State paid off €67m in council land loans

THE GOVERNMENT has paid off almost €67 million in debts accrued by local authorities on loans for land bought for social and affordable housing that was not built.

The latest figures from the Department of the Environment show that applications totalling more than €219 million have been made by local authorities seeking to off-load land which was largely secured during the boom years and has now plummeted in value.

Under the Land Aggregation Scheme established last year, the Government has agreed to pay off the loans of local authorities with land banks they are now unlikely to develop, in order to stop the escalating interest payments.

Applications have been made by 22 local authorities since details of the scheme were issued in April last year.

The amounts sought to date add up to €219,186,785, but it is understood that the total debts incurred by local authorities on underdeveloped housing land are likely to be in the region of €650 million.

So far, the department has approved the funding applications of 13 local authorities and processed €66,816 in claims. The applications of a further nine county and city councils for loans of some €142 million are currently being assessed.

The highest payment has been granted to Fingal County Council, which made a claim of almost €20 million for a 24-hectare plot in Hampton, Balbriggan.

A second Dublin local authority, Dún Laoghaire-Rathdown, has received just over €10 million for 2.8 hectares of land on the Enniskerry Road in the south of the county. A further €10 million-plus has been given to Naas Town Council for 4.82 hectares at Devoy Barracks in the town.

However, the largest number of applications has been made by Cork County Council, which is seeking more than €67 million in relation to 35 sites which it bought but no longer intends to use.

Debts of €21 million have been accrued by the local authority in relation to one 11.7-hectare site alone, known as the O’Mullane Lands on the Old Whitechurch Road.

Local authorities whose applications are approved by the department will have their loans repaid and the land in question will be transferred to the Housing and Sustainable Communities Agency.

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

In some cases, Nama may advise that lands originally bought by private developers could be combined with adjacent lands bought by councils for better returns.

A spokesman for the department stressed that there was no loss to the exchequer in taking on the loans of the local authorities as the loans would have had to be repaid in any case.

By paying the loans now, the department was stopping the debt growing, he said.

Minister of State for Housing Willie Penrose was satisfied with how the scheme had progressed so far, but would be keeping it under review, the spokesman added.