Ms Geraldine Tallon:

I thank the Chairman and members for the invitation to attend this meeting today to discuss the Comptroller and Auditor General's report on the land swap arrangement at Harcourt Terrace.

As the committee is aware, the land swap proposal was a complex and challenging intervention in the housing market by the Government. The Comptroller and Auditor General's report provides a useful overview of the events from 2004 to end 2012. A briefing paper from the Department and OPW was provided earlier this week to update committee members on the situation. To provide an overall context for the committee's discussion today I would like to make a number of points. First, the Harcourt Terrace land swap was a Government intervention aimed an enabling first-time buyers to get on to the property ladder at a time when the Irish housing market was undergoing a period of dramatic growth. While young, middle income affordable house purchasers, would historically have been able to acquire a starter home without assistance, in the housing market conditions of that time these households were no longer in a position to realise their home ownership aspirations. Given what has happened in the property and housing markets in Ireland and internationally since 2007, it is hard now to imagine a situation where annual rates of double-digit price appreciation and successive years of record housing output were the norm.

An intervention in the market ten years ago to deliver 10,000 affordable homes to meet burgeoning demand for a particular demographic cohort might seem extreme to us in 2014 when demand remains sluggish outside of a limited number of years, overall housing output remains at record lows, mortgage lending is weak and property values have decreased by over 50%. It would not be appropriate therefore to consider affordable housing delivery mechanisms such as the land swap arrangement under discussion only through the prism of the last few years.

Second, even the most simple property transaction can be quite a complicated and protracted process. The land swap proposal for Harcourt Terrace was an innovative approach to leverage the value of assets held by the State to deliver on a key public policy objective of supporting home ownership for middle income first-time buyers priced out of the market.
Like many innovative public policy interventions, it was also complex. There were many moving parts and participants. What is now the Department of the Environment, Community and Local Government was responsible for setting the policy and supporting the statutory affordable homes partnership in delivering on the affordable housing initiative. The Department of the Taoiseach chaired a group to provide further co-ordinating support to the Department of the Environment, Community and Local Government. The justice Minister proposed the site at Harcourt Terrace for possible use under the initiative. An Garda Síochána was then in situin Harcourt Terrace. The Office of Public Works, OPW, owns the site and building and was also involved in the proposal to develop a new Garda station at Kevin Street to allow for the station at Harcourt Terrace to be vacated. The Office of the Chief State Solicitor was involved as the legal representative for the OPW. Various external entities from the legal and property sectors were also involved and provided their expertise, and the developers - Durkan New Homes - were party to the transaction as the successful bidders. They provided significant discounts to the State and they were to become owners of the site for redevelopment. In this organisational context, my Department's critical interest was in the timely delivery of the affordable housing. All of these parties acted in good faith throughout the period from the launch of the affordable housing initiative in 2004 right up to the point at which court proceedings were initiated. All parties sought to avoid going to the courts but unfortunately that proved not to be possible.
Finally, by way of overall context, it should be noted that for the land swap at Harcourt Terrace, the State received discounts from Durkan New Homes of over €31 million in value on 215 affordable homes in the south Dublin area. While this has to be set against the High Court award of €32 million made in favour of Durkan New Homes, those earlier significant discounts had enabled 215 households, in 2007, to realise their aspirations to own their own homes.
There are three points. The world has changed radically since this process was initiated; this property market transaction was particularly complex, with many players; and the State received very significant discounts which should be balanced against the court award. These points are essential to a full understanding of the land swap arrangement at Harcourt Terrace. I am, of course, with my colleagues, happy to elaborate on these points or on any other issues that arise in the course of the committee's work in this regard.