John Brady (Wicklow, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

19. To ask the Minister for Finance if he believes amending NAMA’s mandate to include a more explicit goal of contributing to social and affordable housing here, would benefit the State economically and socially; and if he will make a statement on the matter. [17513/16]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

It is important not to confuse Section 2, the purposes of the NAMA Act, with Section 10, the purposes of NAMA and that the purposes of NAMA were established in fulfilment of the purposes of the Act. It is precisely through the establishment of NAMA's commercial mandate that the purposes of the Act, including "to contribute to the social and economic development of the State", are achieved.

The European Commission approved the establishment of NAMA and its mandate under EU state aid rules. Any changes to the NAMA Act would require approval from the European Commission as being consistent with their approval of the establishment of NAMA and its original mandate.

Such a change would prevent NAMA from achieving the best financial return for the State and could lead to an exchequer payment under the Government Guarantee of NAMA's senior debt. It is also likely that such a change would result in NAMA being considered "within government" resulting in NAMA's debt coming onto the State's balance sheet. This would mean that all NAMA debt and expenditure would be included as Government debt and expenditure which would seriously limit NAMA's ability to fund both its housing and SDZ commitments that it has already entered into.

Remember that NAMA acquired loans, not land and not properties. What are commonly dubbed "NAMA assets" or "NAMA properties" are in fact assets and properties owned by NAMA debtors which have been pledged as security for debts owed to NAMA. Any action taken which reduced the proceeds from the sale of an asset securing a NAMA debt would reduce the amount a debtor is able to repay to NAMA, would deviate from NAMA's mandate, would likely breach debtor property rights and would not withstand legal challenge.

Where the provision of social or affordable housing is consistent with NAMA's commercial mandate, NAMA has made a substantial contribution in the social housing sector. Through its debtors and receivers, NAMA has established NARPs as an innovative model which has significantly reduced the up-front capital costs for local authorities in the delivery of over 2,000 residential units for social housing. I understand NAMA is reviewing its remaining portfolio for any further units which may be offered under this initiative.

I would also point out NAMA's ambition to fund, on a value maximising basis, the delivery of 20,000 homes by end 2020. This initiative is entirely consistent with NAMA's mandate. The Agency is playing an important role in funding commercially viable residential construction - including a significant proportion of starter homes - in areas of acute demand.

In adhering to its existing mandate, NAMA already contributes to the social and economic development of the State and I do not propose to amend that mandate.