Kildare Councillors flouted the public interest and perhaps the law in approving the sale of Council land without including its additional actual value to the purchaser as a “ransom strip” – following a valuation by a former Fine Gael Councillor..
By Fiona McLoughlin Healy.
The role of Councillors in disposing of assets is an important one. It is a power vested in them by Section 183 of The Local Government Act.
The Council’s Chief Executive has the power to acquire land but only the Councillors, ie the elected members of the Council acting collectively, can approve the sale of publicly-owned land. Under Section 211 (2) of the 2000 Act, the disposal of publicly-owned land must be for “the best price reasonable obtainable”, and if it is not, the Housing Minister’s consent is required for the sale.
The disposal of publicly-owned land must be for “the best price reasonable obtainable”, and if it is not, the Housing Minister’s consent is required for the sale.
Just five of 31 Councillors present (and a total membership of 40) voted against the sale.
On Monday 30 November 2020, Kildare Councillors voted to dispose of 0.796 acres of publicly-owned land in Athgarvan to a private individual for the sum of €100,000. Just five of 31 Councillors present (and a total membership of 40) voted against the sale, and in substance in favour of my proposal that, as a result of concerns expressed, we adjourn the decision to dispose. Adjournment would have allowed for a second valuation to provide reassurance in relation to some of the issues I outline below.
The founder of Sherry Fitzgerald Reilly, the man who carried out the valuation is a former Fine Gael Councillor.
The founder of Sherry Fitzgerald Reilly, the man who carried out the valuation, is Sean Reilly, a former Fine Gael Councillor. Here’s his signature on the valuation:
Given the responsibility that rests with Councillors to obtain the best price reasonably obtainable, one would expect a certain level of due diligence in considering a disposal of state land. Having access to and being able to review the valuations that form the basis for the proposed sale price is, I would aver, a basic due diligence requirement.
Certainly as the schedule below shows a lot of money is spent annually by the Council on the services of estate agents and valuers.
But reviewing valuations has not been the practice in Kildare. At the previous full Council meeting in October 2020 I had again raised my concerns that, despite repeated requests and reassurances given, the Council Management were still failing to circulate valuation documents with Section 183 notices.
As a result, my colleagues and I were provided with a copy of the full valuation carried out by an auctioneer for and on behalf of the Council for the proposed disposal of .796 acres at Athgarvan, at the November 2020 meeting.
Two things struck me after reading the valuation document, the Council’s notice and the map circulated to Councillors in advance of the meeting.
First, although section 183 (v) requires that notices to elected members include “any covenant, conditions or agreements to have effect in connection with the disposal” ie for Councillors to be fully informed as to the piece of the jig-saw they are looking at, the explanation provided under that section left me unclear about why we were selling the land to the applicant. In fact I was more confused about why the land was being sold after reading the valuation and the Council’s notice.
The value of the piece of land being disposed of lay not in its intrinsic development value but in its value as the only access route to two developments that had been given planning permission a year earlier
Second, here is the valuation document with map.
It appeared to focus on the negatives as opposed to the benefits of the land and therefore read more like a valuation one might expect from a potential buyer, not from a seller. It highlighted for example that:
“The majority of the land would be extremely difficult to develop as it is undulating and at different levels”.
And without clarifying the relevance and significance of planning permissions 19/117 and 19/118 it further added that the:
“Different levels etc of the land, planning ref 19/117 and 19/118, will make it very expensive to develop”.
This is just not the way things operate with valuations. Quite why an opinion had been offered on how difficult it would be to develop the land was perplexing particularly as it was clarified under “valuation assumptions, caveats and disclaimers” that “in undertaking the valuation we did not, unless otherwise stated; carry out a structural survey or test grounds for stability, bearing, capacity, presence of rock or other matters. Any comments in our report concerning the state of repair, structural condition, ground conditions etc are of a superficial nature only and may require to be verified by a building surveyor or structural engineer”.
Having read the document and the Council’s notice of disposal I proceeded to look up the two planning applications that had been referenced but whose relevance had certainly not been clearly articulated in either document.
It soon became apparent that the value of the piece of land being disposed of lay not in its intrinsic development value but in its value as the only access route to two developments that had been given planning permission a year earlier – one consisting of 90 units, the other of 14 units.
Neither development was shown on the map, issued to Councillors, that had accompanied the valuation. The full jigsaw had not been presented. The value of the adjoining developments not shown on the map, is crudely estimated to be anywhere in the range between €20 to €30 million. Thus, the piece of land being disposed of was a ‘Key Value’ site.
Extraordinarily, Kildare County Council had effectively asked the valuer to include the ransom-strip/key-site value but the valuer had not; and now Councillors were approving the deficient valuation.
The relevant case law for valuing what is termed a ‘Key Value Site’ or ‘Ransom Strip’ is Stokes vs Cambridge 1961 which determined that if a parcel of land was needed for access to develop adjacent property, its owner was entitled to up to one third of the resulting value of the developed property.
Based on a crude calculation, had the shoe been on the other foot and the Council required the piece of land in question to develop adjacent land, it would have had to fork out somewhere between €6 and €10 million to acquire the land in question. It’s difficult to be more precise with these figures as the valuation made no reference to the value of the neighbouring developments that were reliant on the acquisition of the .796 acres of land in question.
The night before the vote on the disposal I posted a map of the Council-owned parcel of land for sale showing its position as a point of access for the two developments and the proposal that it be sold for €100,000.
A qualified local auctioneer advised Councillors that the €100,000 proposed for “what it was opening up” was “shocking”. He added that he lived nearby and “you could double or treble its valuation
Having read the post, a qualified auctioneer living locally was prompted to contact a number of Councillors from across the political spectrum in Kildare County Council. He advised Councillors that the €100,000 proposed for the piece of land, and “what it was opening up” was “shocking”. He added that he lived quite close to the land and that in his opinion “you could double or treble its valuation”.
Not quite the value that an application of the relevant case law would suggest but it clearly put elected members on notice in advance of the vote that €100,000 might not be the “best price reasonably obtainable” that Councillors are obliged to achieve.
The following day, although it was accepted by some Councillors during the discussion regarding the disposal, that the land might be worth more money, they argued against getting a second valuation as they did not wish to ‘extort’ money from private developers that might result in inflated house prices.
This argument was flawed for a number of reasons.
First, the proposal to get a second valuation was not a proposal to ‘extort’ money. It was a proposal to get the best price reasonably obtainable for the land informed by its value, including its ransom value (a value I subsequently discovered the Council had effectively asked for in their brief to the valuer – (see letter from County Council to valuer, attached below). Second, there is no guarantee that selling public land at less than optimum value will bring down the price of the houses and, even if there were, this was an argument that should have been presented to the Minister when seeking consent to sell at less than the best price reasonably achievable. Not one that should have been decided blindly and pre-emptively.
Third, Councillors argued that elected members had to sell the land because the granting of planning permission for the two developments a year earlier by Council executives had created an expectation on the part of the applicant that they would be able to subsequently acquire the Council-owned land necessary for the developments.
These are arguments that warrant consideration and clarification by the Minister. If Section 183 vests the authority to sell public land in the elected members and the elected members only, how can Council planning executives create an expectation that is not theirs to create, least of all before Councillors have been consulted or agreed to the sale of the land.
If granting of the planning permission by the executive of a Council in such an instance creates an expectation that land will be sold to an applicant this undermines and usurps the role of Councillors under Section 183 and reduces this statutory role to that of rubberstamping the wishes of the executive.
And even if you accept the argument, and I do not, that Council employees can create an expectation that elected members will sell public land to an applicant, that is not same as creating an expectation that the applicant will be able to buy the public land at a low price.
After the disposal was approved I was finally given the briefing the Council had given its valuer. Incredibly, the briefing revealed that Council officials had asked for similar considerations to be given to the value of the land, and more besides, specifically:
“That the Valuation should provide for the following elements:
The cost of the new road that KCC have to build (circa €115k). This is included in our contract so we can’t let the owners build this for us.
The value of KCC’s 8 units that we have now lost as a result of the developer’s development. I’ve attached the original site map which shows the 8 units immediately below – each unit is semi-detached)..
The Value attached to the fact that the developer could not develop its site without KCC’s access to the site.
The value attached to the KCC element now included in the developer’s planning permission (3 sites)”.
This letter shows that the four elements the valuer was asked to consider were not referenced within the valuation document.
In asking for the value attaching to the fact that the developer could not develop its sites without Kildare County Council’s access to the site Kildare County Council had effectively asked the valuer to include the ransom-strip/key-site value.
That this was not clearly embraced in the final valuation is extraordinary. Equally inexplicable is the failure at any point in the process to highlight the replacement value for the 8 units KCC were going to lose if the land was sold.
On January 1 2021 I wrote to the Minister for Housing, Darragh O Brien. I’m waiting for his reply.
On January 1 2021 I wrote to the Minister for Housing, Darragh O Brien, detailing my concerns around the process for selling Council-owned land, and specifically asking for clarification as to whether elected members of Kildare County Council acted ultra vires our powers in agreeing to dispose of land at much less than the best price that was reasonably achievable for the land at Athgarvan.
I am waiting for a reply.
Fiona McLoughlin is an independent Councillor for Kildare/Newbridge municipal district
Main, featured, picture shows a field at Athgarvan behind which Councillors have sold land, unblocking access for two developments in the distance