Government to wind up Dublin Docklands Development Authority

The government has announced its intention to wind up the Dublin Docklands Development Authority.

The decision follows the publication of a special report on the DDDA by the Comptroller and Auditor General, which contains damning findings about the authority's conduct, particularly in relation to its involvement in the purchase of the former Irish Glass Bottle factory site in Ringsend.

It found that the authority failed to get an independent valuation of the site before committing to the deal, a move which ultimately ended up costing the authority €52 million.

The process of winding down the DDDA is to take up to 18 months, during which time a new board will be put in place for the transitional period. It will be chaired by the Dublin City Manager, John Tierney.

The branding of the Dublin Docklands will remain during that time and planning, managing and marketing of the area will continue in order to maximise its development potential.

The Government said a focus on regeneration and attracting investment and job creation will be key priorities for the new board.

The Minister for Environment Phil Hogan, who is responsible for the DDDA, said the Government remains fully committed to the continued regeneration of the Dublin Docklands.

However he said that taking account of several reports published about the DDDA, keeping the authority on a standalone basis is no longer viable, financially or otherwise.

DDDA was warned about overheated property market

The special report by the C&AG has found that the executive of the DDDA advised its board that its ultimately successful joint venture bid for the Irish Glass Bottle site in 2007 would be made in an overheated commercial property market.

The report also found that while an assessment of the level of investment, benefits and risks of the project was presented to the board during the decision making process, a detailed analysis of those factors does not seem to have been carried out by the authority.

The DDDA was one of a number of shareholders in a company, Becbay Ltd, which bought the site in 2007 for €412 million, with a view to developing it. The DDDA guaranteed the loans to the tune of €29.1 millio.

However the development never went ahead and the land - which ultimately cost €431 million when the price of acquisition, stamp duty and other costs is included - was valued last year at €45 million, according to report.

The purchase by Becbay was funded with loans from two banks. Those loans were taken over by NAMA, which called in the DDDA's guarantee early last year.

A mediated settlement was agreed with the agency last July, which saw the guarantees extinguished in return for the transfer to NAMA of assets worth €7.8 million.

The C&AG found that the total outlay of the authority in the purchase and failed planned development of the Irish Glass Bottle Site in Ringsend was €52.1 million.

The report also found that while the authority obtained ministerial approval to increase its borrowing capacity up to its statutory limit of €127 million, it did not reflect the planned scale of the project when applying for the money from the Department of the Environment.

The C&AG found that the authority told the department that the value of the site was approximately €220 million, while at the same time an outlay of over €400 million was being discussed.

The C&AG found no documentary evidence that the DDDA formally updated the department when the decision was made to bid double the amount it had notified it that it intended to pay.

As a result, ministerial approval for increased borrowing and the DDDA's participation in the joint venture was given on the understanding that the transaction value was around €220 million.

The report finds that the DDDA believed at the time of signing a shareholder’s agreement with the project’s two other private sector partners in November 2006 that its financial commitment to the joint venture would be limited to €35 million.

However that projected exposure peaked at €81.9 million in 2010, before crystallising at €52.1 million.

At the end of 2010, the DDDA had current liabilities of €32 million at the end of 2010, which the report says were funding property assets which would be hard to dispose of in the short-term.