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

This is a very serious part of the Bill and, therefore, I am listening very carefully to what the Minister of State and Deputy McAuliffe have said. My concern is, and I say this very respectfully, what the Minister of State and Deputy McAuliffe are saying is not the same and let me outline why this is the case. I understand the Government's amendment very clearly, and the Minister of State rightly used the phrase "future use" and not "existing use" value. This future use is, as I outlined at the start, a mixture, with some social, some affordable and some open market housing. Therefore, each bit of land, depending on its future use, will have a different market calculation. Some will be very low and some might be a little bit higher. If, as the Minister of State suggested, that there could be some developments with 30% open market sale then that land has full market value in terms of what it would get on the open market. The combined cost of these three is higher than the existing use.

Likewise, and this is why the cost rental issue is relevant in the valuation, the Affordable Housing Bill allows for limited return shared equity investment, essentially private sector investment, which adds to the overall cost. This produces a yield and this yield is relevant to the market valuation of the land if those units are ever to be traded in future. It would be reasonable to expect that this would have to be taken into the market valuation.

Likewise with affordable purchase housing, if the terms and conditions of the affordable purchase housing are similar to those under the serviced sites fund there is a clawback, and once the clawback is paid they are open market price houses with open market price land. This gets very serious because, of course, this goes to the heart of whether or not the agency is compliant with EU state aid rules. A lot of private developers will look at the price at which the LDA acquires land for development. Parsing the valuations to ensure there is no undue state aid, particularly with respect to any aspect of the housing which allows either full market profit or a limited profit. Therefore, we could have at a future stage legal challenges by large residential developers who will dispute the land valuation. It happened in the context of NAMA and some of its land deals.

I respectfully disagree with Deputy McAuliffe that this is a mechanism to reduce the land to a nominal cost. If we were going to do that we would just use the existing use value or the book value based on historic cost to the State agency. This is an attempt to work out a complex valuation formula that will not run aground on state aid rules and will allow for a varying series of valuations on each piece of land depending on what it is used for. This will result in the LDA paying more for the land than if it paid existing use value. I suspect there is no way around this because the Government is wedded to trying to get this vehicle off-balance sheet and this is part of the price but that price is a higher cost to the LDA and the taxpayer and, ultimately, higher prices for the purchaser and borrower.

People really need to think very carefully before they approve this because it is an area where there will be in the future, mark my words, a Committee of Public Accounts hearing and a look-back inquiry from the Comptroller and Auditor General asking why on earth the LDA paid 5%, 10%, 15% or 20% or more above the existing use value for a piece of land owned by a State agency, resulting in higher prices for affordable purchasers and renters when they should have got it at existing use value.

This is not some headline grabbing issue. It is fundamental to whether the agency can do its job and can represent value for money for the taxpayer and affordable purchaser. If people who have more knowledge on this than I do, and there are many of them, can convince me I am wrong I will be happy to accept it. However, if I am correct then, in future, when the Comptroller and Auditor General is before the Committee of Public Accounts at least I will be able to say I raised these matters out of genuine concern on Committee Stage. If it ends up that these amendments are rejected and Deputy Cian O'Callaghan and I and others are ignored, well so be it. This is one of those moments, not unlike the NAMA legislation, where what legislators in the House do will determine how much money the taxpayer pays for land in future, how much affordable purchasers and renters pay and whether it is a good deal or not. Let us take this very cautiously and do the right thing by the taxpayers and working people in need of affordable housing.