money

The gardaí will soon have a new Dublin HQ — but the circumstances leading to its location remain something of a mystery.

The €86.3m command centre will be based on a State-owned site on Military Rd in Kilmainham, south Dublin.

However, it has emerged that the controversial site was not even on an initial shortlist.

The Office of Public Works (OPW) and An Garda Síochána ran a site evaluation project in early 2015, according to multiple sources. A number of sites were recommended in order of suitability, with the results communicated to Garda management at that time. The Military Rd site was not among the recommendations.

The OPW has denied that a separate site selection project had taken place.

Leaving aside how the new site was selected, the Military Rd project has come in for sustained scrutiny in recent months after it emerged that the new build will not be large enough to accommodate the number of employees housed at the current command centre at Harcourt Square in Dublin city centre.

Ten years in the making, should the OPW fail to construct and fit out the new command centre site by the end of next year, a substantial payout will in all likelihood fall due to An Garda Síochána’s current landlord at Harcourt Square, Hibernia REIT.

The OPW first raised concerns with An Garda Síochána that its tenure was coming to a close in 2013, three years ahead of deadline. Nevertheless, that deadline was emphatically missed.

Construction at Military Rd didn’t begin until February of last year.

In 2014, the OPW had the chance to buy Harcourt Square outright, at a fraction of the cost of moving out, but did not do so.

The new build will be distinctly smaller than the current command centre was in 2016, and the number of gardaí on-site has increased significantly since then.

It’s the latest controversy to envelop the OPW and again shines a light on the overall management of projects, the ability to get value for the taxpayer’s money, consistent inertia, missed opportunities and little or no accountability at the body.

With that in mind, in 2014 the Department of Public Expenditure and Reform canvassed for submissions regarding how best to improve the standards of accountability in the public service.

The OPW provided a submission from its then chair, suggesting that there was little wrong with how such things were managed at the body.

However, unbeknownst to the chair, a second submission was sent to the department, from two of the OPW’s valuers, who felt there were most certainly issues with accountability within the agency responsible for managing the State’s property portfolio.

That three-page memo kicked off a seven-year odyssey towards the achievement of improvements in just one of Ireland’s many State agencies.

It is a salutary lesson as to just how difficult it is to shake the public service from its status quo.

In the submission, titled simply Property and Accountability, valuers Allen Morgan and John Dowds argued that the OPW had had a problem since the late 1990s with the property transactions that the body had been entering into.

Put simply, multiple OPW acquisitions and projects from that time were described as not appearing “to make sense in the context of the property market”.

“The transactions invariably seem to be balanced against the State,” Mr Dowds and Mr Morgan wrote.

Possible reasons for such outcomes might include mistakes in judgement, ignorance of the market on the part of a negotiator, bad negotiating skills, or even a compromised negotiating position, they said.

The submission's two authors did not believe that wholesale corruption was an issue within the OPW. Rather, they saw it as an issue of incompetence and unaccountability. Nevertheless, they included “corrupt actions” as a “potential” reason for case mismanagement.

When the OPW got wind of the fact that some subordinates had been making submissions to the body’s parent department, management homed in on one word: “corruption”. They asked for a list of all projects that the memo’s authors considered to be vulnerable to corrupt actions. When the list was received, it was considered, and no evidence of such corruption was found.

Mr Dowds and Mr Morgan asserted that the issues around management, accountability and value for money would always be present unless the Oireachtas public accounts committee (PAC) and the Comptroller and Auditor General (C&AG), the State’s fiscal watchdogs, could find a way to successfully interrogate the nooks and crannies of the OPW’s actions.

Memo merry-go-round 

Back in 2014, the accountability memo died a predictable death and probably would never have been heard of again only for the Irish Commercial Tenants Association getting wind of it.

That organisation duly took out an advert in The Phoenix magazine, lauding the memo and its authors, and stating that it had sent a copy of it to every member of the PAC.

The PAC didn’t know what to make of it, so it sent it to the C&AG, which in turn reverted back to the OPW.

The body’s response was to commission what became known as the five-case review by the same valuers who had written the initial memo — five examples of projects that could serve to “identify accountability vulnerabilities in the context of non-optimal outcomes” — in a lay person’s terms, five projects where good money was thrown after bad.

As a result, a number of projects came on the C&AG’s radar, including Miesian Plaza — the Department of Health headquarters, which remained empty 16 months after its lease was signed (at a cost of €16m).

It was also subject to a €10m rental overpayment after its floor space was mismeasured, a fact noted by the C&AG in its 2018 report on the public finances.

From there, PAC got involved, leading to an excruciating six-hour session before the committee for current OPW chair Maurice Buckley in October 2018, whereupon the Miesian lease was laid bare:

Mr Buckley was forced to admit that nobody at board level in the organisation had any qualification in property valuation whatsoever.

The OPW argued it would “neither be possible, feasible or necessary” to have such qualifications included on the board.

At a recent PAC hearing, Robert Watt, now the secretary general of the Department of Health, was asked what consequences should befall the person responsible for signing off on the Miesian Plaza lease in the certain knowledge that the property’s floor space had been exaggerated.

“You’re talking about negligence and poor performance, not fraud. These are uncertain concepts,” Mr Watt replied.

“You can do your best and make a legitimate mistake.”

Asked what has changed recently to increase its standards of accountability to the public, the OPW said it “works to the highest levels of corporate governance”, with the establishment since 2017 of both a project oversight group and a sub-committee of the board — charged with addressing issues impacting on the State’s property portfolio — as evidence to that fact.

1. Proposed new garda HQ is shrouded in controversy

The site for the new garda command and control centre at Military Road, Kilmainham, a little over 4km from the current base in Harcourt Square. Picture: Moya Nolan
The site for the new garda command and control centre at Military Road, Kilmainham, a little over 4km from the current base in Harcourt Square. Picture: Moya Nolan

The property that the OPW eventually selected for An Garda Síochána’s new Dublin command centre is shrouded in controversy.

The site on Military Rd in Kilmainham, a little over 4km from the current location on Harcourt Square, was a late selection as a replacement for probably the most important Garda installation in the country, and was only settled on in November 2015.

The Military Rd site was not even included in the first phase of the selection process. The site made no appearance on the initial shortlist, though most of the other properties which were on the second list also appeared on the first.

It raises the question of whether Military Rd, which currently houses a computing centre for Revenue, and is in State ownership, was effectively rubber-stamped as the new site before the process had even begun.

To add to that, the site is not exactly flavour of the month with the gardaí themselves, who will be seeking to turn it into one of the most secure installations in the country.

For one, the new build will not be big enough to house Harcourt Square’s current complement of personnel. Two separate tender processes, separated by four years, saw the planned building scaled back in size by 10% to 10,060 sq m.

The OPW said the building it envisaged was based on the numbers of personnel based at Harcourt Square when the project was first mooted, six to eight years ago. They said the new site will take into consideration “extension potential” as one of the key garda requirements for its new command outpost.

However, Military Rd as planned will only accommodate 850 people. That’s more than 200 fewer personnel than were stationed at the centre in 2016, and the numbers have only gone up since.

All this means that a number of divisions currently based at Harcourt Square won’t be making the move to Military Rd, and will have to be accommodated elsewhere. The cost of any overspill will have to be factored into the final bill.

Meanwhile, rumours persist that the operational heads of An Garda Síochána are less than enthused at the prospect of their new home, which is seen as being too small, too narrow, and too close to private residences.

Nevertheless, the OPW has insisted repeatedly that the move to a fully fitted-out Military Rd will be completed on schedule for September 2022, three months ahead of deadline.

“This leaves adequate time for the vacation of Harcourt Square in advance of the expiry of the lease,” a spokesperson said.

Whether that target can be met remains to be seen. 

2. Eyewatering spend on moving gardaí from Harcourt Square

Pending the proposed move to Military Rd, An Garda Síochána is still in Harcourt Square, sold out of Nama and ultimately on to one of Ireland’s largest corporate landlords. Picture: Moya Nolan
Pending the proposed move to Military Rd, An Garda Síochána is still in Harcourt Square, sold out of Nama and ultimately on to one of Ireland’s largest corporate landlords. Picture: Moya Nolan

An Garda Síochána has occupied the site at Harcourt Square in Dublin’s south city centre since the 1970s.

Its installation there is amongst its most important — as a base for its armed response unit, arms stores, cybercrime and fraud sections, and the Criminal Assets Bureau. However, the gardaí don’t own Harcourt Square — they reside there courtesy of the OPW, which is the property’s tenant.

In the early 1980s, the OPW signed four 35-year leases for the four buildings on Harcourt Square, with those contracts set to expire between 2014 and 2016. The property passed into Nama ownership following the banking collapse of 2008.

However, despite the extended period of time necessary to locate and tender for construction for a replacement for the Garda command centre, it was not until 2013 that the OPW and gardaí began discussions regarding the pending expiring leases.

At the same time, the OPW was given the opportunity to purchase the loans on the properties outright, for a figure rumoured to be in the region of €44m, an option that was not exercised.

The property was duly sold out of Nama to US firm Starwood Capital, who in turn sold the four buildings to Hibernia REIT, one of Ireland’s largest corporate landlords, who drew up plans to redevelop the site.

As 2015 unfolded, it became obvious that no replacement building would be procured in time for the final lease expiry in December 2016, and an emergency extension was agreed for six years, at a rent which had been increased by €1.1m per annum. The building will have cost the OPW €36m in rental payments by the time the lease finally expires in December 2022.

Meanwhile, the proposed move to a new site on Military Rd, Kilmainham, has been budgeted at €86.3m, while — if the gardaí fail to vacate Harcourt Square in time — the OPW will in all likelihood be on the hook for a penalty fee due to Hibernia REIT in compensation for the loss of its development opportunity.

The size of that penalty is notional as it will be decided by the courts — but, whatever it is, it will be eyewatering, and has the potential to easily match the cost of moving from Harcourt Square in the first place.

Notwithstanding the missed opportunity to acquire Harcourt Square outright, at the PAC in October 2018, the Commissioner of Public Works, John Sydenham, said “the key issue” with the building “is that it is coming to the end of its life”.

3. Eerily similar precedent for the Kilmainham debacle

There was a race against time — albeit over many years — to move personnel from Harcourt Terrace Garda Station to nearby Kevin St at a cost which ran 36% over budget. Picture: Leah Farrell/ RollingNews.ie
There was a race against time — albeit over many years — to move personnel from Harcourt Terrace Garda Station to nearby Kevin St at a cost which ran 36% over budget. Picture: Leah Farrell/ RollingNews.ie

For the current controversy involving the proposed garda building in Kilmainham's Military Rd, there is also an eerily similar precedent — that of the former garda station at Harcourt Terrace in Dublin which was subject to a similar race against time to move its personnel to nearby Kevin St.

On that occasion, the deadline was comprehensively missed.

In 2006, the OPW, the owners of the site, instructed the Department of the Environment that at least three years would be required to move the gardaí from what was then one of Dublin’s busiest stations to their new home at Kevin St.

Despite this, the department struck a land swap deal with developers Durkan New Homes to provide it with a vacant site at Harcourt Terrace by the end of 2008.

By 2010, the gardaí had still not moved and Durkan, having grown tired of waiting, went to the High Court. The resulting enormous financial penalty was cataclysmic for a State already struggling to stanch the wounds which resulted from the collapse of the Celtic Tiger.

With the value of Harcourt Terrace having fallen from about €18m to just €2.8m as a result of the financial crash, and Durkan securing a minimum payout of €33m due to lost earnings on the 215 houses it had planned to build on the site, the final loss to the State was more than €30m.

Amid the finger-pointing in the aftermath, the Department of the Environment made clear to the C&AG it had made repeated requests to the OPW to finalise the land transfer before the end of 2008 and had made clear “the potential costs to the State for the failure to close the negotiations”.

The OPW for its part noted that, in the end, the gardaí weren’t out of Harcourt Terrace before 2012.

Meanwhile, the site at Kevin St was redeveloped in recent years into what is considered to be the most modern garda station in the country.

That build officially concluded in August 2018, but not before a row had broken out between the OPW and developer JJ Rhatigan which saw the project’s budget rise by €3m to €31m.

That wasn’t the final cost, however. During the OPW’s appearance last November before PAC, OPW chairman Maurice Buckley announced the final figure was in fact €38.2m — a 36% increase of the original budget.

4. Prison has cost us €50m already — and not one brick has been laid

While work carried out at Thornton Hall include an access road and street lighting, there is no sign of a single brick being laid for the proposed prison beyond artist's impressions such as this. Picture: Justice.ie
While work carried out at Thornton Hall include an access road and street lighting, there is no sign of a single brick being laid for the proposed prison beyond artist's impressions such as this. Picture: Justice.ie

Thornton Hall is a 150-acre farm in north County Dublin earmarked for a new prison. All told, about €50m has been spent on the project to date without a brick being laid.

The location was earmarked for a new prison in the early 2000s to help deal with overcrowding and a lack of space at Mountjoy in Dublin City centre.

The site was bought for €29.9m in 2005, a price which State accountant the C&AG subsequently deemed to have been “at least twice the market price at the time for well-positioned agricultural land”. In 2015, the site was revalued at just €2.4m.

The C&AG commented when reviewing the deal that the State had effectively twice in one year ended up in land purchase negotiations with single vendors, leading to a far higher price being paid due to a lack of competition.

They were also critical of the State’s having advertised that it was seeking a significant parcel of greenfield land to build a marquee prison project as this would have effectively bumped up the price, when a more attractive outcome could have been achieved by discreetly utilising the services of a confidential third party.

Officials at the Department of Justice at the time defended that advertisement as being appropriate given that the site would play host to “the most significant prison development in the history of the State”.

The land itself has never been built on and remains in State ownership.

Part of the site includes a fully-realised access road with a dedicated underpass and street lighting which ends abruptly in a dirt track and is in complete disuse. The budget for that road build was €5m.

When the purchase of Thornton Hall was being reviewed by the OPW’s valuation team (which had played no part in the initial purchase) in 2017, the original official OPW file for the project could not be located.

In summarising the deal, the valuers concluded that the “price paid for the subject site was grossly excessive” and that “the manner in which the acquisition was pursued was poorly planned”.

In a recent communication to staff, the OPW board stated it is “not correct” to say “the Thornton Hall case is an OPW issue”.

Nevertheless, the farmland was put forward by the OPW as a possible solution to the need for a new Garda command centre location in 2015, an idea firmly rejected by the gardaí.

5. A measure of error is not the only issue at Miesian Plaza

Home to three Government departments, the Miesian Plaza was vacant for 16 months after the lease was signed. Arguably more embarrassing, a measurement error led to a rent overspend of an estimated €10m. Picture: Gareth Chaney/Collins
Home to three Government departments, the Miesian Plaza was vacant for 16 months after the lease was signed. Arguably more embarrassing, a measurement error led to a rent overspend of an estimated €10m. Picture: Gareth Chaney/Collins

Miesian Plaza, the seven-storey headquarters of three Government departments, has become something of a symbol of the notion of OPW mismanagement in the past five years.

In 2016, the agency agreed to a 25-year lease deal with the building’s owners, Remley Developments, for the provision of Oireachtas office space at a value of €10.1m per year.

The deal agreed was heralded by OPW chairman Maurice Buckley at the body’s meeting with the PAC last November as being of exemplary value for a marquee building.

However, Mr Buckley had to concede that one part of the deal was less laudable — that the building had been measured incorrectly, that this mismeasurement would lead to a rental overpayment of roughly €10m, and that the OPW had been aware of the mismeasurement before signing the lease.

This situation, Mr Buckley admitted, constituted something of an “own goal”.

For its part, the developer Remley, owned by beef baron Larry Goodman, claimed recently that, had the OPW wished to reduce the rent payable to allow for the mismeasurement, stating the building was bigger than it was, it had never bothered to inform Remleys of that fact. In fact, the reason the rent wasn’t reduced “is not clear”, according to the C&AG, who reviewed the deal in 2018.

The saga as to whether or not the OPW can get Remley to reduce the rental payments has now been going on for more than two years, with the latest update from the developer being that it is not willing to attend a virtual meeting as its preference is for a face-to-face discussion.

It has somewhat overshadowed the other main issue with the Miesian Plaza deal — that the building remained vacant for some 16 months after the lease was signed, a period in which rental and service costs totalling more than €15.8m were paid.

Addressing the deal, The OPW suggested the move to Miesian Plaza on Baggot St Lower in Dublin had been “transformative”, with any issues arising an unavoidable consequence of such an ambitious project.

Last week, Patrick O’Donovan, minister of state for the Office of Public Works, told the Dáil that the measurement error “should not have happened and… I know they [the OPW] very much regret that it did”. 

“This is an issue, but I am dealing with it,” he said.

6. Overspend of €2.1m in Galway after 'haphazard' selection process 

Echoing one of the issues with Dublin's Miesian Plaza, Revenue's building near Eyre Square in Galway has cost the country an estimated €2.1m more than it should have so far, due to mismeasurement. 
Echoing one of the issues with Dublin's Miesian Plaza, Revenue's building near Eyre Square in Galway has cost the country an estimated €2.1m more than it should have so far, due to mismeasurement. 

The issue of rental overpayment is not confined to Miesian Plaza. A very similar problem raised its head ten years previously with the leasing of a new headquarters for the Revenue Commissioners in Galway city.

The securing of the office at Fairgreen, just off Eyre Square, under a 20-year lease was the culmination of a five-year search by the OPW on behalf of Revenue.

In reviewing the transaction in 2017, the OPW’s valuers found that “from the outset, the selection process generally appears to have been haphazard, and to some extent client-led, and without the benefit of detailed option appraisal to inform a final decision”.

Specifically with regard to the Miesian Plaza deal 10 years later, the Fairgreen lease also saw a discrepancy in terms of the measurement used in order to calculate the rent due.

In reviewing the transaction, also in 2017, the C&AG found the negotiations with the landlord were based on a ‘net internal area’ measurement — but, in the signed lease, the terms agreed were applied to a higher ‘gross internal area’ standard.

Correspondence from the time reveals that the Chief State Solicitor’s Office (CSSO) had queried that measurement discrepancy, as had the OPW’s own architects and valuers via internal memoranda.

The added cost to the State of agreeing a lease with a higher measurement was estimated by an OPW valuer at the time as being €141,000 per annum, a figure which would see a total overspend of €2.1m by 2021.

When queried regarding the rental measurement issue precedent, the OPW told the C&AG that “the matter is being examined”.

It is unclear whether the rental discrepancy was ever rectified to the OPW’s satisfaction.

More recently, the case has led to a number of seemingly contradictory interactions between the OPW and the Oireachtas Public Accounts Committee (PAC).

In a follow-on submission to the PAC following his appearance before it in October 2018, Maurice Buckley acknowledged the “measurement mistake that occurred” regarding Fairgreen.

Four months later, in March 2019, a letter from Mr Buckley to the PAC stressed that the annual rent had been agreed by then Commissioner of Public Works, the late David Byers, and that “therefore the OPW are satisfied that an overpayment has not occurred”.

Responding to a query on the matter, the OPW said the Fairgreen lease “reflects the final agreement between the Commissioners and the landlord”.

7. State asset on Dublin's quays nearly made it to the list of shame

The 10-year Hammond Lane saga almost saw the prominent State asset — adjacent to the Four Courts in Dublin — added to the city council’s ‘name-and-shame’ vacant sites register. 	Picture: Moya Nolan
The 10-year Hammond Lane saga almost saw the prominent State asset — adjacent to the Four Courts in Dublin — added to the city council’s ‘name-and-shame’ vacant sites register. Picture: Moya Nolan

The site at Hammond Lane, adjacent to the Four Courts, is one of the best-known vacant plots of land in Dublin City centre, and has been embroiled in a 10-year saga in terms of its development.

First acquired by the OPW in the late-1990s from Maguire and Paterson, the matches manufacturer, the site had lain idle for 15 years before being sounded out by the Courts Service as the potential site for a new family courts complex in 2012.

An initial budget of €40m was agreed in 2015, though no progress was made on the site.

Two years later, the Courts Service retained a firm of quantity surveyors to determine an updated cost for the build.

The final report of that exercise, delivered in December 2017, declared that the overall cost of the project would be just under €141m, a figure which the Department of Justice balked at.

Discussions have continued since and, last July, Helen McEntee, the justice minister, announced that just under a quarter of the courts’ annual budget of €66m would be allocated directly to the development of Hammond Lane.

Whether or not a revised budget is available is at present unknown. 

However, the long-derelict nature of the site led to a different headache for the OPW more recently, when Dublin City Council (DCC) announced in 2019 its intention to place the location on its vacant sites register — an action which, along with the embarrassment of having such a marquee site in State ownership listed on what is effectively a name-and-shame list, would also have cost the taxpayer in the region of €700,000 per year in levies.

Indeed, Hammond Lane was one of the sites first highlighted by Dublin City Council in 2013 as necessitating a vacant site tax in order to nudge lackadaisical landowners into actioning their unused property.

Instead, a stopgap solution was found, with the OPW leasing the property as a builder’s yard to the construction company Sisk, for a possible 24 months from October 2019. The OPW said last November that it is “the norm” to facilitate neighbouring construction projects where possible.

In January of last year, DCC announced that the Hammond Lane site would not in fact be entered on the vacant site register. It has now remained unused for 23 years.

The OPW told the Public Accounts Committee last November that it has as yet “not been obliged to pay any (vacant) site levies”, a fact it said is “primarily due to the proactive management by the OPW of its property portfolio”.

8. The art of the deal in Dublin's Merrion Square 

A review of the OPW’s purchase of three buildings on Merrion Square highlighted its apparent failure to negotiate down from the seller’s ‘opening gambit’ asking price. 	Picture: Moya Nolan
A review of the OPW’s purchase of three buildings on Merrion Square highlighted its apparent failure to negotiate down from the seller’s ‘opening gambit’ asking price. Picture: Moya Nolan

In 2007, the OPW moved to acquire a block of three buildings on Dublin’s Merrion Square, adjacent to the National Gallery of Ireland, with the stated purpose of providing expansion capacity to the gallery should it have needed it.

That purchase eventually expanded to include four apartments in a block of eight such dwellings to the rear of the building.

All told, the various buildings and apartments were purchased for €22.1m, including VAT, in late 2007. The OPW’s stated objective was the demolition of the apartments, leaving behind a clear expansion space for the gallery as and when it might need it.

As part of the five-case review undertaken by the OPW’s own valuers in 2017, one of the authors remarked that an expected sale price for the three Merrion Square structures in 2007 would have been in the order of €12m, suggesting the OPW overpaid to the order of €7m.

The review noted that the Department of Finance at the time said that sanctioning of the deal “is on the understanding that the OPW is satisfied that the acquisition of the houses represents value for money”.

“It is difficult to see how the purchase of the subject site represented value for money and how this requirement of the Department of Finance was satisfied,” the review states.

In order to ascertain how the value-for-money requirement was met, the authors sought out the original valuation report for the transaction, only to find that “no such document was available on file”.

They concluded that the asking price by the seller for the three buildings (€17.6m ex-VAT) was merely an “opening gambit”, and should have been greatly reduced following negotiation, not least because the figure was €5.5m higher than the seller had paid for it just three years earlier.

Add to that the fact that they had been comprehensively refused planning permission for the site, which should have markedly reduced its value further rather than raising it.

Such negotiations do not appear to have taken place, while the entire deal seems to have been conducted without reference to the OPW’s valuation arm.

The three buildings on Merrion Square lay vacant until 2014, before being refurbished at a cost of €4m and used as Oireachtas offices. They were vacated early last year after a stairwell collapsed in the middle building.

Meanwhile, the four apartments to their rear were untouched until 2015, before being refurbished and are currently leased to homelessness charity the Peter McVerry Trust for the provision of social housing.

The OPW told the Irish Examiner the budget for the deal of €23m, as set by the Department of Finance, had not been breached.

The notion that the three buildings had been acquired at a price many millions above their market value “is one that the OPW… would strongly dispute”, a spokesperson said.

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