Sunday, April 11, 2010


Councillors Conference in Sligo – Who pays for work in Unfinished Estates?

Senators are elected by local county and city councillors. The “trades association” of these councillors is known as LAMA (the Local Authorities Members Association). It’s a very important body for Senators, since they have the clout and influence to determine many elections to the Seanad.

LAMA holds conferences for its members every six months or so. I was invited to attend and speak at this Saturday’s one in Sligo by a member of the LAMA executive, Labour Councillor Pat Hayes from Waterford. Pat gave me a free rein to talk about whatever subject I thought would be of interest to the Councillors.

I know from my emails and telephone calls that currently one of the biggest issues in relation to councillors is the proposed new Planning & Development Bill, and how that impacts on local councils, councillors and their constituents. So, I decided to focus my contribution on this Bill.

I got on the road at twenty past seven and motored along serene and empty roads all the up through up the M1 from Drogheda, through Monaghan and across via Eniskillen to Sligo. I arrived in time to hear local Senator Mark McSharry finish his contribution and then listened to the comments of Kerry-based Senator Paul Coughlan. Both of these also addressed issues in relation to the Planning & Development Bill.

Whilst most people welcome the new bill in principle, there are some issues that are of concern. I focused on some in particular, including the need to carry out a comprehensive assessment of the costs of completing unfinished estates.

The Bill has new powers in relation to finishing estates and allowing local residents to push for them to be taken in charge. The question arises though, if a developer cannot finish the works in an estate (say they go bust, an increasingly frequent phenomenon) then how are the completion works paid for?

This eventuality was meant to be covered by forcing developers to put a bond in place with a bank. Some councils are cagey as to what exactly this entails, but from what I can ascertain often this meant the developer purchased some sort of insurance for X euros from the bank, which guaranteed to pay out 100x euros or 500x euros if the bond was ever called in. It did NOT mean that the developer lodged a cash sum equal to the bond required into the bank.

Roll on a few years, to 2010. The recession is biting and many developers are going to the wall. Picture an unfinished estates first occupied in the middle of the decade in 2005. Residents are sitting in their reasonably new homes, built five years ago, now in negative equity, and they want their estate finished off. They petition the local authority to finish the estate.

In Meath alone there are probably a hundred estates waiting to be taken in charge. If say a third of them require further works then that could amount to 30 estates in Meath alone. Gross that up nationally and we could be talking about 500 estates requiring completion works. If each taking in charge costs say €200,000 then this would be a requirement of possibly €100 million. The bank bonds are meant to cover these costs.

This is not a huge amount of money, but if no allowance has been made within the coffers of the banks then it makes it less likely for these completion works to be carried out.

So, I’m going to table a question to Minister Lenihan, asking him can he give information on the amount of completion bonds still outstanding which are held by the main Irish Banks. I don’t expect to get too far with the question, but at least it might concentrate a few minds on this issue.