Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

I thank the Senator for raising this issue. I am not aware of the particular case referred to by him, but it is clear from his remarks that the issue may have a wide implication across many parts of the country where there are unfinished estates and housing units, apartments and the like which must be finished. There are implications with regard to what happens where a development has, effectively, been put into NAMA, particularly in terms of Part V. He has made a very valid point in that regard. For clarity, I will read the note I have on this matter and we can then take the matter further through correspondence or discussion with me or the Minister for Finance.

Among other things, Part V of the Planning and Development Act 2000 requires that up to 20% of land zoned for residential developments or for a mix of residential and other uses is to be reserved to meet social and affordable housing needs and to be made available to the local authority at the existing use value rather than development value. In addition to the options of providing land, units or sites within the proposed development, agreements with developers may include the transfer of other land within its functional area; the provision of new units on other lands within the functional area; the transfer of fully or partially serviced sites to the local authority or to an approved housing association; the payment of money in lieu; or any combination of these. This encapsulates the Part V provisions that were part of the original Planning and Development Act.

The fact that NAMA acquires a debitor's loans does not alter the debitor's statutory obligations with regard to Part V of the Planning and Development Act 2000. There are cases where a developer has not completed a development and where the 20% Part V component has not yet been fulfilled. This might cause difficulty in regard to the sale of the completed housing units in other parts of the development because the terms of the original planning permission are not yet met and the local authority is not in a position to issue a certificate of compliance. Given the prevalence of unfinished estates, this is likely to be a widespread phenomenon. However, NAMA debtors will be involved in only a minority of cases.

The same issue arises, on a larger scale, in the case of developers who borrowed from non-NAMA banks, to whom the Senator referred. NAMA is not in a position to provide funding to enable unfinished developments to be fully completed unless it can be shown they are commercially viable. In the case of most unfinished developments, however, they are unfinished precisely because they are no longer commercially viable. Nevertheless, each estate will be examined on a case-by-case basis by NAMA as part of its commitment to the Minister of State with responsibility for housing to examine options arising out of the report of the advisory group on unfinished housing developments.

Part V of the Planning and Development Act 2000, as amended, has played a considerable role in the delivery of social and affordable housing since its introduction in 2002. However, Part V was designed for a radically different housing market to that which exists in 2011. In recognising that, we must consider how planning gain can continue to be captured while taking account of prevailing market conditions. A full review of Part V of the Planning and Development Act 2000, as amended, was announced in a new housing policy statement launched on 16 June. Also announced in the policy statement was the standing down of all affordable housing schemes, including shared ownership, in the context of this review.

NAMA is aware that the Department of the Environment, Community and Local Government is reviewing Part V of the Planning and Development Act 2000, as amended, and the agency will dovetail its approach with the outcome of that review. In the interim, outstanding issues in regard to the fulfilment of existing Part V agreements may best be resolved on a case-by-case basis, with developers and local authorities coming to agreement on revised Part V arrangements. In some cases, local authorities, as well as developers, will be unable to fulfil their side of Part V agreements, often for budgetary reasons. NAMA engages with the Department of the Environment, Community and Local Government regularly on planning matters and the engagement to date has been constructive and productive.

In general terms, and without wishing in any way to pre-empt the review, it is likely that a revised Part V will place a greater focus on the delivery of social housing supports, particularly where there is no demand for affordable housing. I thank Senator Colm Burke for raising this important matter. I will report to the Minister for Finance and the Minister for the Environment, Heritage and Local Government the substance of his remarks. However, as I outlined in my reply, these issues are being worked through by NAMA on a case-by-case basis. That process may not be as conclusive as Members would like, but the commitment has come from NAMA that this will be done in order that we ultimately attain some agreement from the process. The Senator's points are well made and I thank him for raising them.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

I fully agree there is a necessity to complete unfinished estates where there is demand in an area, particularly built-up areas in which there are still employment opportunities. Under the NAMA Act, the agency has power to borrow up to €5 billion in working capital for the purpose of advancing new money to complete developments or projects where it is commercially advantageous to do so. All approvals of working and development capital are subject to a credit decision-making process approved by the board of NAMA. To the end of April 2011, the agency has approved more than €800 million in new money advances. For example, it advanced in the region of €100 million to Google for the completion and sale of high-profile buildings. NAMA has this capacity to provide working capital as a means of completing a development, but that can only be done on a case-by-case basis.

In the case to which the Senator referred, there is a role for the local authority in pushing the issue with NAMA so that the agency is fully apprised of the circumstances. Where it is commercially viable for these matters to come to a conclusion, my understanding is that they can and do come to a conclusion. In the case the Senator highlighted, it is certainly a matter worth pursuing with the local authority and NAMA.