Friday 10 September 2010

Government to pay local council property debts

MORE THAN €30 million in debts accrued by Dublin City Council on loans for undeveloped housing land are to be paid off by the Government under a scheme to halt the mounting debts of local authorities.

Every local authority in the State is expected to apply for the land aggregation scheme which will allow them to offload land bought for social and affordable housing but unlikely to be developed following the the collapse in the property market.

Under the scheme the loans will be repaid by the Department of the Environment and the land transferred to the recently established Housing and Sustainable Communities Agency.

The agency will then determine the future use of the land and will consult the National Asset Management Agency to determine the best use of all land banks controlled or owned by the State.

Information on loans for almost 2,000 hectares of local authority lands at more than 600 locations around the State have been submitted by city and county councils to the department since details of the scheme were issued last April.

The local authorities could choose to retain some of these lands if they believe there is a prospect of development in the near future, but most are likely to apply to transfer most of the undeveloped land to the new agency.

Dublin City Council had bought parcels of land at Belcamp Lane in Darndale and Ayrfield in Donaghmede, both of which are just inside the county boundary with Fingal, with the intention of building social and affordable housing.

The land was bought for about €22.4 million, but mounting interest payments have pushed the debt to more than €30.9 million.

The north Dublin lands are not the only undeveloped residential lands on which the council has outstanding loans, but in other locations the council believes it may still be able to achieve a return on the asset and begin repayment.

Fine Gael housing spokesman Terence Flanagan said the Government was trying to cover up the bad decision-making and millions in losses made by local authorities during the boom years by taking bad loans off local authorities’ books.

“Rather than the local authority coming clean and going public to explain the bad decisions made they are being advised to transfer these losses to their own version of Nama,” Mr Flanagan said.

Taxpayers, many of whom were facing the repossession of the family homes, were being asked to bail out local authorities, he said.

However, a spokesman for the Department of the Environment said the scheme was in fact saving money for the taxpayer.

By paying off the loans now the clock was being stopped on the mounting interest owed, he said. The removal of the burden of servicing the mounting debts on the loans would free up more local authority finances to spend on services for the public.

The land taken over by the agency may still be available to local authorities for social housing projects in the future.

However, the local authorities will have to seek the approval of the agency before they can develop or use any lands. It is also possible that lands acquired by Nama could be combined with adjacent land banks taken from the local authorities for social housing projects.

The department expects to begin receiving applications for the scheme from local authorities in the coming days. Where lands are deemed suitable for the scheme the local authority management will need the sanction of councillors before the transfer can take place.

Irish Times

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