Report warns against setting up spin-off company for housing

Dublin city councillors have been warned that setting up a spin-off company to deliver social and affordable housing on public land may end up increasing the cost of housing.

A report compiled by Dublin City Council’s (DCC’s) management team, assessing the viability of a separate council-owned building company to deliver housing projects, concluded that such an undertaking would involve significant upfront costs and would duplicate much of the council’s existing work.

It also noted that such an entity could not be subsidised by the council or else it would be in breach of EU competition rules.

"The creation of a building company by DCC for the construction of social housing is not a viable proposition in our view because it would be a cumbersome and very difficult task to implement with many governance, legal, financial and bureaucratic implications to overcome and maintain into the future," it said.

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“Such a company would have to tender for construction projects in the same way as ordinary private contractors. There is no certainty at all that it would achieve more positive construction costs,” the report said.

However, the plan for a separate DCC building company may yet get the green light from councillors, who have the ultimate say, and who recently voted against management on the controversial Oscar Traynor Road housing development in Santry.

The report was conducted on foot of a motion by Sinn Féin councillor Daithí Doolan, who chairs the council’s housing committee.

His motion, which will be voted on next month, proposes the council establish a "designated activity company" in partnership with the State-backed Ireland Strategic Investment Fund "for the sole purpose of constructing social and affordable housing on public land".

Adding cost

In his motion, Mr Doolan said DCC housing projects were over-reliant on contracting private companies to develop and build housing projects. " This situation inevitability adds cost to and reduces control over projects," he said.

Fine Gael councillor James Geoghegan, however, said he hoped councillors rejected the Sinn Féin proposal, which the report showed would increase the cost of housing and the bureaucracy involved in delivery.

“This is another example of an alternative Sinn Féin proposal on housing that is being met by a wall of opposition from the people actually tasked with delivering it,” he said.

Councillors recently approved a plan for 853 homes at the Oscar Traynor Road site, which will see 80 per cent of the land used for social and cost rental housing, despite DCC chief executive Owen Keegan expressing "serious reservations". The previous plan for the 17-acre site collapsed last November following the refusal of councillors to approve a deal with developer Glenveagh Homes.