Council Plans for Public-Private Partnership for Housing on Big Plot on East Wall Road

Beside North Strand Fire Station, and opposite Fairview Park, lies a disused 1.6 acre council plot.

The site, vacant for years, is known as the Readymix site after the concrete factory that used to be there. It could soon be developed to create more than 100 new social homes.

On 6 April, independent Councillor Christy Burke asked the council’s chief executive whether there are plans for the site. The current idea is to develop it through a public private partnership (PPP), came the response.

PPPs, though, are a divisive model – in part because several high-profile projects in the city went belly-up with the onset of the last economic crash.

Some say that PPPs are slower, more costly and riskier than the normal procurement process, while others see them as an innovative model in the government’s toolbox to tackle the housing crisis.

These Partnerships

A PPP is a deal by which a private company secures private finance to carry out a construction project for the state. The company takes full responsibility for all the construction and maintenance. In return, the state pays them an annual fee.

That sounds very convenient but you pay a high price for that luxury, says Orla Hegarty, assistant professor of architecture in University College Dublin.

“These projects take much longer and cost significantly more to procure. A very high premium is paid for private finance and management, and what’s more there is a loss of control over delivery and standards,” she says.

The deals can also be high-risk because they are relying on private finance so some high-profile deals have collapsed, she says.

A spokesperson for Dublin City Council says that PPPs are not especially risky. Previous issues caused by the collapse of the economy cannot be blamed on the PPP model, they said.

“We very much welcome different and innovative ways of procuring and delivering social housing in the context of the ongoing housing crisis,” he says.

Possibilities for Plans

The Readymix site is on the vacant sites register with an estimated value of almost €6 million.

Dublin City Council inherited the patch of land when the Dublin Docklands Development Authority wound up in 2016.

The council has no concrete plans for it yet but they will start looking into the design shortly, says the council spokesperson.

Burke, the independent councillor, says he would like to see the site developed for a senior citizen complex and a nursing home, which are both needed locally.

Another good option could be a senior citizen complex combined with “really affordable” homes for people to purchase, says Burke. “That model would create a great blend of communities.”

By “really affordable” he means homes priced at €200,000 or less, he says.

Burke is not excited by the PPP approach which in his experience is “slower again” than ordinary procurement. “Unless there is a plan there that is ready to go.”

He would support a PPP in certain circumstances though, he says, such as if the private developer wanted to build a nursing home on the site.

Some PPPs include privatising part of the land, while in others the private company builds a fully public project for the state.

Fianna Fáil Councillor Mary Fitzpatrick says that the site on the East Wall Road has not been discussed among the Dublin Agreement Group – a coalition of parties that control the majority of votes on the council.

That’s because there are no detailed plans drawn up for it yet, she says.

The Dublin Agreement Group has committed not to sell off public land unless the benefit to the council of selling clearly outweighs the benefits of the council using it for homes.

Fizpatrick wouldn’t rule out a PPP for the Readymix site, she says. “You have to look at each site on a case-by-case basis. I’m not going to say never – absolutely never – but [PPPs] are certainly not the primary solution.”

“The emphasis should be on state provision of public housing,” she says.

She hopes a new national government will take that approach to providing housing in Dublin, she says.

Risks, Costs, Delays

Sometimes, PPPs can be a means of getting large-scale infrastructure built, particularly in developing countries where governments don’t have the expertise available or cannot raise finance, says Orla Hegarty, assistant professor of architecture at University College Dublin (UCD).

But since the Irish government has access to interest-free loans, Hegarty struggles to understand the rationale for the approach, particularly for housing projects, which could be “on-site and occupied, using traditional procurement, before a PPP could even be negotiated”, she says.

A Dublin City Council spokesperson says that “there is no analytical evidence that shows that this PPP-type approach is slower and more expensive”.

But Hegarty says there is lots of evidence. “The European Court of Auditors found that PPPs had ‘widespread shortcomings and limited benefits’,” she says.

In the UK, the state calls the deals Private Finance Initiatives but the government there has nowstopped using the arrangements completely because they offer poor value for money, she says.

The UK government has been buying out some of these contracts, because of the high costs that are typically payable over 25 years, says Hegarty. “In the case of the UK, a debt of £199 billion will be paid by taxpayers, for buildings worth less than £60 billion,” she says.

PPPs are also high risk, says Hegarty. She points to the collapse two years ago of the UK contractor Carillion, which was building schools in Ireland under a PPP.

That collapse “caused contagion across the construction industry resulting in liquidations, losses to sub-contractors and suppliers and extensive delays to projects”, she says.

Dublin City Council has direct experience of the issues, she says. It had intended to use PPPs to develop a number of its key sites, including at O’Devaney Gardens and St Michael’s Estate but following the economic crash in 2008, those deals collapsed, she says.

“Having seen the fallout, it is surprising that the city council would consider again risking the timely delivery of much-needed housing,” says Hegarty.

The PPP model being used now is different to the one that fell apart before though, says the council spokesperson.

The model proposed for the Readymix site is an “availability based PPP model” whereas the previous one was a “land swap model”, he says.

The land-swap model was dependent on the market value of land and “unfortunately this was severely impacted by the economic crash in 2008”, he says.

“While a small number of major Dublin City Council PPP projects did collapse it was a result of the economic crash not the PPP model itself and PPPs were not the only things to collapse at that time,” says the council spokesperson.

Two major PPP projects went ahead successfully at Fatima and Charlemont Street, he says.

Still Hegarty says, if the council could design the projects themselves and then contract construction companies to build them, it would be cheaper. “Coming out of this uncertain time, builders will be delighted to tender with the certainty of monthly payments and continuity of work,” she says.

“Paying construction costs and a reasonable profit in a recession is a really efficient way of getting good value for money and ensuring that projects get to site quickly,” says Hegarty.

“Of course the experience on PPPs has not always been positive but this applies also to projects secured by more traditional methods,” says the spokesperson for Dublin City Council.

There are currently 220 homes under construction in Dublin using this approach, he says, at Scribblestown in Finglas and Ayrfield in Coolock.

Traditional procurement methods simply won’t provide enough social housing quickly enough, to address the housing crisis, he says. PPPs “can be an innovative, efficient and alternative method of securing much needed capital infrastructure,” says the spokesperson.

“Options like PPP arrangements or other innovative methods should not be dismissed but rather they deserve strong consideration and support,” they said.

The Department of Housing hasn’t yet responded to queries as to what it sees as the advantages of the PPP approach, whether it causes delays, or if the Scribblestown project is working out more expensive than other housing developments in Dublin.

Will Councillors Agree?

Ultimately whatever deal is struck between Dublin City Council and a private developer, it will fall to councillors to decide whether or not to sell the land.

“In view of the current housing crisis and the large waiting list for social housing in this particular area we would expect strong support for the development of this – one of our few remaining big sites in the city,” says the council spokesperson.

Burke, the independent councillor, says that it would be a good idea for councillors and management to thrash out an agreement on what should happen to the Readymix site in advance.

Fitzpatrick, the Fianna Fáil councillor, says that a consensus between councillors and the council managers is normally reached in advance of entering into PPP negotiations.

For example, she points out that many features of the O’Devaney Gardens deal were agreed upon by the councillors in 2016, prior to the negotiations that led to the eventual deal.

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Laoise Neylon: Laoise Neylon is a city reporter for Dublin Inquirer. You can reach her at [email protected]

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