The Government has scrapped a €600 million scheme to pay off the loans local authorities took out on land bought for social and affordable housing that was never built.
The Land Aggregation Scheme was set up in 2010 to stop the mounting interest payments and wind up the loans city and county councils had taken out to buy land which had lost the potential for development.
About €111 million has been paid out, but the Department of the Environment has told local authorities the scheme is no longer sustainable and is being discontinued. This will leave councils to find the resources in their own budgets to pay their loan debts next year.
The department has approved loans totalling €162 million in relation to 73 sites across 19 local authorities for inclusion in the scheme. The councils have received €111 million and will be able to recoup the remaining €51 million, but any pending applications will not be approved and no new applications will be considered.
Dublin City Council, the State's largest housing authority, had sought to transfer €31 million in loans to the scheme, but its application had not been processed before the scheme was axed.
Other Dublin authorities fared better with Dún Laoghaire Rathdown County Council getting just over €10 million for a 2.8 hectare site in Sandyford, while Fingal has redeemed almost €26.5 million for a vast 24.2 hectares at Hampton in Balbriggan and has been approved for almost €9 million more for sites in Garristown and Hackettstown.
The scheme was brought in to stop the escalating interest payments local authorities were making to lenders. Under its terms, the local authority's loan would be repaid and the land transferred to the Housing and Sustainable Communities Agency, which has responsibility for the management of the land.
There would be no loss to the exchequer in taking on the loans of the local authorities as the debts would have had to be repaid anyway, and while there were significant up-front costs, the major gain was in ending interest payments.
Better returns
The plan was for the housing agency to consult the National Asset Management Agency to determine the best use of all land banks controlled or owned by the State. It was thought
Nama might advise that lands originally bought by private developers could be combined with adjacent lands bought by local authorities for better returns when the market recovered. Other land banks would be used for social housing in the future when budgets allowed.
There was no obligation to take part in the scheme, although most local authorities did made applications.
Some who did not make submissions may have decided they would hold on to the land because they believed they could make use of it in the near future. However, for many it was because the lands were not yet eligible for the scheme by the time it was axed.
The local authorities could only redeem the loans if they had fallen due for repayment; if a county council had secured a long-term loan, it had to wait for it to mature before submitting it. The scheme was due to have run for 10 years and many councils would have expected to make submissions in the coming years. No agreements were reached with Nama in relation to combining land banks, a source said.
