In 2008, Galway City Council purchased land for €10.5m, over €4m more than it had changed hands for only months before, and has done nothing with it. Political Editor Daniel McConnell reports.
THIS saga began in late 2006. On the outskirts of Galway city at a time when the entire country had gone mad for building houses and apartments, a local developer agrees to buy a 7.6 acres plot of land, in two lots, from a local farmer.
They agree a price of €6.5m for the land known as Keeraun on the Ballymoneen Road and the deal is done.
The developer, Sawgrass Properties Ltd, in little over a year, will sell the land on to Galway City Council at a premium of more than €4m.
The council, having spent well over the odds for the land, which was bought for the purpose of developing social and affordable housing, bought the land for €10.5m in early 2008, a full year and a half after the property market had gone into freefall.
The council had been willing to pay almost €1m more than that for the land.
Now, nine years on, the land has never been developed and is now in line to become a halting site, the most expensive halting site in the country.
Worse still, the council has been nursing hefty interest payments on the loan it took out to buy the land.
The saga is laid out in an extensive dossier of Freedom of Information documents which have in recent days been handed to the Public Accounts Committee, the Dáil’s spending watchdog, which is now to investigate just how the taxpayer came to be burnt so badly.
According to documents, obtained by the Irish Examiner, the land was sold to Galway City Council for almost €10.5m in early 2008 for the purpose of building social and affordable housing.
The 7.6 acres of land at Keeraun, on the outskirts of Galway city, had been sold to developer, Sawgrass Property Ltd, in November 2006 for €6.4m, who then sold it on to the council for €10.5m a few months later.
The Irish Examiner has learned that this is despite the council knowing what Sawgrass paid to the local farmer who sold the land a few months before, as shown by the documents.
It is revealed that, five months after the sale of the land to Sawgrass, the city council got a valuation from auctioneers who gave three different values based on how many homes could be built.
The first valuation was for €7.5m, based on 10 homes per acre, or 76 homes in total, being built on the land.
The second was for €9m, based on 12 homes per acre or 91 units and the third valuation was for €11.3m, based on 15 units per acre or 114 units in total.
The mid-range valuation was the most relevant one, as it was the one closest to the actual number of units that were planned to be built on the land.
The documents suggest that the council proceeded to draw contracts and the necessary financial documents based on a price of €11.14m.
At this stage, Sawgrass Properties pulled the plug on the deal, only to be talked back to the table by officials after some haggling over a number of special conditions which were attached to the sale.
But, ultimately, the final agreed sale price was reduced down to €10.5m in light of the stalling of the property market weakening.
So, the council paid Sawgrass their money and they walked away with a very tidy profit from the land which they had bought themselves only months before.
But for the council, the nightmare was only beginning. Just as soon as the contracts were signed and the money was paid, Ireland’s crash took hold with a vengeance.
As budgets were being slashed all over the country, all house building by local authorities stopped.
As a result, the very expensive 7.6 acre plot of land was never developed and has remained idle ever since.
But it gets worse from the taxpayers’ perspective.
The site, along with others across the city, was not accepted into Nama for local authorities, the Land Aggregation Scheme.
As a result, the council was obliged to continue to pay the loan it used to acquire the site. The interest-only loan payment on this and other sites will cost the council around €600,000 in 2017, according to the council budget meeting; or €4.8m if spread out over eight years.
It has emerged that other than paying interest, the local authority has done nothing with the site for over eight years. Not one cent has been paid off the capital loan of €10.5m.
The local authority appears to have now abandoned its commitment for social housing for this site, and instead wants to use it for Traveller-specific accommodation, and possibly a halting site.
Repeated requests to Galway City Council for a response went answered.
All queries to contact not only the people who were in the positions of authority at the time, but also the current occupants of those roles have so far brought no response.
We also made contact with Sawgrass Properties Ltd, but again no response has been forthcoming.
But the move to make the land available for traveller accommodation was announced to councillors before Christmas.
The council’s director for housing, Tom Connell, told councillors that emergency accommodation issues require the landbank at Keeraun to be considered to relieve the Traveller housing crisis.
“We now have to go back and look at our landbanks on the Ballymoneen Road and assess the most appropriate and bring forward proposals,” he said.
City manager Brendan McGrath said the need to address the traveller accommodation crisis will “require difficult and braver decisions” and he ultimately has the power to approve the plans, without the consent of the elected councillors.
This, predictably enough was met with a furious response from councillors who complained about a lack of consultation.
Whatever about the future use of the site, there is considerable national political interest in what happened here, and just who is to blame.
Speaking to the Irish Examiner, Public Accounts Committee member Marc MacSharry said the details of the dossier received by the committee are “simply extraordinary” when you consider the double hit to the taxpayer.
“On the surface it would appear that because a lack of process there is a major loss,” he said. “It would appear the executive entered into the deal without seeking or receiving the approval of the elected members of the council.
“It would seem to be an extraordinary premium to be paid for the land by the council and it is clear that someone was caught napping.
“Under the various acts the Department of the Environment have to sanction all borrowing so we need to know on what basis was this allowed happen.”
This saga will be discussed this Thursday when the PAC gather and open this dossier in public session.
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