Advertisement

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

File photo Alamy Stock Photo

Builder launches legal action over Housing Minister's decision to halt 486 social homes

Emails between department officials warning of the costs also emerged today.

LAST UPDATE | 8 Jul

LEGAL PROCEEDINGS HAVE been launched over the government’s decision to suddenly halt almost 500 social homes.

The judicial review proceedings have been initiated by construction company JJ Rhatigan against the Department of Housing, following Minister James Browne’s cost-related decision to stop the project from going ahead last month.

It was also revealed today that costs for the multi-partner project had “effectively doubled”, according to internal warnings from housing officials weeks ahead of the cancellation.

In correspondence seen by The Journal, they warned that “development costs and interest rates” had combined to see the price rise for the multimillion euro project, which was to deliver 486 homes across six sites in Dublin, Kildare, Wicklow and Sligo.

All 486 homes were due to be delivered under a public private partnership (PPP) scheme.

This model is essentially a long-term contract sometimes used to deliver infrastructure, where the private partner provides funding and operational management of the project as part of its delivery.

The model for the delivery of such largescale social housing projects has been thrown into doubt as a result of the recent cancellation.

New details at Oireachtas committee

Today’s Oireachtas Housing Committee heard Browne say that judicial review proceedings had been initiated by one of the parties involved in the PPPP in recent days against the department because of the cancellation.

Court records show builder JJ Rhatigan has lodged papers against the minister and Dublin City Council.

Social Democrats housing spokesperson Rory Hearne said the situation was now an “utter mess”, telling the minister that the legal proceedings will likely further delay the delivery of the homes through alternative means.

Browne told the committee he could not discuss the cancelled PPP as it was now the subject of legal proceedings, but, speaking generally, he said the model of housing needs to be “completely overhauled” to make it better for the taxpayer.

Labour TD Conor Sheehan told the minister that by deciding to pull the 486 homes “at the 11th hour”, he had effectively made future PPPs “unviable because no developer will want to enter into a PPP in the knowledge that the Minister could cancel it” weeks before it would start.

Four upcoming PPPs – set to contain several thousand homes – have been stalled with a review being carried out into each project.

IMG_6082

The Wexford Fianna Fáil TD also said he was not happy about the “length of time” it took for the project to “land on my desk for a final decision”.

It’s likely to raise further questions about management of the scheme, as the PPP had twice passed government financial appraisals – including last October.

Emails between officials

The Journal can also now report that housing officials raised significant concerns around the costs involved in the project in late March, just weeks before cancelling the project.

The claim was made in emails – seen by The Journal – between the Department of Housing to their counterparts in the Department of Public Expenditure and Reform. The latter department has responsibility for the purse strings on projects backed by the State.

They repeatedly sought a meeting on the project, with housing officials later requesting discussions “asap” as they were due to have a decision made on the future of the homes by May.

In one email, housing officials sought an urgent meeting with the Department of Public Expenditure and Reform about the project.

The project is known as Bundle 3 as it is the third of the social housing projects delivered under the model.

“The costs have risen significantly since the last bundle closed in 2019/2020 (effectively doubled),” the officials said in an email from 27 March.

“These costs include the whole lifecycle including development, funding, operations for 25 years etc.”

Housing officials added that they were working with the State-backed financial institution National Development Finance Agency (NDFA) and said it had reviewed different aspects of Bundle 3.

The official said that Bundle 3 had “passed” its value for money tests – which were conducted last year – but raised concerns over the costs now presented.

“The cost of delivery of Bundle 3 has doubled when compared to Bundles 1 and 2, reflecting current development costs and interest rates,” the official told the Department of Public Expenditure and Reform.

The Housing official continued in the email, outlining that the NDFA have provided a report “detailing the costs and the reasons for the increases over previous bundles”.

The NDFA’s cost report was not released by the department due to commercial information contained within the report.

The homes were due to be delivered by the Torc Consortium, a partnership for all six sites between Galway-based developer JJ Rhatigan, London-based financier Equitix, Japanese developer Kajima and housing body Túath Housing Association.

Although no final contract had been awarded, it is understood that the second Value for Money check last October resulted in developers proceeding to work on the site, leading the consortium’s partners to spend upwards of €8 million on the six sites to get them shovel-ready.

A total of 1,400 workers had been assigned to work on the homes for the next 18 months before the plug was pulled.

Readers like you are keeping these stories free for everyone...
A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

Close
JournalTv
News in 60 seconds