Eoin Ó Broin (Dublin Mid West, Sinn Fein) | Oireachtas source

As Deputy O'Callaghan said, this is one of the most important sections of the Bill. I have seven amendments in this grouping relating specifically to sections 53 and 54. These are new additions to the Bill. They were not in the original version. They did not get pre-legislative scrutiny. Given these are the sections which will determine what the LDA will pay for lands it is acquiring from other State agencies, it is crucial we fully understand what it is the Government is proposing. Unfortunately, when one reads the Bill and listens to some of what the line Minister, Deputy O'Brien, and some of his backbenchers have said, there are conflicting interpretations. I am not saying people are wrong or are misreading the Bill. Land valuation and the determination of price for land is a very complex area of professional expertise. People who work in this area in local authorities, Departments and in the private sector get master’s degrees from Technological University Dublin and have a level of knowledge about how one does this, which, unfortunately, many members of this committee do not have and, therefore, we are grappling with this as lay people. The difficulty with the legislation is it is quite opaque in terms of how this will work. I will throw out a few tangible issues, to which it is important the Minister responds. Public land has different values depending on who owns the land. Local authority land generally has what is known as historic value. It sits on the books of a local authority on the basis of the value it paid for it. That is very different from any calculation of its current use, whether it is existing use, which is the formula Deputy O'Callaghan and myself are arguing for, or market value, which is what is provided for in the Bill.

Therefore, the historic value, where that is lower than the existing use, should really be the transfer price so that the local authority does not lose out if it is transferring land but neither does the LDA pay above the price.

The really important concept of existing use, which should be the standard under this Bill, is generally the land from other public agencies that will be transferred. It is not used for residential housing; it is used for a variety of different forms. St. Kevin's is an old hospital site, Dundrum central is an old psychiatric hospital site. The CIE and HSE lands in Limerick, for example, are public transport and public health lands and they have existing use values. Existing use is invariably a lower cost than market value, so why the Government would not have used existing use as the bar is hard for me to understand and I would like it explained.

Finally, market value is the estimated value that the land will get when sold on the open market. Of course, if conditions are attached to the use of the land, that constrains the market value. For example, if we take the Dundrum central site, let us imagine it will have 10% social housing - which is too low, but that seems to be the indication - 50% affordable rental and purchase, and 40% open market sale. When any professional land valuer is estimating the market value of that site, there are four separate calculations: first, the calculation which keeps the land value for the social housing very low, then second, a calculation for affordable sale units which could be based on the future imputed uplift of the value of that land if-and-when that affordable home is sold into the market. That is a way of thinking about that valuation. There will also be a valuation for the land that the cost rental units are on. Again, that could be the imputed yield of those cost rental units over a period because that concretely affects the land value, particularly because the LDA may involve private equity investors or other private vehicles. Then, of course, there is the full market value of the land that would have open market price homes. The Minister said that his desire is in Dublin that a majority, if not 100%, will be social and affordable, but he is also indicating that some percentage could be open market sales. For example, in open market sale, the price on the strip of land beside Dundrum central hospital last year, for a two-bedroom apartment, was €500,000. What many of us are worried about is, notwithstanding the fact that where there is a mixed tenure scheme with social, affordable rental and for purchase on open market price, there will be a land value calculation for each segment of that housing and the accumulated cost of that to the LDA would be higher than the existing use value. If I am wrong, I am happy to be corrected but nothing I have heard to date says that I am.

Finally, the proposal around Part V is one of the most bizarre propositions. Part V is based on an assumption that a developer paid full market price for the land and has a full development cost. Part V has a very specific mathematical formula, which establishes the discount between the existing use value of the land at the point of purchase and the market value, if I understand it correctly, to achieve a discount for the purchase of the social and affordable homes by the local authority. A Part V formulation cannot be applied when the land is not bought at full market value as it is sold on the open market. That just makes no sense. The big concern in this regard is that surely if land is to be transferred, much as I would prefer if it was not for the purposes this Bill is setting out, from CIÉ, Iarnród Éíreann, the HSE or a local authority to the LDA, the agency should not pay anything more for that land than its book value, whether it is existing use or the historic value on the books of that agency or organisation, otherwise it is paying above the odds. Why is this important? It is not just an accounting exercise. The LDA will deliver affordable homes to buy and rent. The price of those affordable homes, the price of the rent that is set or the price of the purchase, will be determined by the all-in development costs. We know land, after the nuts and bolts of hard construction, is one of the largest factors of development so if the LDA pays more than it should for the land on which social and affordable homes will go, then unfortunately that will push up the development price and that will push up the cost to the affordable purchaser or renter. I am less concerned about local authority lands. How Dún Laoghaire-Rathdown managed that transfer will probably reflect the existing use value but I am really concerned about HSE, CIÉ, OPW lands, etc. We need the Minister to explain in plain English how this will work and how it will not result in what I, Deputy Cian O'Callaghan and others believe the LDA paying above what it should pay for land, thus pushing up the cost and ultimately the price of affordable homes to rent or buy for working people.