Partnership projects not viable, builders claim

PUBLIC PRIVATE Partnerships (PPPs) have no future in the production of social housing, according to both construction industry and social development organisations.

The Construction Industry Federation (CIF) and development agency the Dublin Inner City Partnership (DICP) have dismissed PPPs as no longer viable following the recent collapse of six Dublin social housing projects.

However, despite the failure of these projects, Dublin City Council says it intends to press ahead with new PPP schemes. Hundreds of social housing tenants who had expected to be in their new homes by this Christmas will have to wait up to 10 years for their estates to be redeveloped following the collapse earlier this year of five PPP agreements with developer Bernard McNamara, and in recent weeks the termination of a further social housing PPP with Bennett Developments.

Bernard McNamara had agreed to redevelop the dilapidated flat complexes of St Michael's Estate in Inchicore, O'Devaney Gardens in Dublin 7 and Dominick Street, near the Ilac centre in the north inner city. He was also to develop new housing on council land at Infirmary Road, also in Dublin 7, and Seán McDermott Street in Dublin city centre.

The PPP process began in the first of these estates, St Michael's, in 2003, but when construction failed to begin earlier this year, cracks in these projects began to emerge. By the end of the summer it was clear the five projects would not be going ahead with Mr McNamara. At the beginning of December the council announced they would not be redeveloped through PPPs at all. Within a fortnight, a sixth PPP, Croke Villas, a flat complex in Ballybough that was to be developed by Bennett Developments, was also shelved.

The council plans to spend €95 million to build 280 social housing units between St Michael's Estate, O'Devaney Gardens and Dominick Street, and has abandoned plans for the development of the Infirmary Road and Seán McDermott Street sites. It has yet to determine how it will fund the Croke Villas redevelopment.

The downturn in the housing market has been blamed for the collapse of the PPPs. The schemes worked by allowing developers to build private housing on State/local authority land on the condition that they also build social housing for the council to allocate to its tenants.

During the boom this seemed like an ideal way of providing social housing. However, according to director of contracts with the CIF Don O'Sullivan, PPPs are suitable for the development of roads or waste infrastructure, but don't work for social housing.

"The problem with building housing is that it's very time-dependent and very market-dependent. What's a good deal today may not be a good deal tomorrow."

The stringent EU procurement rules under which PPPs are sanctioned mean the process can take up to four years to complete, before construction begins.

PPPs were introduced in Ireland in the late 1990s, so have only been in use during a time when property values were continuously rising, now they're been tested in a downturn and have been shown not to work, he said.

DICP, which has been working with communities to regenerate their areas, has similar views.

"Social housing is the responsibility of the State. People can't be left hoping the private sector will supply what's needed. Enough evidence has been produced now that this is not the right way to produce social housing," DICP director David Connolly said.

He believes the lengthy process involved makes PPPs unsuitable for housing. "The PPP process has become extremely complex and has created a rigid legal framework which cannot offer a viable solution in the short term."

Assistant city manager Ciarán McNamara said the council does not intend to abandon PPPs, and plans to use them to regenerate more areas.

Contracts have yet to be signed with a developer, and Mr McNamara said all projects would be assessed on an ongoing basis.