Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

I echo the comments of my colleague, the Minister, Deputy Gormley, in acknowledging the importance of the issues at the core of this evening's debate and reiterate the clearly articulated commitment of Dublin City Council on the priority which attaches to the tenants living in the affected estates.

In my role as Minister of State with responsibility for housing, urban renewal and developing areas, I am constantly reminded of the need for a holistic approach to the challenges arising in addressing issues of disadvantage. History tells us very clearly that it is wholly inadequate to focus purely on physical regeneration in the form of new social housing. We have to address the wider social issues that affect the communities concerned and do so in a co-ordinated manner, engaging all the relevant stakeholders and service providers.

It is important that I place the matter of housing-related public private partnerships in their wider social housing policy context. The use of the housing-related PPP model is just one of a range of mechanisms available to housing authorities to facilitate the delivery of social housing to households that have an identified housing need. In the first instance, my Department supports an extensive capital investment programme through which Exchequer funding is made available to local authorities. In addition to the normal construction programmes of local authorities and voluntary bodies, the Part V mechanism is becoming an increasingly important element in the social housing investment programme and one which, it must be emphasised, also meets our national housing policy objective of mixed-tenure housing. Through the rental accommodation scheme, we have seen a substantial increase in the level of long-term leasing arrangements being used to meet the housing needs of individuals and families.

Significant progress has been made in recent times in scaling up the social housing investment programme. Last year alone, the main local authority house-building programme saw the construction of 5,000 new dwellings, the acquisition of 2,000 units, including through Part V arrangements, and almost 800 new dwellings leased under the rental accommodation scheme. This year, my Department is providing a record investment of over €1.2 billion in the construction and acquisition programme, as well as for the regeneration of existing local authority stock. This year, my Department is providing a record investment of over €1.2 billion in the construction and acquisition programme, as well as for the regeneration of existing local authority stock.

Given that this evening's debate is focused on issues relating to housing in Dublin city, it is important to note that the issues surrounding the PPP projects do not affect the delivery by the council of its wider, and very ambitious, social housing programme for 2008. This programme of housing construction and regeneration, for which my Department has allocated €250 million, will see the delivery of 350 new starts and approximately 630 completions, as well as the continuation of support for the regeneration of Ballymun and the refurbishment of a number of other inner city flat complexes.

The current PPP regeneration programme nationally consists of 18 live projects at various stages of procurement and delivery in various locations, primarily in the Dublin region. These are considered to have the capacity to yield an additional 2,500 social houses as well as 2,000 affordable and 4,000 private units over a period of years.

The PPP housing model used in this type of project is, at its simplest, based on the local authority optimising the use of its existing land holdings to leverage private finance to deliver integrated developments and to distribute project risk across all the parties involved. In many cases it also involves the contractor providing office, retail and recreational facilities. These projects, from a social perspective, represent an effective way of supporting the development of sustainable communities as they automatically make provision for social, income and tenure mix through the inclusion of private housing, community facilities and commercial development.

We need only look as far as the Fatima Mansions project which has seen the complete regeneration of previously run-down blocks of 364 inner city flats with a socially disadvantaged community into a vibrant new development in the centre of the city. The completed regeneration of Fatima Mansions will see 615 new dwellings, with a mix of social, private and affordable housing. A substantial community centre with a swimming pool, a fitness centre and a crèche alongside some state-of-the-art all-weather pitches have been completed as part of the first phase. The second and final phase is due for completion by the end of 2009 and as well as the completion of the social, affordable and private units, will provide for retail and other commercial outlets. It is also envisaged that space will be allocated within the development for local enterprise initiatives to support the social and economic regeneration of the area.

I mentioned that there are 18 live housing-related PPP projects at various stages of progress nationally. These projects are not taken on lightly and must go through a rigorous assessment to determine whether they are suitable for the PPP process. The capital appraisal guidelines produced by the Department of Finance require Departments, local authorities and other public bodies to undertake an appraisal of all capital projects prior to any decision to go ahead with the procurement process. In addition, the National Development Finance Agency, NDFA, which has specific expertise in the evaluation of PPP projects, provides financial advice and PPP projects are benchmarked against traditional forms of procurement.

Once the decision to procure a project through the PPP mechanism has been made and agreed with the NDFA and the sanctioning body, it could be said that the real work begins. This process is replete with checks and balances, not just in terms of Department of Finance guidelines but also EU procurement legislation. In addition, each PPP project is overseen by a project board charged with providing strategic oversight and consisting of representatives of the local authority, the NDFA and the Department of the Environment, Heritage and Local Government. An independent process auditor is appointed for larger projects and the procurement of independent legal advice is also a prerequisite under the current guidelines.

Before I leave the issue of process, I wish to respond to one of the points raised in the Labour Party motion regarding the involvement of a single contractor in all five projects. In a fair public procurement process each individual tender is considered on its own merits. To mitigate against exposure to increased risk, the public sector seeks assurances as to the financial capabilities of the prospective bidders and their ability to fulfil the terms of the contract. This is done at an early stage in the tender process, with advice from the NDFA. Notwithstanding the various checks and balances that exist, my Department will consider what further measures may be required, within the constraints of the rules governing public procurement.

It may be useful to the House if I provide some clarification on the five projects and their status within the Dublin City Council PPP regeneration programme. Since the announcement in May by Dublin City Council that these projects would not now go ahead as planned, my Department has been working closely with the council as it examines options for ensuring the regeneration of these areas. At present, the council is engaged in a full examination of all the implications of the evolving situation, following the initial indications by the developer that, in his view, increased apartment sizes and energy requirements had rendered the projects unviable in the current market.

Of the five projects, only three involve signed contracts with the developer, namely, O'Devaney Gardens, Infirmary Road and Convent Lands. While the last two projects are brownfield sites, O'Devaney Gardens is a full-scale regeneration scheme, with 186 families remaining on the estate. I understand that Dublin City Council is prioritising these families under its allocations policy to provide them with suitable accommodation pending the completion of the regeneration project.

The remaining two projects at St. Michael's Estate and Dominick Street are in a different position as no contracts have been signed. The council has entered into correspondence with the developer to try to agree an acceptable way through which the local authority can move forward and examine other avenues for progressing the projects. Arising from recent indications by the council, I am hopeful that the outstanding matters will be resolved shortly, thus enabling the council to move forward.

I am advised by the council that a number of households in St. Michael's Estate have agreed to move to alternative accommodation since May, with just 18 households remaining. The council has also indicated that sufficient alternative accommodation has been identified for these families and offers are being made on an ongoing basis. The council has also met the regeneration boards for these areas to apprise them of the current situation.

At this stage, it is difficult to comment on the possible outcomes of the council's efforts and I certainly do not wish to prejudice the process in any way. The council is still engaged with the developer on the three schemes for which there are signed contracts, with the indications now being that a mediation process will be initiated in relation to two of the projects to bring matters to a conclusion.

Again, I express my support for the communities living in these complexes and emphasise that the residents of these areas continue to be at the centre of all our considerations. As a demonstration of this and of my support for the council's efforts to bring matters to a conclusion, I have met representatives of the Dominick Street community and will visit O'Devaney Gardens and St. Michael's Estate later this month.

Dublin City Council, for its part, has undertaken to examine all the housing-related PPP projects currently on its books to determine whether they will be affected by the current market situation. I am hopeful that an examination of these will show that they will not be affected and that they can proceed as planned.

As Minister of State with responsibility for housing, I am conscious of my responsibilities in determining any potential negative impact on the wider PPP housing model. Accordingly, the factors cited as influencing the decision of the developers must be carefully considered. As the Minister outlined, a multi-agency group has been established to examine the model and the impact of the current market on the ongoing viability of this mechanism for delivering sustainable communities. To date, the group has met twice and I expect to be presented with its report on the matter this autumn.

Despite this, it is clear that we will still need private enterprise in whatever form it takes if we are to achieve our objective of building sustainable, mixed communities. It is not acceptable for us to return to the age of large, single tenure social housing estates with poor social support services, which we now know contribute to economic and social deprivation of the areas concerned. Whatever we do in the future, we simply cannot afford to repeat the mistakes of the past.

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