There was an article in Tuesday’s Irish Times concerning the land aggregation scheme run by the Department of Environment. To date, 47 sites with a loan book of €110 million has been transferred to the Housing and Sustainable Communities Agency, which has responsibility for the management and maintenance of the land.  There have been 115 sites submitted, with loan debts of €260 million and interest accruing.  The local authorities can only redeem the loans if they have fallen due for repayment, and local authorities have housing loans totalling €499.5 million which could possibly all transfer at when the loans mature.  Nearly all loans are for more than was originally paid due to interest payments.  For example, Fingal County Council owed c.€26.5 million for a 24-hectare plot near Balbriggan, originally bought in 2000 for c.€19 million (one wonders why it didn’t manage to use it between 2000-2007 given it was gaining interest every year, they had a very rapidly growing population, and there was a pressing need for affordable and social housing).

This land, and the land in NAMA, represents the best opportunity the State has had, probably in its history, to create a national land bank.  Such a land bank would enable the state to control at a reasonable cost the provision of land for key developments such as social and affordable housing, schools, hospitals, play areas, community facilities, transport routes and so on.  Because there has been no carry forward costs to holding land (such as property tax), and the recommendations of the Kenny Report were never implemented, the state has been held to ransom by land speculators for development.  As a result, land costs have been a significant percentage of overall cost in state-led development, for example, in road building programmes.

And because the land is only in the hands of two agencies, it should be relatively straightforward to consolidate and coordinate.  The Irish Times piece suggests that this might be occurring to a certain extent: “The agency [HSCA] will consult the National Asset Management Agency to determine the best use of all land banks controlled or owned by the State. In some cases, Nama may advise that lands originally bought by private developers could be combined with adjacent lands bought by local authorities, for better returns. It is also possible that some of the land will be used for social housing in the future, the department has said.”  I have three concerns, however, with present arrangements and practices.

The first is that I do not believe that either HSCA or NAMA have either the mandate or requiste staff with the required skill set to determine the best use for land banks.  Long term spatial planning is not in the remit of either agency and yet they are being asked to manage a key component necessary for it.  How exactly are they making decisions about ‘best use’ of land banks?  How is this evaluated?  Against what criteria?  In consultation with whom?  NAMA has one full-time planner and a planning committee that includes three planners.  All very experienced, but this task requires an interagency team of experts with regional/national spatial planning knowledge working on it in a concerted fashion inconjunction with the regional and local authorities.  HSCA similarly does not have the in-house expertise.

Second, long term landbanking requires long term planning.  In the Netherlands, who have built up a considerable land bank and use it to good effect, they have long term spatial masterplans that detail anticipated development over the next 30-40 years.  They have worked out in principal where they want to concentrate population, build transport infrastructure, place industry, retail, utilities, schools, hospitals, services, etc under different demographic scenarios and organised land accordingly.  We have no such masterplan.  We have a broad spatial strategy that has no specifics and 400 generally uncoordinated local and county development plans administered by 88 planning authorities.  Making long-term land banking decisions means have a good sense of what development land the various parts of the state are going to require well into the future.

Third, that the need for a return in the short-term in order to reduce state overhead will mean that the land will be sold back to private developers at a massively discounted price (75-98%) of its value in 2007 or the amount it cost the state.  In the future we will need to buy this land back at market prices which will be much more than it is now.  The result will be speculators making a fast buck at the taxpayer expense, and in the absence of proper property tax will have little overhead for doing so.  This will be a disaster for the tax payer, especially given the opportunity we presently have.

In my view, NAMA and HSCA should produce (1) a public strategy document on how it proposes to manage the land bank it presently has, (2) should then put in place the structures needed to implement this strategy which is properly resourced and staffed.  To make decisions about land banking in the absence of such a strategy, with no public oversight or public knowledge as to what is planned (or rather not planned) is shortsighted and foolish and will lead to costly mistakes being made.  We have a unique opportunity to make long term gains through land banking, let’s not waste that opportunity by not managing it properly and frittering it away.

Rob Kitchin