A process set up to find off-balance-sheet funding for thousands of social housing units has failed to find a viable proposal from private investors, according to documents seen by RTÉ's This Week programme.
The revelation is contained in a letter written by an official at the Department of Environment's New Funding Models Section in December.
It outlines the outcome of a process whereby private investors, fund managers and others were invited to suggest how the State could effectively underwrite private developers to use non-Government finance to build thousands of new social housing units but while also keeping the money off balance sheet.
The previous government said that finding some method of off-balance-sheet funding was essential if it was to meet the official target of building 35,000 social houses by 2020.
The letter concludes that, despite the department considering that the exercise was a valuable one in some respects, "no new model that would itself be capable of providing and or financing social housing on an off-balance-sheet basis has emerged from the proposals".
The proposals were made to what was called the Social Housing Clearing House Group - which was set up under the scope of the Department of Environment last year.
One of its main tasks was to invite interested parties to pitch how they might model new off-balance-sheet funding - which is considered critical to funding the number of social houses under the last government's plan which was the Social Housing 2020 strategy.
The letter seen by RTÉ said: "In the course of its work, the Group has considered the potential of a number of the models proposed to provide an off-balance-sheet funding source.
“Being able to access funds in a manner that is off balance sheet is considered to be an essential pre-requisite in progressing proposals for new funding models.
“This is a difficult and complex task and despite the high level of engagement with the Group by such potential providers and financiers of social housing, no proposal has emerged that in and of itself could be considered off-balance sheet," the letter said.
Under the Social Housing 2020 strategy, it is claimed that a mix of both Exchequer and off-balance-sheet funding will be needed to fund the construction of 35,000 new social housing units and other housing supports for 75,000 families, up to 2020, and so any delay or derailment of this objective could prove to be a significant roadblock to the development of much needed social housing.
The letter goes on to report, however, that the department is pressing ahead with its plans to develop a model for off-balance-sheet funding.
Sources told RTE's This Week that the hope is this can be completed in coming months.
The Department of Environment was working in conjunction with the Departments of Finance and Public Expenditure and Reform, and the National Development Finance Agency on the project.
Well-placed sources said that the creation of a viable off-balance-sheet model was by no means a simple one. In that regard, the letter says that the process of devising such a model was both a "complex and difficult task".
One well-placed source close to the process said that the difficulty was best evidenced by the failure of the State to design an off-balance-sheet model for Irish Water, which last year failed the market corporation test applied by the Eurostat agency, meaning its capital borrowings continue to be counted on the general Government debt.
However, speaking on RTÉ's This Week, Dr Lorcan Sirr, lecturer in housing and urban economics at Dublin Institute of Technology, said the department would have been better served if it had actually brought a team of housing experts together to devise an off-balance-sheet model, rather than spend time listening to pitches from groups which may not have had the appropriate expertise.
Dr Sirr also questioned whether the off-balance-sheet approach was the correct one if it meant that the State would be essentially underwriting the finance and operational costs in a series of what are called DBFO (design, build, finance and operate) public private partnerships.
He said that lessons from other jurisdictions, in particular the UK, were that such public-private partnership contracts were more costly to the state than direct financing.
Independent Donegal TD Thomas Pringle also said that he was concerned that the insistence on going down an off-balance-sheet model was a further sign that the previous government wanted to effectively privatise housing expenditure when it should be directly spend by the State via the country's local authorities, which he said had capacity lying idle in the form of architects, engineers and planners.