The development of the largest housing project in the city of Dublin is experiencing continued delays – due to a huge difference in the price developers are looking for social and affordable apartments, and what the state is willing to pay for them.
Reports from a briefing for Housing Minister Darragh O’Brien show that the developers of the Poolbeg-West Strategic Development Zone (SDZ), led by Johnny Ronan, have sought up to $675,000 for a three-bedroom apartment – nearly 60 percent above the approved price cap for councils.
The Poolbeg SDZ, which houses the former Irish Glass Bottle factory, is intended for 3,500 homes, a quarter of which are social and affordable housing.
Dublin City Council (DCC) has so far failed to send a consolation letter to the developers, including Ronan Group Real Estate (RGRE) and its US backers Oaktree and Lioncor stating that it will purchase the apartments at their indicative cost. .
The Ronan-led group paid €200 million for 80 percent of the site in 2020, with Nama holding 20 percent.
Ronan’s consortium has since indicated that it wants to increase the allowable housing density, according to the SDZ voted on by DCC councilors and approved by An Bord Pleanála in 2019.
The urban planning applications submitted to date by the consortium are in line with the SDZ-approved density.
A briefing for Secretary O’Brien in October ahead of a meeting between him, DCC and Ronan with his development partners reveals that housing officials said the state should consider acquiring 25 percent of the land as a value-for-money prize. social and affordable housing could not be obtained.
The developer’s indicative costs for the 10 percent of the required social housing showed that a one-bed apartment was €495,000, which was above the council’s unit cost ceiling of €372,800 for new construction and the department’s upper limit of €404,800. for a new-build bed.
The Ronan consortium wanted €607,500 for a double room, while the council’s cost ceiling was €395,200 and the department’s upper limit for a new two-bed was €474,200.
An artistic impression of what the developed IGB site could look like
Ronan’s group wanted €675,000 for a triple room – above the unit cost ceiling of €425,800 and the €520,000 ward cap for the purchase of a new three-bedroom apartment.
The briefing noted that before the more than 1,200 units at the Poolbeg site can be developed, planning permission requires a new bridge to be built over the River Dodder first.
Dublin City Council indicated that the bridge would likely cost €44 million, compared to the €31 million previously forecast. And another €19.4 million has already been pledged by the state for other infrastructure improvements in the area.
The briefing warned the minister that the Ronan Consortium’s indicative costs for social units were more than 50 percent higher than the set unit cost ceilings for two- and three-bedroom apartments.
“Given the high level of Treasury funding (about €50 million) already committed to keep development going, it is imperative that value for money is guaranteed with regard to social and affordable units,” the briefing said.
It noted that the developers had to provide 25 pc of social and affordable units in order to comply with the SDZ terms and legal requirements, “therefore it is in the best interest of the developers to come to an agreement regarding this 25 pc”.
The briefing said that if the social and affordable units could not be delivered “by this developer” at a price that represents value for money “and to control costs and the timeline for delivery”, then the “option to buy 25 pc of transferring the land from the developer/Nama should be considered.”
Minister of Housing Darragh O’Brien
Sources who met with the developers say there is growing nervousness among their US backers over the deadlock over the financing of the Poolbeg site’s social and affordable units, which will also include commercial units and private accommodations.
The consortium has indicated that it has expressed interest to the Land Development Agency (LDA) in participating in its Project Tosaigh, in which the LDA will agree to the pre-sale of vacant properties.
The memo from the October 20 meeting between the minister, Dublin City Council officials, Ronan and his consortium partners shows that Ronan insisted his partnership had the “expertise, resources and funds” to deliver the SDZ.
Though not included in the official memo, a source at the meeting said Ronan suggested that the site’s density could be increased to accommodate between 5,000 and 6,000 homes – and that the developers could use a new one. Urban Development Zoning (UDZ) designation of a bill that has yet to be converted into law.
To unlock the social and affordable housing, Nama must transfer its stake to Dublin City Council
According to the official memo, Ronan “called for a ‘blue-sky’ approach to the plan and stated that the development should be a public-private partnership”.
Ronan acknowledged that the existing SDZ program was award-winning and important to local residents and emphasized Oaktree’s commitment to significant investment in Ireland.
William Murray, one of Ronan’s planning consultants, said there was a “need to change the plan” after saying the site had the unique opportunity to be an example of a “carbon negative” development.
Another member of Ronan’s team said “a revised proposal” would improve views, daylight and sunlight, save energy and double biodiversity.
Tom Phillips, one of Ronan’s planners, said a “clean slate” approach was needed. Phillips said that “SDZs had not performed” and that “investors would like to have certainty” while suggesting the location would be suitable for UDZ designation.
Sinn Féin housing spokesman Eoin Ó Broin
Charles Blackburn, managing director and co-head of Europe for Oaktree’s Global Opportunities division, told the minister: “There is no other site in Europe quite like this, based on a combination of proximity to the city, location on the bay, connections to nature, etc.”
He said Oaktree was a long-term investor in Ireland and one of the top five property providers in Spain.
The development partnership explained that they wanted to activate the first phase of development – and while they want to change the housing number, unit mix and building design of the approved SDZ, they would provide 25 percent social and affordable housing in each revised schedule.
Mr O’Brien told the consortium that any change to the SDZ would be a matter for the municipality.
Richard Shakespeare and John O’Hara, the senior officials of Dublin City Council at the meeting, “questioned the intensity of the proposals for a revised SDZ plan”.
Mr Shakespeare said any changes would need to be considered by the council’s 63 elected representatives before a new submission can be made to An Bord Pleanála, all of which would take time.
This weekend, Sinn Féin’s housing spokesman, Eoin Ó Broin, said he has held a number of meetings with developers, local residents and the municipality in an effort to move the Poolbeg project forward.
He is concerned that no progress has been made in reaching an agreement on financing the social and affordable housing part of the development since last October’s ministerial meeting.
Mr Ó Broin wants Treasury Secretary Paschal Donohoe to step in and instruct Nama to transfer his 20 percent stake to the City Council.
“This is a project of huge strategic importance for the city, and so we need to properly develop and develop the project,” said Mr Ó Broin.
“The problem at the moment is that it is simply not possible to provide social or affordable housing given the set-up of the schemes.
“The only way to unlock social, and in particular affordable housing, is for Nama to transfer its interest in the site to Dublin City Council. I call on the Minister of Finance and the Minister of Housing to resolve this matter as soon as possible.
“We also need more coordination with the Minister of Transport [Eamon Ryan]who happens to be the TD for this constituency, and the Ministries of Housing and Finance, to ensure that the totality of public investment for the bridge, road and infrastructure is discounted for the social and affordable housing.
“My big concern is that if the hands-off approach of the three ministers involved continues, we might not get the social stuff, we might not get the affordable stuff and we might not get houses there for years.”
RGRE said it had submitted multiple planning applications for the first two phases of the development that meet current SDZ specifications and will deliver 1,450 homes, a quarter of which will be social or affordable housing.
“Our goal is to deliver these phases as quickly as possible to provide much-needed housing in our capital,” it said.
A spokesman for the Housing Minister said Dublin City Council approved an application for the first 570 residential houses on the former Irish Glass Bottle site on March 24 this year.
“Under the SDZ conditions, this will provide 57 social and 86 affordable homes,” said the spokesperson.
“The Department of Housing, Local Government and Heritage remains committed to working with Dublin City Council and the developers of the Poolbeg SDZ area to move this site forward, subject to agreement on all normal and relevant terms, including value-for-money aspects, and we are working on that.”