The development of the largest housing project in the city of Dublin is facing ongoing delays – due to a wide gap between the price developers are seeking for social and affordable housing and what the state is willing to pay for it.
Records of a briefing for Housing Secretary Darragh O’Brien show that developers at the Poolbeg-West Strategic Development Zone (SDZ), led by Johnny Ronan, have asked for up to €675,000 for a three-bedroom apartment – almost 60 per cent above the approved price cap for councils.
The Poolbeg SDZ, which includes the former site of the Irish Glass Bottle factory, is earmarked for 3,500 housing units, a quarter of which must be social and affordable housing.
Dublin City Council (DCC) has so far been unable to issue a letter of comfort to the developers, which include Ronan Group Real Estate (RGRE) and its American backers Oaktree and Lioncor, stating that it will purchase the homes at their indicative cost prices .
The Ronan-led group paid 200 million euros for 80 percent of the land in 2020, with Nama keeping 20 percent.
Ronan’s consortium has since indicated that it wants to increase the allowable housing density under the SDZ, which was voted on by DCC Council members and approved by An Bord Pleanála in 2019.
The building applications submitted by the consortium corresponded to the density approved by the SDZ.
An October briefing for Secretary O’Brien ahead of a meeting between himself, DCC and Ronan with his development partners reveals that housing officials said the state should consider taking 25 percent of the land if a price represents good value. relationship for society and affordable housing was not available.
The developer’s indicative cost of the 10 per cent of social housing required showed that a one-bed flat was €495,000, which was above the Council’s unit cost ceiling of €372,800 for a new build and the Department’s ceiling of €404,800 for a new-bed.
The Ronan Consortium wanted €607,500 for a twin bedroom – while the City Council’s ceiling was €395,200 and the Ministry’s ceiling for a new twin bedroom was €474,200.
Ronan’s group wanted €675,000 for a three-bed flat – above the council’s unit cost ceiling of €425,800 and the department’s ceiling of €520,000 for buying a new three-bed flat.
The briefing noted that before the more than 1,200 units on the Poolbeg property can be developed, planning permission requires that a new bridge be built across the Dodder River first.
Dublin City Council said the bridge would likely cost €44m, up from the €31m previously forecast. Another 19.4 million euros have already been pledged by the state for other infrastructure improvements in the region.
The briefing warned the minister that the Ronan Consortium’s indicative costs for social units were more than 50 per cent above the set unit cost ceilings for two- and three-bed homes.
“Given the high level of funding from the Treasury (approximately €50 million) already committed to continue development, it is imperative that value for money is ensured in terms of social and affordable units,” reads in the briefing.
It noted that the developers had to deliver 25 pieces of social and affordable units in order to meet the SDZ conditions and legal requirements, “so it is in the developers’ interest to agree on these 25 pieces”.
The briefing said if the social and affordable units could not be delivered “by this developer” at a price that represents value for money “and to control the cost and timing of delivery” then the “Option to transfer 25 percent of the land from the developer/Nama should be considered.”
Sources who have met with the developers say their American supporters are increasingly nervous about the impasse in funding the social and affordable units at the Poolbeg site, which will also contain commercial units and residential housing.
The consortium has indicated that it has expressed interest to the Land Development Agency (LDA) in participating in their Tosaigh project, where LDA will agree to pre-purchase vacant homes.
The memo from the 20 October meeting between the Minister, Dublin City Council officials, Ronan and his consortium partners shows Ronan insists his partnership has the “expertise, resources and means” to make the SDZ a reality .
Though not recorded in the official memo, a source at the meeting said Ronan suggested increasing the density of the site to allow for between 5,000 and 6,000 housing units – and that developers could claim a new urban development zone (UDZ). Designation from a bill that has yet to be passed.
In order to unlock the social and affordable housing, Nama must transfer her interests to Dublin City Council
According to the official memo, Ronan “called for a ‘blue sky’ approach to the planning program and stated that development must be a public-private partnership.”
Acknowledging that the existing SDZ scheme is award-winning and important to local residents, Ronan stressed that Oaktree is committed to significant investment in Ireland.
William Murray, one of Ronan’s planning advisers, said there was “a need to change the plan” after saying the site has a unique opportunity to be an example of “carbon negative” development.
Another member of Ronan’s team said “a revised proposal” would improve views, daylight and sunlight, save energy and double biodiversity.
Tom Phillips, one of Ronan’s planners, said a “clean approach” was needed. Phillips said “SDZs have not stood the test of time” and “investors would need reassurance,” while implying that the site is suitable for UDZ designation.
Charles Blackburn, Oaktrees Global Opportunities Arm’s Managing Director and Co-Head of Europe, told the Minister: “There is no other location in Europe like this, based on a combination of proximity to the city, location on the bay, connections to nature etc .”
He said Oaktree is a long-term investor in Ireland and one of the top five housing providers in Spain.
The development partnership stated that they want to activate the first phase of development – and while they want to change the housing numbers, housing mix and building design from the approved SDZ, they would provide 25 percent social and affordable housing in each revised program.
Mr O’Brien informed the consortium that any change to the SDZ was a matter for the local council.
Richard Shakespeare and John O’Hara, senior Dublin City Council officials at the meeting, “asked about the intensity of the proposals for a revised SDZ programme”.
Mr Shakespeare said any changes would need to be considered by the Council’s 63 elected representatives before a new bill was submitted to An Bord Pleanála, all of which would take time.
This weekend, Eoin Ó Broin, Sinn Féin’s housing spokesman, said he had had a series of meetings with developers, residents and the council to move forward with the Poolbeg project.
He is concerned that since last October’s ministerial meeting there has been no progress in reaching an agreement on financing social and affordable housing.
Mr Ó Broin wants Finance Minister Paschal Donohoe to intervene and direct Nama to transfer its 20 per cent stake to the City Council.
“This is a project of enormous strategic importance for the city and that is why we need to design and develop the project properly,” said Mr. Ó Broin.
“The problem right now is that it’s just not possible to deliver social or affordable housing given the way the programs are set up.
“The only way to develop social housing, and in particular affordable housing, is for Nama to transfer its interest in the site to Dublin City Council. I urge the finance minister and the housing minister to resolve this matter as soon as possible.
“We also need stronger coordination with the transport minister [Eamon Ryan]who happens to be the TD for this constituency, and the Department of Housing and Finance to ensure that all public investment in the bridge, road and infrastructure is discounted for the social and affordable housing.
“My big concern is if the hands-off approach of the three ministers involved continues, we may not get the social, we may not get the affordable prices and we may not get housing there for many years.”
RGRE said it has submitted multiple planning applications for the first two phases of the development, which will meet current SDZ specifications and will deliver 1,450 homes – a quarter of which will be social or affordable housing.
“Our goal is to carry out these phases as quickly as possible in order to provide much-needed housing in our capital,” it said.
A spokesman for the Housing Secretary said that on March 24 this year Dublin City Council approved an application for the first 570 houses on the former Irish Glass Bottle site.
“Under SDZ conditions, this results in 57 social and 86 affordable units,” said the spokesman.
“The Department for Housing, Local Government and Heritage remains committed to working with Dublin City Council and with the developers of the Poolbeg SDZ area to move this site forward, subject to agreement on all normal and relevant conditions including value for money relationship. Money aspects, and work is underway in that regard.”
https://www.independent.ie/irish-news/gap-widens-between-the-price-developer-wants-for-social-housing-and-what-the-state-will-pay-41845697.html The gap between the price the developer wants for social housing and what the state will pay is widening