Potentially costly deja-vu for OPW over housing gardaí  

Issues surrounding the OPW’s approach to budgeting, property selection, and value for money achievement have been in the public sphere for much of the past decade
Potentially costly deja-vu for OPW over housing gardaí  

The OPW agreed to a €10m rental overpayment on the Department of Health’s new headquarters at Miesian Plaza in south Dublin city. Picture: Gareth Chaney / Collins Photos

At the October 11, 2018, meeting of the Public Accounts Committee (PAC) in the Dáil, the Commissioners of the Office of Public Works (OPW) were put through the wringer.

Probably the most noteworthy topic from the six-hour hearing was the discussion surrounding the OPW, the body charged with managing much of the State’s property assets, agreeing to a €10m rental overpayment on the Department of Health’s new headquarters at Miesian Plaza in south Dublin city.

The source of the overpayment? The use of an obsolete measurement standard to ascertain the building’s area. 

Thereafter it emerged that the OPW had been aware of the use of the wrong standard but had signed the agreement anyway.

Indeed, under aggressive and persistent questioning from the committee members, Commissioner Maurice Buckley finally revealed that no senior members of the body had any sort of professional property qualifications whatsoever.

Issues surrounding the OPW’s approach to budgeting, property selection, and value for money achievement have been in the public sphere for much of the past decade.

A submission by two longstanding employees of the body to the Commissioners in 2014, entitled “Property and Accountability” suggested that multiple property transactions entered into by the OPW “at first view do not appear to make sense in the context of the property market at the time”.

The transactions invariably seem to be balanced against the State. It would seem … nobody has ever been held accountable for a poor property transaction.

And the grilling given to Mr Buckley and his fellow Commissioners in October 2018 threw up as many questions as it did answers.

“For every mistake made, there is a precedent,” one source tells the Irish Examiner of the OPW’s travails.

In Miesian Plaza’s case, the precedent found by the Comptroller and Auditor General (C&AG), in his review of the saga in 2018, was that of the Revenue Commissioners’ building at Fairgreen, off Eyre Square in Galway City, which befell a similar fate to the Dublin building with an incorrect measurement standard to that agreed upon with the landlord signed into the lease in September 2006. The cost? An overpayment of €141,000 per annum.

When asked about this, the OPW told the Irish Examiner that the C&AG’s assertion regarding the Galway building had been “found to not be the case”.

“The annual rent being paid under the lease in Fairgreen reflects the final agreement reached between the Commissioners and the landlord and therefore the Commissioners are satisfied that an overpayment of rent has not occurred,” a spokesperson said.

But another issue raised at the 2018 PAC meeting was the prospect of the OPW having to pay Hibernia REIT, one of the country’s largest private landlords, a potentially massive penalty for failing to move the Dublin Garda command centre from its current base at Harcourt Square by the end of 2022, when the lease expires.

The story of Harcourt Square is an instructive one.

While the worst has not yet transpired there, a precedent also exists for such an eventuality — that of the nearby former garda station at Harcourt Terrace.

In 2006 the OPW, the owners of the site, instructed the Department of the Environment that at least three years would be required in order to move the gardaí from what was then one of Dublin’s busiest stations to a new premises at nearby Kevin Street.

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 for the formalisation of a deal, went to the High Court. The result was cataclysmic for the State.

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 the developer had planned to build on the site, the final loss to the State was more than €30m.

Amid the finger-pointing that transpired 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).

Fast forward to 2021 and the OPW is in a very similar position with the move from Harcourt Square, the gardaí’s Dublin operations centre, home to arms stores, the armed response unit, a cyber crime unit, the Criminal Assets Bureau, and (in 2016) more than 1,000 gardaí — in other words a specialised location, not easily moved from, and one for which the State was merely a tenant with a lease expiring in 2016.

Following the financial crash a decade ago, Harcourt Square passed into the stewardship of NAMA. 

In March 2013, with time running out fast, the OPW was afforded the opportunity to bid on the site, along with other shortlisted bidders, for an indicative sale price of €44m. It declined.

Within weeks the site had been sold to US firm Starwood, who in due course sold it on to Hibernia, who in turn moved to draw up plans to redevelop the entire site. 

The OPW scrambled to renegotiate a new lease, with little success, and 2014 saw the body move, for the first time, to identify potential replacement locations. 

In 2016, a stopgap replacement lease extending to 2022 was agreed with Hibernia, at a cost of €6m per annum.

Meanwhile, the replacement site selected, at Military Road in Kilmainham about two miles away, began construction early last year with an €80m budget (since risen to €86m), with a 30-month schedule, which immediately became complicated by the Covid-19 shutdown on construction.

At present the project is slated for completion, pre-fitout, by September 2022. The OPW has declined to confirm whether or not the site has been deemed a critical strategic infrastructure project, which would allow work to continue during the current lockdown.

But given the ongoing restrictions, it is feasible that the end-2022 moving date could be missed (the OPW insists that the project is on course and will complete by September of next year).

Meanwhile, mutterings have abounded for some time regarding the Military Road site’s size and suitability in terms of the purpose for which it has been selected, with the build having dropped from a projected seven floors to six and a 10% reduction in floor space by end 2017 (the OPW says that 850 gardaí will be accommodated at the Kilmainham site, roughly 200 fewer than were situated at Harcourt Square in 2018).

The OPW acknowledged late last year that should the gardaí fail to vacate Harcourt Square by the end of next year, Hibernia would be in a position “to pursue whatever remedies are available in law”.

Given it took until two years before the Garda lease expired for the State to apparently comprehend the gravity of the situation it found itself in, the arguments that all is well with Military Road could reasonably be deemed as being less than convincing.

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