REPORT on the 1995 floods in south Galway says the risk of flooding was not "adequately assessed" in selecting sites for newhouses in the area.
A home relocation scheme for victims of the floods has so far cost the State £300,000 under legislation enacted earlier this year.
Property values have slumped by over £7 million, accounting for the lion's share of the estimated £10 million cost of the floods.
Meanwhile, Fianna Fail senator Mr Frank Fahey has accused political opponents of trying to smear him over a link with a building firm in the area. Mr Fahey was a director of Lally Construction, which built a number of houses on low lying ground near Gort during the 1980s. Some of the houses were flooded in 1995.
The report on the floods was drawn up by consultants engaged by the Office of Public Works to carry out a comprehensive study of the area. A detailed analysis of the results is not expected until next year.
It says more than half of 42 houses flooded in 1995 were built since 1970. Their comparatively young age "suggests that the risk of flooding may not have been adequately assessed by reference to historical data - if such data were available - when selecting sites for the houses in question", it says.
According to the OPW, seven of the most affected families have been paid a total of £300,000 under a relocation scheme. Six other claims were refused, while a further six have yet to be decided. The Red Cross has also given humanitarian aid to flood victims from a £260,000 European Commission fund.
Four of the worst affected houses, including two by Lally Construction, were built in a hollow in the townland of Glenbrack, between Coole Park and the Galway Gort road. The houses are surrounded by higher land on three sides. Land on the fourth side is marked "liable to flooding" on large scale maps for the area.
Mr Fahey said a returned emigrant who has since died, Mr John Joe Walsh, bought the land at Glenbrack and sought planning permission for the houses. Lally Construction was one of several companies contracted to build houses in a number of areas, including Glenbrack.
The company had no involvement in the planning process and was simply contracted to build houses on sites where planning permission had already been secured.
Mr Fahey said a political opponent had attempted to smear him by suggesting the planning permissions were granted under Section 4 motions to Galway County Council and that he had a role in matter - as a local councillor.
"That is totally untrue - the man got the planning permission himself in the normal way," he said.
Three of the houses in Glenbrack have been demolished and the fourth is due to be demolished in the near future, under the terms of the relocation scheme. One of those relocated to higher ground nearby, Mr Gerry Coyne, said planning permission for the houses should never have been granted.
HE bought his partially built house in 1989 and moved in with his family when it was finished that November. "Four months later, six inches of water came into it. Every February since then we worried about the floods. All the area is so low we used to be marooned."
Although he accepted the houses were built in good faith, Mr Coyne said he felt "sore" at the local authority. "The houses down here should never have been built at all," he said.
"It's only when it happened to us [in 1990] that people said, `Why did you buy a house down there?' And I said, `Why?' And they said, `Sure, that's a flooded area.'"
"No one ever told me, because I was only a blow in to Go.... that was the first we heard of it. Everyone in town knew it was a flooded area but us."
A spokesman for Galway County Council said the council had no role in assessing potential flood risks before granting planning permission for houses. "If a person wants to build on a site that is liable to flooding, that's their decision," he said. "It's up to the purchaser to check these things out."