Mr. Seamus McCarthy:

In the course of audit of the 2012 Appropriation Accounts for the Department of the Environment, Community and Local Government and for the Office of Public Works it emerged that a number of payments made in 2012 pursuant to a High Court order had been split between the accounts. The ultimate beneficiary of the payments was NAMA. Chapter 6 was compiled primarily to present a coherent account of the circumstances that gave rise to the payments. The High Court decision awarded €32.6 million to a firm of house builders now in an arrangement with NAMA in a case taken against the Minister for the Environment, Community and Local Government. The case arose after the State was unable to deliver a Dublin city centre site in accordance with the terms of a land swap agreement.

In 2004, the Government decided to pursue land swaps as a means of delivering affordable housing. The plan was that high value parcels of land in State ownership would be exchanged with developers in return for the delivery of affordable housing on sites owned by the developers. Being already zoned residential and serviced, the developers' sites would effectively be ready to go. The site involved in this case was at Harcourt Terrace in Dublin. It was owned by the Office of Public Works and at that time accommodated a Garda station and the Irish Film Censor's office.

In 2006, the Affordable Homes Partnership carried out a feasibility study and decided that a land swap of the site offered the best opportunity to deliver affordable housing. In May 2006, the OPW wrote to the Department of the Environment, Community and Local Government expressing its reservations about the proposed timescale for the delivery of vacant possession of the Harcourt Terrace site. Nevertheless the site was advertised. The successful bidder offered a price considerably in excess of other bids. It already had control of an adjoining site which it had previously purchased from the State.

In December 2007, an agreement was signed between Affordable Homes Partnership and the firm setting out the terms of the swap. Some 215 affordable housing units were provided by the Affordable Homes Partnership at discounts valued at €31.2 million in total. As part of the agreement, the freehold title of the Harcourt Terrace site would transfer to the successful bidder when all the affordable units had been received and the site would be leased back to the State until the end of 2008. However, by the end of 2008, the site was still occupied by An Garda Síochána due to delays in delivering the planned alternative accommodation at the junction of Kevin Street and Bride Street.

Further negotiations between the parties took place in 2009 in order to put extended transitional arrangements in place. By late 2009, the broad shape of an agreement was in place, providing for the firm to lease the property back to the OPW for a five-year term. However, there were further delays in completing the transfer documentation. In 2010, the firm served a completion notice under the terms of the contract. As the site was still unavailable, the firm subsequently instituted legal proceedings in the High Court and demanded payment of the amount of the discount together with €4.2 million for penalties. Affordable Homes Partnership was dissolved at the end of 2010 and its assets, liabilities and outstanding litigation transferred to the Department. Ultimately in July 2012 an award was made for €32.6 million plus court interest and costs. The Department and the OPW have agreed to apportion the payment, with 60% being charged to Vote 13 for the Office of Public Works and the remainder being charged to the interim housing and sustainable communities agency subhead in Vote 25 for the Department of the Environment, Community and Local Government.

In effect, the full payment relates to the provision of affordable housing in 2007-2008, which in the normal course would have been expected to be charged in full to the relevant subhead in Vote 25. By agreement with NAMA the award is being over a period of five years commencing in 2012, when a total of €11.3 million was paid. Both Appropriation Accounts reflect the respective outstanding financial commitments. I understand that the Accounting Officers will be in a position to outline payments made since 2012.