CORK’S city manager has defended the contract governing the multi-million euro sale of 111 acres of public land to a top developer almost five years ago.
Following probing questions from two city councillors, Joe Gavin issued a detailed two-page report this week outlining the issues surrounding the sale of city-owned land at Mahon to developer Owen O’Callaghan.
In 1999, the then Cork Corporation advertised the sale of the land-bank in Mahon.
O’Callaghan Properties bid €44 million and won the tender with ambitious plans for the development of Mahon Point shopping centre.
Although it was not the highest bidder, the company’s offer to build a trade centre on a portion of the site helped clinched the deal.
Under the terms of the sale, which was finally signed off in 2002, Mr O’Callaghan entered in to a trade centre agreement which would see him build a trade centre, or in default of this, pay €6,094,742 to the council.
But a trade centre was subsequently deemed unsuitable at this location as the council earmarked a CIE-owned site near Kent Station as its preferred location.
As efforts to secure the centre on that site dragged on, Mr Gavin announced two weeks ago his intention to call in the O’Callaghan bond to help fund the construction of a conference centre elsewhere in the city.
He invited proposals from the private sector to build the facility within two kilometres of the city and said the council was prepared to invest up to €12m in the project to demonstrate its commitment.
But Fine Gael Cllr Patricia Gosch and Socialist Party Cllr Mick Barry asked Mr Gavin why the €6m O’Callaghan bond was not index-linked to take into account rocketing land values.
The site could now be worth up to €8m.
They also asked why he was not being forced to hand back to the city the prime site which was originally earmarked for the trade centre.
Mr Gavin confirmed that the amount agreed was not subject to indexation and that there was no provision for the return of lands to the city council.
“The payment of €6,094,742 which was the money to be expended on the trade centre by purchasers was the agreed default situation,” he said.
He said formal negotiations between the council and O’Callaghan Properties will take place on the terms of the trade centre agreement.
But a spokesman for O’Callaghan Properties said the company has always been, and still is willing to build the trade centre in Mahon.
He said once a decision is finally and officially taken to not proceed with the Mahon Point option, it will honour in full the terms of the bond.
Cork City Council