City council left with €26 million loan repayments

Environment Department to face questions over land acquisition loans in July meeting

A Government-led initiative encouraging local autorities to buy land to build social housing and create construction jobs collapsed along with the economy, leaving the Galway City Council with banks of land and loans of more than €26 million.

The debt was revealed at a special meeting of Galway City Council on Monday when a motion, proposed by Fianna Fáil councillor Peter Keane, was passed condemning the manner in which the Department of the Environment and Local Government had refused to accept and take back the loans it provided to the city council, particularly the those in respect of lands purchased in Ballyburke and Keeraun. The motion also called for the Environment minister Phil Hogan, and the Housing Minister Jan O’Sullivan, to direct that the loans totalling €26 million are immediately taken back.

Galway City Council chief executive Brendan McGrath said the matter had been raised with the department and a meeting was due to take place on July 11. Mr McGrath said that as part of a Government initiative the council bought more than €30 million of land at the height of the boom with the promise that with each phase of building completed the money would be recouped from the Department to repay the loan. However, following the inclusion of one piece of land in the Land Aggregation Scheme, the council was now left with the repayment of more than €26 million, with €600,000 in interest payments alone. However, he was confident a solution could be found at national level.

A loan of €5.75 million was taken on by Galway City Council for land located east of Ballymoneen Road and this was accepted into the scheme and the legal transfer is currently in progress. However, submissions in respect of two sites at Ballyburke, with loans in the region of €16.2 million, will not be approved and no submission was made in respect of a loan of €10.5 million for land at Keeraun. The report states: “It is clearly beyond the scope of the city council to make repayments on loans totalling more than €26 million. The council has requested the Department indicate how these repayments are to be funded and also, that the lands which are not accepted into the scheme will remain in the council’s ownership”. Councillors were also warned of the “serious financial implications associated with the Department’s non committed position regarding the funding of these loans”.

The scale of this financial burden was revealed in a housing report which shows there are currently 3,597 households on the housing waiting list, with the council currently maintaining a housing stock of only 2,218 houses. In March 2014 the council received an allocation of €2.5 million under the Job Stimulus programme for the construction of 15 units, including the construction of 13 units at Ballymoneen Road, a site which is in the Land Aggregation Scheme, and the council, which has planning permission for 69 units, will be applying to have lands released to build in 2015.

There was much criticism in the council chamber with Cllr Frank Fahy questioning why the council was spending “crazy money” on retro-fitting houses and buying land when a house could be bought now for between €80,000 and €100,000, while Cllr Mike Cubbard said it was a “farce” to have land that has not been built on for 10 years.

 

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