Housing Crisis in Dublin - Government Parties' PPP Strategy Flops

cactus flower wrote:

I don't live in Dublin - does anyone else know?
Salary costs are through the roof. Domestic rates are needed to develop a proper city. INMO relying on developer contributions drove up house prices and was not sustainable for funding social housing and other public work needed for the City.

Development levies can't be used to fund social housing - they can only be used for specified capital projects required to support development, e.g. water, sewerage, community facilities, parks, footpaths etc. etc.

Is this a related discussion on this on p.ie?
http://www.politics.ie/viewtopic.php?f=160&t=35580

joemomma wrote:

cactus flower wrote:

I don't live in Dublin - does anyone else know?
Salary costs are through the roof. Domestic rates are needed to develop a proper city. INMO relying on developer contributions drove up house prices and was not sustainable for funding social housing and other public work needed for the City.

Development levies can't be used to fund social housing - they can only be used for specified capital projects required to support development, e.g. water, sewerage, community facilities, parks, footpaths etc. etc.

The practice by Green politicians of bringing private sector speakers with commercial interests to their public meetings and events I find very disturbing, and I don't think the fact that MacNamara was not the only speaker answers that. I fully concede that I don't know what was said at the meeting, and that it is possible that the Green T.D.s laid into the PPS process. Perhaps there is someone out there who was at the meeting who could clarify this. That would certainly put me back into my box on this one.
I admit my perceptions were coloured by having gone to a session on food security at which Trevor Sargent was main speaker, and to which he brought a private biofuels producer to speak. The biofuels guy was given free reign to promote his product and Sargent did not say a word about the adverse impact of the biofuels industry on food security, or why he had brought the guy along at all. I have had a Green Councillor come along to my house on a canvass who used the General Election canvass to try to sell me 'green' products. I have seen Mary White use "Questions and Answers " to promote her book business. Consequently I have a concern that the Green Party has not tackled the ethics of promotion of commercial operations/operators as part of their political activities and that sparked my reaction to MacNamara's participation as a billed speaker in the Green Party public meeting. I am particularly wary as I have had a lot of dealings with developers who pressurise and misprepresent to communities in order to avoid getting objections to planning applications. My advice to communities is always to have no dealings with developers but to deal direct with the planning authority.

I also concede that it is difficult (although not impossible) to turn around a process like the PPS's in central Dublin once they are well advanced. However I would like to point out again that it was Martin Cullen who instructed the Council to run with the PPS policy (from the position now occupied by a Green Minister). The Indymedia and SBP links I posted showed that there had been 3 years of planning and consultation work put in to St Michaels Estate by the residents and D.C. Council before that scheme was thrown away overnight and replaced with the (now failed PPP) scheme. Cullen did not worry too much about intervening late in the day.

Increased developer contributions and the raised standards have raised development costs of housing Dublin in the order of 50%. If you want a specific figure I will work one out for you. In referring to developer contributions I am talking not only to planning levies for infrastructure but to the PPS process itself. I think that public bodies got the idea in the boom that there were unlimited easy pickings to be had from development profits and that all new urban works ( and now school sites etc.) could be provided for out of that pot under various guises. Of course that is rubbish for two reasons.
One is that the boom was a bubble and unsustainable, and the other is that it was not the developer paying but the house buyer, who had to pay a further inflated house price. The recently published legislation to allow for procurement of school sites as a spin off from residential development profits put forward by Gormley is also nonsense as the boom is over and requiring school site land to be contributed in association with residential planning applications is likely to be just one more factor making new residential development in Dublin non viable.

Public aspects of urban development need to be properly planned and paid for by a reasonably secure income stream, not by windfall profits of speculative housing development. In my view a domestic rate along with commercial rates is the way to do it.

A domestic rate is also a disincentive to leaving residential property empty, something that has plagued Dublin for decades.

Now that the PPSs have failed, John Gormley surely has the opportunity of bringing forward a new policy for local government funding and for social and affordable housing
that is more in tune with the published housing policies of the Green Party? I hope he does.

I'll put the PDs in the thread title too.

so how should one fund social housing?

lostexpectation wrote:

so how should one fund social housing?

Personally, I think that it should be a combination of income tax passed down from central government, commercial rates, domestic rates and possibly a component of self-build too, that would allow some occupants to have an input where they want to and have the skills.

well where's the gap now lack of central government taxes coming down through?

No domestic rates. Someone can be very asset rich and generate a lot of demand for infrastructure but not pay tax related to that. No self build that I am aware of (self-build could include something like painting your own place).

From yesterday's Times:

Quote :

Public-private partnership rules to be reviewed
MARK HENNESSYand KITTY HOLLAND


Developer Bernard McNamara: firm pulled out of partnershipTHE GOVERNMENT is to order a review of the rules governing public private partnership housing deals with private developers, following the decision of a leading construction firm to pull out of five deals in Dublin.

In all, the State and local authorities are involved in up to 15 such partnerships in the capital and a smaller number elsewhere in the State.

Although a review would take months, Minister of State for Finance Michael Finneran last night insisted that the State needed private builders to be involved in such developments. He said there "is no going back" to the large local authority estates of the past.

Meanwhile, Dublin City Council is seeking legal advice as to whether it can impose penalties on developer Bernard McNamara - although some close to the projects say that penalties are not explicitly stated in the contracts.

A council spokesman confirmed senior officials would meet Department of the Environment officials today or tomorrow to discuss how to get the regeneration plans, now on hold, underway. They are worth a total of €900 million.

"Our lawyers are weighing up our options. We will await their advice. Our priority is to get the projects back up and running. A lot of preparatory work has been done and the projects cannot be left."

Among the affected projects are the €265 million redevelopment of St Michael's Estate in Inchicore, the €200 million plan for Seán McDermott Street and the €180 million regeneration of O'Devaney Gardens, off the North Circular Road.

Mr McNamara is understood to have withdrawn from the projects because of a downturn in the housing market and changes to planning regulations for apartments.

The Department of the Environment last night said that the first of the developments would not have been covered by the new tougher building regulations because planning permission had been granted in advance of their introduction.

A spokesman for the Department said the meeting with DCC officials was being scheduled "with urgency", adding that funding and the use of PPPs for social and affordable housing would be on the agenda.

The Society of St Vincent de Paul said the situation exposed how unsuitable PPPs were for providing social and affordable housing.

Meanwhile, Mr McNamara's company is still in talks with the State about building the Thornton jail in north Dublin, 14 months after it was selected as the preferred bidder by the Department of Justice, Equality and Law Reform.

Asked if there were any difficulties in agreeing the final terms of the contract, a Department of Justice spokesman said: "Negotiations with this preferred bidder are at an advanced stage".

Labour's Senator Alex White said the collapse of the public-private partnerships in Dublin is a symbol of the times - where the poor are the first to suffer from an economic downturn.

"It demonstrates the folly of our over-reliance, particularly in recent years, on the private sector to address pressing social problems and concerns. We have become completely obsessed with outsourcing everything to the private sector and have little or no confidence in our ability or the ability of a properly funded public sector to take the lead in issues such as this," he said.

Sinn Féin Dublin South Central TD, Aengus Ó Snódaigh said: "The effect of this is that hundreds of much-needed social housing units will not be built in the near future."

Where is the statement from the Minister for the Environment ?

Brendan McNamara and Finbar Flood Chairman of the Dublin Regeneration Board are live on Marian Finucane's programme. McNamara is saying that PPPs are a nightmare - the planning and red tape has cost 27 million on the public side and more on his without anything having been delivered. McNamara is saying that PPPs are too complex and sophisticated for housing - a license or public development is more suited - he didn't pull out of the deal DCC terminated it.

David McWilliams is agreeing that PPPs are not delivering. MacNamara is critical of the DCC consultative process out of which the brief was designed.

This is the third collapse that the St Michael's residents have experienced.

An RTE podcast will be available next week.

The impression is of cumbersome processes that are three or four cornered and that as MacMamara says are not focused on delivery of a result.

the opaque dcc yet again

lostexpectation wrote:

the opaque dcc yet again

My understanding of it is that Public Private Partnerships can't be other than opaque as even elected representatives can't be given the details for reasons of commercial confidentiality.

National Treasury Holdings are involved.

There doesn't seem to be the possibility of a round the table approach where all the players get together and iron out the difficulties. One problem is that the tender process for the PPPs took place before any planning permission was applied for. When An Bord Pleanala changed the scheme that was granted by reducing the number of units, the viability of the project was reduced. The new size and sustainability standards were also introduced after the PPP deal was agreed. Even without the collapse in the market and reduced house prices the scheme would have been in trouble.

According to posters elsewhere, the prices that DCC is asking for affordable housing is now much higher than the market price in the open market and people on the panel are having to turn their offers down.

People contrast this situation with the bad old days of massive public estates like ghettoes. But that had changed a lot by 2003. Local authorities were buying houses in private estates and building much smaller developments of social housing. If Dublin City, who have some good in house architects, had built good infill schemes a bit higher density than the existing, they could have sold some units onto the private market and created a mix that way.

frak commercial sensitivity

lostexpectation wrote:

frak commercial sensitivity

Well yes, but they have built that into the law.

but what does that even mean, its the same as with the advertising, are they seriously telling us we're not allowed to see how much things cost?

There was a councillor on the radio last week bitterly complaining about a PPP deal that the Councillors had been told they couldn't see the deal for that reason.

It is probably worth checking out further as Councillors are occasionally known to play dumb.

Quote :

5.5 The Public Sector Benchmark
Before going to procurement the local authority must prepare a Public Sector Benchmark [PSB] for the PPP project. The PSB provides an estimated cost of the project were it to be carried out by traditional means. It is an important part of the process for ensuring value for money and as a tool for helping analyse the financial calculations behind the proposals from the bidders for the PPP contract.
The PSB contains commercially sensitive material and should be kept confidential to the Project Board. The PSB Report must be sent to the Department and the local authority and must await receipt of the Affordability Cap for the project, which is based on the PSB before commencing the procurement process.

This looks like the document.

LINK

I couldn't say from a quick look what type of information is confidential - the probability is that the local authorities would if anything err on the side of caution to avoid breach of law.

It appears to be a significant reduction in local democracy if councillors can't know, and vote on, the full details of a scheme.

cactus flower wrote:

Brendan McNamara and Finbar Flood Chairman of the Dublin Regeneration Board are live on Marian Finucane's programme. McNamara is saying that PPPs are a nightmare - the planning and red tape has cost 27 million on the public side and more on his without anything having been delivered. McNamara is saying that PPPs are too complex and sophisticated for housing - a license or public development is more suited - he didn't pull out of the deal DCC terminated it.

David McWilliams is agreeing that PPPs are not delivering. MacNamara is critical of the DCC consultative process out of which the brief was designed.

This is the third collapse that the St Michael's residents have experienced.

An RTE podcast will be available next week.

The impression is of cumbersome processes that are three or four cornered and that as MacMamara says are not focused on delivery of a result.

Let's remember to get that podcast. This morning on Morning Ireland City Manager Ciaran McNamara (to confuse things more) was talking about Bernard's withdrawal and they played some of that piece from Marian Finucane from yesterday. The implication I picked up is that Bernard 'pulled out' because the building dimensions of the projects were changed as the project was going along so it became more and more expensive and complex to push the project through. DCC, or whoever makes such decisions, changed the specs of the housing to a bigger size and this basically started off the red tape and expense involved on Bernard's part. Ciaran countered this this morning with a particular reference to something or other but I didn't hear it exactly.

Try this link for the Morning Ireland piece (they've started getting their things up right after the show now instead of a delay of two or three hours)
javascript:showPlayer('/news/2008/0526/morningireland_av.html?2379036,null,209')

or this if that's no good http://www.rte.ie/news/morningireland/

Also the Tribune had an article on it yesterday, an excerpt is here

Quote :

After news of the decision broke, Bernard McNamara sent an email, which has been seen by the Sunday Tribune, to assistant city manager Ciaran McNamara saying the company took issue with the idea that it was "pulling out" of the five regeneration projects. In relation to St Michael's Estate it said it was "more a case similar to a marriage that it has not been possible to consummate. We believe we have made every reasonable effort to progress matters". He pointed out that in September of last year the company had offered to go ahead with the first phase of social and affordable units on the site "on terms we thought were agreed with DCC representatives at the time, but which we were subsequently advised that the rigidity of the PPP process and the legal advice being received by DCC would not allow sign-off on phase 1 proceeding to construction".

Tribune Link

So who can the finger be pointed at now if there is any finger to point - The government or DCC or both?

i always do this

http://www.rte.ie/news/2008/0526/morningireland_av.html?2379036,null,209

he said he already had kitchen units being made for the apartments, and yet they still hadn't applied for planning?

lostexpectation wrote:

he said he already had kitchen units being made for the apartments, and yet they still hadn't applied for planning?

They are pods: like a little shell with kitchen fittings inside it. I expect every flat he builds take a similar pod.

The system seems to be back to front. The Council should get a planning permission and then get tenders to build it, instead of the other way around.

Just saw this on Breaking News .ie

Well done, John. About time, but very welcome none the less - Are you watching, Mary Harney?

Quote :

10/06/2008 - 15:37:40
The Environment Minister John Gormley has said that his department is to examine the way Public-Private Partnerships are run.

It follows the collapse of five PPP schemes in Dublin recently involving developer Bernard McNamara.

The council has declared that there has been no meaningful progress made in discussions with Mr McNamara on the St Michael's Estate and Dominick Street projects, and therefore he has been asked to withdraw from negotiations.

I noticed this letter in the Irish Times today:
[url=http://www.irishtimes.com/letters/[/wysi_size]]http://www.irishtimes.com/letters/[/url]

Quote :

Madam...The recent collapse of the public-private partnership involving MacNamara Construction was a devastating blow for the residents of the three public housing estates that were due to be regenerated.

The residents had participated in the consultation and planning phase in good faith in the expectation that their living conditions would be radically improved. In addition to the three estates effected by this crisis - O'Devaney Gardens, Dominic Street and St Michael's Estate - a further three housing estates in the inner city - St Teresa's Gardens, Charlemont Street and Croke Villas - are also depending on PPPs to provide new housing and community facilities.

In total, there are more than 800 families, comprising 2,000 people including more than 900 children, living in housing and environmental conditions that have seriously deteriorated in recent years as they await regeneration through the private sector.

Almost 80 per cent of these families are headed by single parents, almost exclusively women, who are having to cope, in many cases, with extreme poverty. These families can not be expected to wait any longer for adequate housing and living conditions, which are their right.

The board of the Dublin Inner City Partnership (DICP), at its recent meeting, decided to support the call from local residents for the Minister for the Environment to intervene urgently to secure the Exchequer funding for Dublin City Council to provide the social housing directly.

The partnership has put forward a case to the Minister that a total investment of €235 million is required to construct 797 social housing units on the existing sites. The efforts of local residents and their community organisations, elected representatives and City Council officials, all of whom are trying to resolve this crisis, are seriously constrained by the current Department of Environment position that the PPP process is the only mechanism available to provide publicly owned social housing in these communities.

In our view, it is vital that the Minister removes this constraint. In the meantime, it is essential that urgent remedial work is undertaken on the current housing stock in these estates to provide the living conditions to which the residents are entitled. - Yours, etc,

DAVID CONNOLLY, Director, Dublin Inner City Partnership, Upper Ormond Quay, Dublin 7.

It is good to see the Partnership speaking out - not an easy thing for a publically-funded body to do. I agree with the Board members that Government has a responsibility to house its tenants in decent conditions, whether by building or buying homes.
The discussion on PPPs as a funding mechanism for public projects has been debated a lot since this thread was started and several things have become clearer

- PPPs are a means of hiding national debt without counting it as part of National Debt. The public will be paying for these projects for generations to come.

- PPPs are unaccountable and while 16 billion euro of public money is tied up in them currently, politicians are not allowed information on how the schemes are drawn up.

- PPPs are often very poor value for money.

- PPPs are not just about co-funding of public services but are used as a way of smuggling in privatisation.

John Gormley has said that his Department will review the operation of the schemes. What he needs to do is to look for more effective, transparent and better value ways of delivering public services.

http://www.irishtimes.com/newspaper/archive/images/2008/0528/Pg013.png how PPPs hide debt

http://www.irishtimes.com/newspaper/archive/images/2008/0609/Ar0220008.png

http://www.irishtimes.com/newspaper/archive/images/2008/0523/Ar0150003.png John Purcell warns against PPPs

http://www.irishtimes.com/newspaper/archive/images/2008/0521/Ar0070003.png no going back

Pin Discussion: Bernard McNamara Being Brought to High Court Monday for Debt

Sunday Business Post

Quote :

Property developer Bernard McNamara has written to a number of his lender banks in light of the ongoing downturn in the property market.

The letters, known in the banking industry as ‘‘framework documents’’, provide an update on the developer’s financial position.

The letters, sent late last week by McNamara’s finance director, are being seen as a statement of McNamara’s commitment to work through the difficult trading environment, and are expected to lead to discussions with banks about his borrowings.

McNamara has banking relationships with several lenders, including AIB, Bank of Ireland, Anglo Irish Bank and Bank of Scotland (Ireland). While the exact extent of his total borrowings is not known, it stretches into the hundreds of millions of euro.

McNamara has been involved in several of the biggest development site purchases of the property boom, and has also won several major construction contracts. The letters may trigger discussions between the Clare businessman and his banks about future funding.

Banking sources said framework documents were becoming increasingly commonplace in the current climate.

Looks like Bernard could do with a bit of Quantitative Easing ..

Auditor #9 wrote:

Pin Discussion: Bernard McNamara Being Brought to High Court Monday for Debt

Sunday Business Post

Quote :

Property developer Bernard McNamara has written to a number of his lender banks in light of the ongoing downturn in the property market.

The letters, known in the banking industry as ‘‘framework documents’’, provide an update on the developer’s financial position.

The letters, sent late last week by McNamara’s finance director, are being seen as a statement of McNamara’s commitment to work through the difficult trading environment, and are expected to lead to discussions with banks about his borrowings.

McNamara has banking relationships with several lenders, including AIB, Bank of Ireland, Anglo Irish Bank and Bank of Scotland (Ireland). While the exact extent of his total borrowings is not known, it stretches into the hundreds of millions of euro.

McNamara has been involved in several of the biggest development site purchases of the property boom, and has also won several major construction contracts. The letters may trigger discussions between the Clare businessman and his banks about future funding.

Banking sources said framework documents were becoming increasingly commonplace in the current climate.

Looks like Bernard could do with a bit of Quantitative Easing ..

I missed this interesting post Auditor #9. Could this have anything to do with the decision to recapitalise the banks reported on 13 December?

At the same time, there has been an increase of people on the housing waiting lists of 30% in the last year. It was predictable that this situation would quickly lead to a build up of housing need, at the same time as
The hidden hand is not able to house people. The empty houses (in good locations) should be bought at cost of construction and people housed in them. How ludicrous is it to have empty houses becoming derelict whlst people are homeless and overcrowded, or in places like the Devaney Flats.

https://www.tribune.ie/archive/article/2000/jun/25/housing-list-increased-by-a-third-in-one-year/

Dublin City Council is having to reduce the price of Social and Affordable housing they acquired from developers under planning law.

The houses were meant to be a cheap option, but purchase price was set in agreements made before the houses were built, and are now in many cases higher than the full market price.

The City Council must be taking the loss on these houses, but it is better than leaving them empty.

Meanwhile, tax incentivised hotels built out of developers taxes from the housing boom (i.e. at a cost to the exchequer due to loss of tax) are predictably falling like nine pins. Even without the crash, the numbers of hotels built, with little to lose because of the tax breaks, was crazy and many were sure to fail.

Quote :

TWO LUXURY hotels in west Dublin, opened less than 18 months ago, are to close their doors with the loss of 72 jobs. The Glashaus Hotel closed yesterday and the Tallaght Cross Hotel will cease trading this weekend. Both hotels are owned by property developer Liam Carroll.
The 186-bedroom Tallaght Cross opened in February last year and cost €20 million to develop. Its sister hotel, the 48-bedroom Glashaus, began trading in September 2007.
The hotels form part of Tallaght Cross Town Centre which has been developed beside The Square shopping centre and Tallaght hospital. They were both aimed at the top end of the business market.
Rates at the hotels had been sharply reduced over the last six months to deal with pressure in the market, but the reductions were not enough to sustain viability at the hotels.
The future of the two buildings has not yet been decided.
Three other hotels, the Abberly Court, the Plaza Hotel and the Tower Hotel, also operate in the same area of Dublin and, with Mr Carroll’s hotels, offered 400 hotel bedrooms in the suburb. A few miles away, the Louis Fitzgerald Hotel, opened in 2007, has 190 bedrooms and, nearby at Kingswood, the Comfort Inn has 129.
The rapid growth in hotel facilities in Tallaght, with a population of over 80,000, was triggered by the expansion of business activities in west and south Dublin.
Yesterday, the Tallaght Cross and the Glashaus websites were both forwarding inquiries to the Alliance at the Gasworks, which offers short-term apartment accommodation in the converted Ringsend gasworks building, also owned by Mr Carroll.
Michael Skehan, general manager of the hotels, said they were closing due to current economic conditions. A lot of very committed, hardworking staff were being let go, he said.
The closures follow a number of high-profile hotel shutdowns last year including Capella Castlemartyr in Co Cork and the Woodstock Hotel, Ennis, Co Clare.