COMMITTEE of PUBLIC ACCOUNTS debate -
Thursday, 15 Feb 2001

Vol. 3 No. 4

County Wicklow VEC.

Acting Chairman

Item 5 is the Town of Bray VEC - Annual Financial Statements 1994 to 1997 and the General Report of the Comptroller and Auditor General on the Education Sector 1995 - relevant sections. Item 6 is County Wicklow VEC - Annual Financial Statements 1994 to 1998 and the General Report of the Comptroller and Auditor General on the Education Sector 1995 - relevant sections.

Witnesses must be made aware that they do not enjoy absolute privilege. I apprise them as follows. The attention of members and witnesses is drawn to the fact that as and from 2 August 1998 section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the committee's proceedings. Notwithstanding this provision in the legislation, I remind members of the long-standing parliamentary practice that members should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I welcome Mr. Hugh O'Brien, and ask him to introduce his officials.

Mr. O’Brien

I am accompanied by Ms Carmel Whelan, head of the development community services at County Wicklow VEC, and Mr. Kevin Lewis, assistant principal officer and head of information technology and finance at County Wicklow VEC.

Acting Chairman

I ask Mr. Pádraic McNamara, principal officer in the post-primary education section of the Department of Education and Science, to introduce his colleagues.

Mr. McNamara

I am accompanied by Mr. Des O'Loughlin, assistant principal officer in the further education section, and Mr. Jerome Kelly, assistant principal in the post-primary administration division.

Acting Chairman

I ask Mr. Purcell to introduce the Town of Bray VEC annual financial statements for 1994 to 1997 and the County Wicklow VEC annual financial statements for 1994 to 1998.

Mr. Purcell

There are nine separate accounts before the committee this morning, five of which are for County Wicklow VEC up to the end of 1998 and four for Town of Bray VEC up to the end of 1997. In 1997 the two vocational education committees were amalgamated by Statutory Instrument No. 91 of 1997. Since that time one VEC covers the entire county. From 1998 onwards there is only one account, that is, County Wicklow VEC. The inevitable problems of administration associated with the amalgamation meant that the presentation of the 1998 account and the audit thereof were not as timely as I would have wished. Unfortunately, the position with the 1999 account shows only slight improvement. Despite reminders from my office, it is only in recent weeks that an account for 1999 has been presented for audit.

Looking back over the nine accounts, there has been only one occasion on which there was a necessity for a critical audit report. That was on the 1995 account of Town of Bray VEC when I reported that overpayments totalling £17,366 had been made to VTOS participants and that only £285 had been received in refunds. The VEC carried out an investigation into the matter which was thought to be associated with two other irregularities referred to in my report for that year. However, there was no evidence to substantiate this possible connection. On the basis that it was an administrative error by the VEC and the fact that the payees claimed they believed they were only getting that to which they were entitled, recovery action was not pursued. Procedures within the VEC were tightened up at the time and there is no evidence of problems in that area since. That is history to a certain degree.

The committee has had correspondence from a residents' association and from Deputy Roche in recent months on the sale of a site by County Wicklow VEC to Bray Urban District Council. The tone of the correspondence generally claims that Bray UDC sold on the site to a property development company with the implication that the VEC may not have received the full value of the site. The site in question adjoins Bray UDC property. Over the years Bray UDC had expressed an interest on a number of occasions in acquiring it. The latest and ultimately successful bid to purchase the site was connected with a deal that Bray UDC had with the aforementioned property company which would involve a major development on the site and adjoining lands. The first phase of the proposed development incorporates the construction of a theatre or an arts centre and later phases envisaged a new headquarters for Bray Urban District Council and some housing.

In October 1997 the VEC decided in principle to make the site available to Bray UDC for a nominal sum. That was subject to a number of conditions, including agreement by Bray UDC and Wicklow County Council that the VEC would have a significant role in the management of the proposed theatre to ensure that various courses run by the VEC, such as performing arts, would have access to the theatre and its facilities; the identification of other educational benefits which would accrue to the VEC from the establishment of a theatre in Bray; a commitment from Bray Urban District Council and Wicklow County Council to assist the VEC in every way possible to procure a site for an all-Irish school which was outgrowing its accommodation within the town; and that any decision to transfer the site for a nominal sum would be subject to the approval of the Department of Education and Science. The Department was not prepared to approve the disposal of the site for a nominal sum and sought the Valuation Office's observation on the value of the site. It put a value of £150,000 on it and the VEC sought and received that price from Bray Urban District Council for the land. The sale was closed in March 1999. I understand planning permission has been granted and work has recently commenced on the site.

According to a local newspaper article, the value of the entire package to Bray Urban District Council is in excess of £2.1 million when all things are considered. However, I cannot confirm that because, as the committee knows, I do not have any audit or inspection rights in local authorities and, consequently, I do not have access to the files of Bray Urban District Council. If the figures quoted are correct - there is a big caveat on that - it would appear that on a straight monetary comparison the value of the site would be greater than that received by the VEC.

Given the strategic importance of the site to the proposed development, the main question which arises is: would the VEC have got a better price for the site if it had put it on the open market or even negotiated directly with the developer? Members might ask why should Bray Urban District Council, rather than the VEC, get the benefit? What must be taken into account in trying to get an answer to these questions is the difficulty in assessing benefits accruing to the VEC from the deal. On a broader level, one could argue that different criteria should apply to land deals between public authorities where there is a shared interest in providing facilities for local communities. In this context there seems to be an implicit understanding that the goodwill shown by the VEC in this instance will be reciprocated when land is required for a new school building in the future. All these factors complicate any attempt to arrive at a firm conclusion as to whether the VEC got best value for money from the disposal of the site.

Acting Chairman

We appreciate the efforts made. The Comptroller and Auditor General covered many aspects of the deal that might be questioned. Mr. O'Brien forwarded his opening statement. Do you, Mr. O'Brien, wish to add to that?

Mr. O’Brien

I gave the opening statement to the committee and I presume the members have sets things in context. The Town of Bray VEC and County Wicklow VEC were separate schemes up to 31 December 1997. Both schemes were then amalgamated from 1 January 1998. I was acting chief executive officer of County Wicklow VEC from September 1995 to December 1997. From that date I held the post of education officer until October 2000 when I was appointed chief executive officer of the amalgamated scheme. I have endeavoured with the help of the administrative staff to brief myself particularly on the issue relating to the 1995 account. The reasons which caused the problems at that time were quickly identified by the VEC and brought to the attention of the auditors. Since then procedures were set in place which have avoided any difficulties. Since the amalgamation, we have tightened structures more.

Acting Chairman

I will open the meeting to discussions. I call on Deputy Bell.

Deputy Bell

The statement by the C&AG leaves a number of questions to be answered by the VEC, especially in view of the correspondence involving the Novara and Sidmonton Deputy Residents Association and Deputy Roche regarding the sale of the site referred to in the correspondence. As a member of local authorities and statutory bodies for the best part of 30 years, my understanding is that the sale of public property would normally have to go to public tender and be subject to the highest bidder. How can a site be transferred from one public statutory body to another and then sold to a private developer when neither stage was put to public tender? The money involved is very substantial, approximately £2.7 million. The taxpayers are the owners of the site while the VEC and local authority are the caretakers of public land.

I have never seen a situation where a local authority or VEC can transfer land for money without conditions built into the contract to the effect that land could not be passed on to a private developer without it being put to public tender. If Deputy Roche was opposed - we saw his letter only this morning - to the procedure involving the transfer from the VEC to the local authority, was it subject to a vote? Could the members of the VEC who voted in favour of it be effectively surcharged on the basis that the sale was improper and contrary to the regulations set down by the Department?

The departmental representative should be asked the same question. Was it brought to his attention? What was the decision of the Department and when and under what circumstances was sanction given by it? Was any attempt made or instruction given to set down the procedure for determining what the value of the site would be? It is normal that the sale of public property would be subject to planning permission being granted. The dogs on the street know that if a site is sold for a certain amount of money - in this case £150,000 - without planning permission in an area of high valuation like Bray, the value of the site will substantially increase. That happened in this instance.

What action was taken by the VEC and the local authority? I do not know if a member of the local authority is present. It might be an idea to ask the county manager and-or the town clerk or county secretaries involved about the procedures they set down regarding the sale of the property.

Acting Chairman

Deputy Roche's letter was circulated on 7 December. It was agreed to take it with this examination today.

Mr. O’Brien

St. Cronin's comprises 1.7 acres of land. It is situated on the main street in Bray. In 1983 approximately 0.9 acres was sold to the urban council in Bray. The portion of the land at the rear was retained by the VEC for future use. As far back as 1983 the urban council in Bray at all times expressed an interest in the site and in having first option on it, should it be sold, but the VEC did not make a decision on giving it first option. Since then the town council made various suggestions as to the disposal of the site. The main one was that it would provide sports facilities at a school adjacent to the site to a value equal to whatever value would be put on it by an independent valuer.

In 1997 the town of Bray VEC was asked to dispose of the site to the urban council for a nominal sum of money. The VEC had a particular interest in the fact that a theatre would be constructed because it has a very important performing arts sector attached to its senior college and the group does not have a satisfactory premises in which to do its work. Therefore, a big advantage for the VEC was that it would have a state of the art theatre available to it and to the performing arts sector in the senior college.

Over the years the town of Bray VEC has been endeavouring to get a site for an all Irish school which is run under the auspices of the VEC. It has tried several places but effectively none has been made available. It had to consider whether it could get a site for this school and get a commitment from the council that such a site would be provided.

The urban council had sourced funding for the theatre, but it needed to own the land before it could draw down any of the funding. The VEC agreed in principle with the idea of disposing the land to the urban council for a nominal value subject to the approval of the Department of Education and Science. The Department turned down the request and said it was precluded from giving that type of permission to the VEC. However, it asked the Valuation Office to undertake a valuation of the site and it valued it at £150,000. The VEC then sought the approval of the Department to dispose of the site for that amount and that approval was given. I know that some figures may have been bandied around - the £2.1 million which Deputy Bell mentioned, and, indeed, another figure of £1.15 million. If one can visualise a square of 1.7 acres, the front of which is already owned by Bray UDC, and then a site at the back which is land-locked with no access from anywhere, that is, the site which was owned by the VEC, we would not be comparing like with like. The £1.1 million, which was offered by the developer, was for the plot of land, which would actually be 1.1 acres in area and which would have frontage on to a main street which obviously would be a big plus in its favour, and it would have a building on it of over 4,500 sq. ft. The £1.1 million was offered for that site. The rest of the site, which would have been ours, would be land-locked and would not have any of the advantages of the front part of the site.

The VEC site was going to be used for the construction of the theatre and the construction of the civic offices of the UDC. That is what we would have been looking at also; this was something which would add to the educational facilities of our senior college and add an extra dimension to the local community of Bray. The theatre will cost in the region of £5 million.

Therefore, the £150,000 was for a land-locked site with no access. The VEC did not get involved in any of the other transactions which might concern the urban council and any developer. It was simply interested in its own plot of land and it was interested in ensuring that a theatre would be provided. It certainly was very interested in the provision of a school site in an urban area, where sites are impossible to get. I do not know whether I have answered all of Deputy Bell's questions.

Deputy Bell

He has partly, and I thank him. Why, in his opinion, was nothing built into the contract to state that in the event of the site being sold on, it would be subject to public tender? The Department or the local authority will have to answer that question to satisfy public concern about this. I am not suggesting at this stage that anything improper occurred, I am simply asking the question in public in order that it can be answered. We should also ask for a copy of the minutes of the VEC meeting where this subject was discussed. I appreciate that this was prior to the amalgamation of the two vocational education committees. We should also ask for a copy of the minutes of the UDC meeting where this subject was discussed, and what conditions were laid down.

I can see merit in the provision of a public facility which would be of value to the community at large. While that was subject to it being built by a private developer, and I can understand the use of joint ventures, there is, however, something which does not make sense here. Perhaps it has to do with the fact that it happened a long time before the two vocational education committees were amalgamated, but if the Department is not in a position to answer the question, we should ask it to supply us with its correspondence with both Bray UDC and the VEC and the conditions laid down for the sale of the property concerned. How could there be such a difference? If it was not £2.1 million, then there must be a substantial difference between the sale for £150,000 and the quoted figure of £2.1 million. There are questions which need to be answered to clear up this matter. With all due respect, Mr. O'Brien did not answer the question.

Acting Chairman

There were many questions built into Deputy Bell's statement. Perhaps Mr. McNamara would comment on this and give the departmental view on it.

Mr. McNamara

Initially the VEC sought to dispose of the site at a nominal price. The Department has two roles here. First, it has a role under the VEC Acts; the vocational education committees cannot sell off stuff except at the market price. It also has a role in ensuring that the property being sold is surplus to requirements, in other words, that it is not needed for other school purposes.

In this case, the Department was satisfied that the property was surplus to requirement and it advised the VEC that the site could only be sold at market value. In fact, to facilitate this, the Department obtained a valuation from the Valuation Office, which was £150,000 as it transpired. Therefore, the Department gave approval to the VEC to dispose of the property and supplied the market value from the Valuation Office.

The Department does not have a role in the arrangements for the disposal of the site. In other words, the VEC would have significant autonomy there. However, it had a role in giving permission to sell the site and for ensuring it was surplus to requirements, that it was not going to be needed for another school or whatever.

Acting Chairman

In putting a valuation on it, I take it the Department was satisfied the process was carried out and the figure is there.

Mr. McNamara

That valuation was provided by the Valuation Office.

Acting Chairman

Mr. O'Brien, would you like to pick up on that in regard to Deputy Bell's last question?

Mr. O’Brien

We have always gone to the Valuation Office in any area where we are disposing of, or purchasing, property. We have looked on it as the honest broker. We were very satisfied that the £150,000 was a fair and reasonable price for that land. We would not have envisaged it selling for much more. In that way the VEC would have been happy with that. When you add the provision of the theatre, which is being built by the UDC rather than the developer, and the knock-on effect of being able to actually acquire another site for a school which is of vital importance, we felt that it was very good value for money in the overall context.

Acting Chairman

I suppose a point emerging here, of which we have seen previous examples in the past ten years or more, is that the Valuation Office may not always give a satisfactory figure. The statutes lay down that the office should be used, but if there is that much conflict between the figures, the process we would probably all recommend is public tender. Public tender encourages a declaration of interest by people which would put a real value on a property.

The process was gone through and they used the Valuation Office. We cannot blame people for that. It would appear, however, that there are problems in that regard. Would it be fair to say that? If there is that much conflict about the potential price of the property, which I appreciate is land-locked etc. but which is of use to somebody, it would appear there is a conflict between the mechanism used by the Valuation Office and by the general public.

Mr. O’Brien

Yes. One can argue that toss either way and I would accept what you have said, Chairman. There is another point which I should make. If - I am using the word "if" advisedly here - it were possible to have got a much higher price for that site - when I say "much higher", I am referring to a figure of £100,000 or £200,000 more - and to charge the full market price for it, we also would have, at that stage, been relying on our county council to provide another site for a school eight miles south of Bray, the market value of which was £1.3 million. However, because of the whole community dimension attached to the disposal of the land in Bray, the council did not charge its full market price for the other school site. It actually charged £700,000, which would have meant a saving of £600,000 for the VEC, or really the Department.

Acting Chairman

It would be fair to say that these are the extra issues to which the C&AG referred at the outset. Some of us are members of local statutory bodies and our normal reaction would be to look for co-ordination, co-operation, flexibility etc. However, this committee has a value for money brief which is almost in direct conflict with what individual members would seek on a local basis. We are used to engaging in an element of horsetrading rather than wasting public money, but I accept that this is in conflict with our role on this committee. As already stated, the points to which Mr. O'Brien refers are probably those in respect of which the C&AG indicated there are obvious implications.

Deputy Bell

With respect, I still do not believe this question has been answered in full. I appreciate that one of the major parts of the process was the transfer, at whatever price, to the UDC. This must surely have been done at VEC level on the understanding that the UDC would be responsible for the development. However, the situation subsequently changed. In my opinion we should request the minutes of all discussions relating to this subject which took place at VEC and UDC level.

Acting Chairman

Urban district councils are outside our remit. We can obtain the minutes of VEC meetings, but we cannot obtain those of UDC meetings.

Deputy Bell

We should invite the county manager and officials of the UDC to come before us to outline the process that was followed. My understanding of the position is that the VEC was of the opinion, rightly or wrongly, that the UDC was going to carry out the development. When it decided not to proceed with the development, why did the UDC not put the contract out to public tender? There must be an explanation for that. I cannot understand how, with the various impediments involved, a private developer could obtain planning permission from the same public authority, the UDC, which is now under appeal to An Bord Pleanála. I do not know whether this falls within our remit, but there are questions of public concern involved and these have been highlighted by the residents and a Member of the Oireachtas. In that context, clarification is required. I appreciate that Mr. O'Brien is only now gaining knowledge of this matter and that it was, I assume, dealt with before he took up his current position.

Will the Chairman indicate if the committee, under its Standing Orders or rules of procedure, would be in order to request information about the procedures under which this matter was discussed and in respect of which decisions were made at both UDC and VEC level?

Acting Chairman

We would probably be given that information if we requested it. Perhaps I could ask Mr. Purcell to comment further on this matter because there are a number of complicating factors involved. For example, I know that the question of a headquarters for the UDC and various other matters were tied in with the overall issue. Mr. Purcell took the unprecedented step of visiting the site because of the complications involved.

Mr. Purcell

Yes, perhaps I could just point out that while the VEC site was landlocked, it was absolutely vital to the broader development because it gave access to a much bigger area of land for housing development, which otherwise would not have been able to have been developed. It is my understanding - I am sure the chief executive officer will correct me if I am wrong in trying to respond to Deputy Bell's question - that the VEC would have been aware that the UDC had this other arrangement with the property development company and that that was what made the land valuable in that sense. I do not think it was envisaged, at the time the land was being sold to the UDC, that the UDC was going to do anything else with it except use it as part of the deal that it would reach with the development company. That is my understanding of it, but I am sure the chief executive officer will be in a better position to respond to that specific question.

Mr. O’Brien

Not having been there, I cannot say for certain. However, I think that what the Comptroller and Auditor General said would be accurate. As I said, the VEC, even being aware of what might happen - again that was all subject to planning in any event - was concerned about the fact that it had land which was of no use to it, but it saw a future use in the form of the theatre and the future advantage of being able to get another site for a school. It would have got its valuation.

Acting Chairman

Does Deputy Bell wish to ask a further question before I call Deputy McCormack?

Deputy Bell

I must state for the record that I am not satisfied. It is my view that, under the Freedom of Information Act, not only this committee but the public at large would be able to seek all information and correspondence relevant to this transaction. I am sure the people concerned have considered that option but, if they have not done so, I would advise them to seek such information under the Freedom of Information Act in order that all documentation relevant to that transaction, at both VEC and UDC level, be placed in the public domain.

Acting Chairman

The UDC issue could be pursued through the Department of the Environment and Local Government. However, we can discuss that later when we conclude our examination of this matter.

Deputy Bell

We are examining accounts dating back to 1994, almost eight years ago. It is unreasonable that the committee should be asked to examine accounts eight years after they were audited. What plans does Mr. O'Brien have to ensure that the information, required by statute to be placed before the committee, is made available within a reasonable period following the end of the financial year. In other words, we should now be examining the accounts of the VEC for the year 2000, not 1994. I accept the difficulties involved, particularly the matter of the transfer and the amalgamation of the two vocational education committees, but will Mr. O'Brien ensure, through the financial control element of the Department - and perhaps the C&AG will comment on that - that in the future the committee will be given, within a reasonable period after the end of the financial year, the audited accounts?

Acting Chairman

I want to be fair to Mr. O'Brien, who, I am sure, does not need me to defend him. We decided to use this methodology as a vehicle to bring this item back before us.

The Comptroller and Auditor General expressed a concern about the 1999 accounts.

Mr. Purcell

Yes.

Acting Chairman

However, the committee has updated all the accounts. We are using the 1994 accounts as a vehicle to deal with this issue. Otherwise the accounts would have been noted early last year. We insist that everyone submit their accounts within the 12 month period. We kept them open instead for the purpose stated. Would Mr. Purcell like to add to that?

Mr. Purcell

No, you are quite right, Chairman. The scheduling of accounts going back to 1994 is purely a device. They would not have come before the committee if it had not been for this particular issue. Since it was being raised, it was decided by the secretariat, for which I understand there is a strong precedent, to bring in all the accounts which had not been viewed by the committee over the previous period.

Deputy Bell

Thank you, Chairman.

Mr. O’Brien

By way of explanation, the 1994, 1995, 1996 and all the other accounts would have been completed well in advance of this. It is not that they are being made available now by the VEC.

Deputy McCormack

Did the Valuation Office take into account, or was it aware when conducting the valuation, that part of the property would be the site for a theatre and a school? Is it possible for us to acquire a copy of the Valuation Office report?

Acting Chairman

That is more directed to Mr. McNamara.

Mr. McNamara

We can obviously supply a copy of the Valuation Office report to the committee. The other question was what it would have taken into account. I obviously could not answer that. That would obviously be something the Valuation Office would do itself, but I will get a copy of the report.

Deputy McCormack

Is there anything included in the report taking into account the planned or envisaged use of the site at the time for a school and theatre?

Mr. McNamara

Yes, just to clarify for the Deputy, when we wrote to the Valuation Office, we supplied the documentation that had been supplied from the VEC, including a site map. All that information was provided to the Valuation Office.

Deputy McCormack

What was the acreage of the entire site valued at £150,000?

Acting Chairman

Was it 0.9 of an acre?

Mr. McNamara

Yes, it was 0.9 of an acre. You are correct, Chairman.

Deputy McCormack

Was it a reserve function of the members of the VEC to give permission for the sale of the site? Did any members of the VEC have a dual mandate, being also members of the urban district council?

Mr. O’Brien

It would be within the brief of the VEC to decide on the disposal of the site once it obtained the permission of the Department to do that. There would be an overlap of membership between the old Town of Bray VEC and the urban council. In any urban area there would be an overlap.

Deputy McCormack

Was there in this case?

Mr. O’Brien

Yes.

Deputy McCormack

How many members?

Mr. O’Brien

There would be eight people who were on both.

Deputy McCormack

This is a very fine point. Did those eight people participate in the decision and, if they did, did they declare an interest in the matter?

Mr. O’Brien

They all would have participated in the decision. Some, not all, would have agreed with it.

Deputy McCormack

That is not the question. Did they declare an interest? Obviously members of the UDC who were members of the VEC had an interest in the matter when wearing their other hat as members of the UDC. It was obvious the UDC had an arrangement of some description, I do not know if it was cosy, with a developer to develop further and use lands on which to build a theatre and a school. I want to establish if members of the VEC who had dual membership declared an interest in the matter.

Acting Chairman

I do not know if Mr. O'Brien is aware of the date but I would like to know when declarations of interest were first required. It may have happened following this decision which means it would be in force only three or four years at this stage. We did not have to declare an interest prior to that.

Deputy McCormack

I am not concerned with their roles as members of the UDC because we do not have jurisdiction over that. I am concerned with their roles as members of the VEC.

Acting Chairman

I am not sure if declarations of interest came into being for health boards and other public bodies before or after that decision was made.

Deputy McCormack

I do not suggest anything. I only seek information.

Acting Chairman

I want to know if it was necessary for them to declare their interest. The Deputy would be as experienced in this as I am. Would Mr. O'Brien be aware of the date?

Deputy McCormack

Let us also clarify that.

Mr. O’Brien

I would not be aware of that because it was a number of years ago.

Deputy McCormack

Perhaps we could obtain information on that.

Acting Chairman

Perhaps Mr. O'Brien will take that point and obtain information.

Deputy McCormack

The Comptroller and Auditor General gave a very comprehensive report on it which means he obviously has concerns on the matter. It follows that we, as members of the committee, must also have concerns.

Mr. O'Brien said one thing which I would like to correct for the record. It is not the responsibility or function of any local authority to provide sites for schools. That is a matter for the Department of Education and Science. It can happen that authorities do it but it is not their function. Where did the provision of a site come into the matter?

Mr. O’Brien

Obviously it is up to the VEC and the Department to go and source sites. As part of this overall package, and at other times, vocational education committees will approach local authorities to see if there are sites available and perhaps use the good offices to see that sites are made available.

Deputy McCormack

Was Wicklow County Council the planning authority for the area which ultimately decided upon the granting or otherwise of planning permissions or had Bray UDC planning jurisdiction over the area?

Mr. O’Brien

It would be my information that it is Bray Urban District Council.

Deputy McCormack

It complicates matters further that the body negotiating with the developer after acquiring a site at very good value from the VEC also decided on planning applications.

Deputy Durkan

How long did the VEC own the property in question?

Mr. O’Brien

How long did it own it?

Deputy Durkan

When did it acquire it?

Mr. O’Brien

I would have to get that information for the Deputy. I imagine it was in the 1930s. It would be that length of time.

Deputy Durkan

It had it a long time.

Mr. O’Brien

Yes.

Deputy Durkan

Does Mr. O'Brien know from whom it was acquired?

Mr. O’Brien

We know the building itself was in the ownership of the parish priest at the time. I assume the whole site was in parochial——

Deputy Durkan

The two were merged probably.

Mr. O’Brien

Then it was used as a school.

Deputy Durkan

Mr. O'Brien will be aware of the letter the committee received from Deputy Roche. He states:

For the record I, as a member of the Co. Wicklow VEC, indicated that I was extremely unhappy with the manner in which this particular land transaction took place. The bulk of negotiations on this particular land transfer were conducted by the Bray Vocational Education Committee in the period prior to the transfer of administrative responsibilities from the Urban VEC to the County VEC. By the time the County VEC took over administrative responsibility for the town of Bray the advise to the VEC members was that the issue had reached such an advanced point that it would not be possible to reverse the process.

Who advised the VEC to that effect?

Mr. O’Brien

I am not aware of that particular letter. I have not seen it. I assume the advice would have come from the previous chief executive officer but that is only my opinion.

Deputy Durkan

Was legal advice sought at that time to back up that?

Mr. O’Brien

I do not know.

Deputy Durkan

Would it be normal procedure to get legal advice as the reference is to advice to VEC members? Was it legal advice or just the advice of the chief executive officer?

Mr. O’Brien

I would assume it was the advice of the chief executive officer rather than any legal advice.

Deputy Durkan

Can that be ascertained?

Mr. O’Brien

I would not see any reason for legal advice being sought. The members of the VEC, not only Bray VEC members, but all members of the amalgamated scheme, were brought to the site before any decisions were made. So they would have seen for themselves what was at issue.

Deputy Durkan

Chairman, it would have been helpful to the witnesses if a copy of that correspondence had been furnished to them. It is unfair that they should be discussing something they have not seen.

Acting Chairman

Is it agreed that we hand over a copy of the correspondence? Agreed.

Deputy Durkan

In 1997 the Comptroller and Auditor General or someone indicated to us that the VEC was asked to dispose of the site. Is that correct?

Mr. O’Brien

Yes.

Deputy Durkan

Who asked that of the VEC?

Mr. O’Brien

The urban council.

Deputy Durkan

So the urban council made the approach in the first instance.

Mr. O’Brien

Yes. This would have been an ongoing issue.

Deputy Durkan

Did it make this request several times before that?

Mr. O’Brien

It would have.

Deputy Durkan

Over the years.

Mr. O’Brien

Over the years. At one stage it was a type of quid pro quo that it would provide sports facilities equal to the independent valuation of the site. At one stage there was talk of tennis courts which would be available, not only to the school, but also to the public. It would have declared an interest in the site for quite some time.

Deputy Durkan

Mention was made of the fact that the site was landlocked and, as such, would have a reduced value or market price. What was the valuation? Perhaps the Comptroller and Auditor General might be able to update us. Someone suggested more than £2 million. I presume that is the current value or was it the value at the time of the disposal of the property? I am anxious to ascertain precisely the value at the time of the disposal of the property, not the current value which is irrelevant.

Mr. Purcell

What I said at the outset was that a local newspaper reported that, assessing the scheme on behalf of the local authority, the valuer stated that the value of the entire package to the town council was in excess of £2.1 million. The entire package would have included building a new headquarters for the UDC, making a contribution towards fitting it out and further considerations. It is very hard to disaggregate such a figure. I am referring to an article in a local newspaper. I do not have access to the UDC's papers which would, perhaps, clarify the matter. It makes it very difficult to establish what the value of that particular part of the site was in the whole package, even leaving aside some of the other quid pro quos which might accrue to the VEC.

Mr. O’Brien

I might be able to help the committee on this issue. The reported value of the site was £2.1 million. This included £1.15 million for the sale of the front of the site plus the building. The developer was also going to build offices for the UDC up to a value of £1.6 million. The developer would provide the urban council with a fitting out allowance which at one stage was for £260,000 but that may have increased with costs. There were also going to be a certain number of dedicated car parking spaces and the developer was going to provide £100,000 towards the cost of servicing the site for the theatre. All of these would have been built into the overall package of £2.1 million.

Deputy Durkan

I am trying to get at the fact that the front of the site has direct access to the main street.

Mr. O’Brien

Yes.

Deputy Durkan

Then why is it described as landlocked?

Mr. O’Brien

The VEC site was at the rear and was cut off.

Deputy Durkan

It was sub-divided from it.

Mr. O’Brien

Yes.

Deputy Durkan

What was the process under which the site was sub-divided? Originally it was one entire plot. When was it sub-divided?

Mr. O’Brien

The urban council bought it in 1983 so one would be talking about some time prior to that.

Deputy Durkan

It bought the part fronting onto the road.

Mr. O’Brien

Yes, with the building.

Deputy Durkan

The urban council had the front of it and the VEC had the back. It bought the front in 1983. What procedure was followed during that purchase? Is it relevant to this conversation?

Mr. O’Brien

I know from our files that it was valued and sold at that time at whatever the value was. I think it was £80,000 to £90,000.

Deputy Durkan

Was valuation assistance sought, was it done by public tender or by reference to the Valuation Office and subsequent sale?

Mr. O’Brien

I would only be speculating and it is not clear from the files. However, if it was sold for, I think, £90,000 I would say it was based on that valuation. That is my opinion.

Deputy Durkan

We will move on a little. I would like to hear more about the issue of landlocking. It has taken on a different appearance. The VEC sold the first part of the property in 1983 and now the VEC is looking to sell the rest of the property which was landlocked and had an inferior value as a result. In his report the Comptroller and Auditor General hinted that it was known at VEC and UDC levels at the time of the transaction that perhaps the property could be used to transfer on by way of a larger deal. Is that true?

Mr. O’Brien

Yes. I believe that is the case.

Deputy Durkan

So the transaction took place with that in mind.

Acting Chairman

The original transaction in 1983 was not done with that in mind.

Mr. O’Brien

No.

Deputy Durkan

How was it proposed that the third party - the developer or new or proposed owner - who would receive the property from the urban council would get around the landlocking? Was it because he owned other land in the vicinity?

Mr. O’Brien

At that stage he would not have owned anything. There was a GAA football field at the back.

Deputy Durkan

Reference was made to the fact that the site was landlocked. Only two bodies could have any influence on changing that status, the developer who could buy lands to relieve the landlocking and the urban district council which would have the ultimate responsibility for granting or refusing planning permission on a site.

Mr. O’Brien

The VEC would not have had a say in the provision of access because the site was effectively landlocked. In 1993, the VEC site was valued at £90,000 on the open market. The valuers, a reputable firm, posed two questions. They stated that competitive bidding from more than one developer or investor against the council could yield a bonus price. However, the reverse could also happen. Some developers could feel the county council, having land holdings in the immediate facility, could delay development through obstructing the planning permission process. The valuers advised that one scenario would counter the other and that, in their estimate, the £90,000 value would stand.

Deputy Durkan

What details did the Department supply to the Valuation Office when seeking the valuation of the property? Was an indication provided of the site's landlocked status or its potential future use for community or other purposes?

Mr. McNamara

We would have supplied the correspondence received from the VEC which included a map and an architect's report, copies of which I can provide to the committee.

Deputy Durkan

A survey would have been carried out on the site.

Mr. McNamara

Absolutely.

Deputy Durkan

How often would the Department ordinarily approve the disposal of a property purely on the basis of a valuation? I am aware of the reasons the valuation was sought in the first instance but would instructions have been issued in regard to public auctions, tenders etc.?

Mr. McNamara

That happens infrequently, perhaps once or twice a year. A circular was issued to the vocational education committees in 1988 outlining the methodology for dealing with these matters, including issues such as getting the best price, public tender etc. Comprehensive instructions were given to the VEC of which I can also provide copies.

Deputy Durkan

What is it proposed to build on this controversial site?

Mr. O’Brien

A theatre and civic offices for the urban council.

Deputy Durkan

Who provided the alternative school site?

Mr. O’Brien

The golf course in Bray is being sold and is being relocated elsewhere. That land will be——

Deputy Durkan

Who owns that land?

Mr. O’Brien

It is currently owned by the golf club.

Deputy Durkan

The school will be located there.

Mr. O’Brien

A commitment has been given that six and a half acres of the golf course property will be made available for the school.

Deputy Durkan

Who negotiated that? Was it part of the overall development plan for the area?

Mr. O’Brien

Yes.

Deputy Durkan

How far away is the site?

Mr. O’Brien

It is on the northern outskirts of Bray.

Deputy Durkan

It is within the development boundary.

Mr. O’Brien

Yes.

Deputy Durkan

Surely somebody was responsible for organising to obtain this site. How did it transpire that the issue of the school site, in which the VEC had more than a passing interest, arose in another location? I admit the VEC site would not have been an ideal one as it is very small.

Mr. O’Brien

Yes, it is much too small at only 0.85 of an acre. The new school site resulted from an overall package which made land available to us, land we simply could not get in any other part of the town. The VEC and its then chief executive officer considered several sites during the 1990s but no suitable sites were identified. The golf course site will be suitable. The sourcing of a school site was a very big attraction for the VEC.

Deputy Durkan

The Deputy who represents the area wrote to this committee stating: "I, as a member of the VEC, indicated that I was extremely unhappy." Naturally, it is the committee's objective to keep everyone as happy as possible.

Acting Chairman

That seldom happens.

Deputy Durkan

An expression of unhappiness from a Member of the Oireachtas is something into which we must inquire. What would have made a member of the VEC unhappy about the manner and methodology of the disposal?

Mr. O’Brien

I could not nor would I dare to comment on what made Deputy Roche unhappy. Other Deputies involved in the decision-making process were happy.

Deputy Durkan

Some were happy and some were not. That is human nature. However, the point at issue is whether a public auction or tender process would have made everyone happy.

Mr. O’Brien

I find it difficult to comment on that. My personal view is that the VEC would have felt that the process undertaken was the best approach. It is not a question of making 22 committee members happy because it is not possible to satisfy everyone. The majority view decides what is to happen in the best interest. Although I would need to check my facts, I do not believe Deputy Roche voted against this decision——

Deputy Durkan

Given that the site was landlocked, who would have been the main contenders if it had been sold by public auction?

Mr. O’Brien

I do not know, probably developers.

Deputy Durkan

How would they have accessed the site?

Mr. O’Brien

They could not have gained access to it.

Deputy Durkan

Under any circumstances.

Mr. O’Brien

No, not without crossing the UDC property.

Acting Chairman

This type of issue can cause a dilemma for the committee. I referred earlier to the conflict which arises in terms of the committee seeking to encourage local development, local authority initiatives and keeping a close eye on value-for-money concerns. The Comptroller and Auditor General completed a comprehensive report on this matter at the committee's request which arose, in particular, because we received correspondence from a Deputy and a local residents' group. The Comptroller and Auditor General pointed out the complexities of the situation but did not state that this was not a value-for-money transaction. His assessment was very fair.

The note from the Valuation Office to the Department of Education and Science states:

With reference to your letter of 19 May 1998, I am directed to advise that the estimated value of the above site would be in the region of £150,000. This takes account of the lack of frontage and the necessity for access over the urban district council grounds . . . The existing pre-fab type building of 3,600 square feet which is used as a health centre would not enhance the value of the site.

I have seen the map of the site which shows its landlocked position. Perhaps there is an element of begrudgery here. The VEC was faced with the option of doing nothing about the site for the next 40 years or taking some initiative which would leave it open to criticism. This is a difficult one to call. Deputy Bell's suggestion that we should seek whatever minutes and further information are available is probably the best course of action. I am not worried about the UDC not coming within our remit as we can source this information through the Department of the Environment and Local Government. On the need to revisit the issue, I ask members to bear in mind that it is possible with hindsight to have a different view. The Comptroller and Auditor General is usually sticky in pointing out areas where he has a difficulty with the value for money aspects. He made the same point as Mr. O'Brien about the complexity of this issue because of the trade-off etc. which was done in the interests of the public service generally.

I suggest that we note the 1994-98 accounts and reconsider this issue in the context of the 1999 accounts with which we still have to deal.

Deputy Bell

At the end of the financial year ended 31 December 1998 bank interest was £36,020. Will Mr. O'Brien say under what circumstances that substantial amount of interest was paid? Will the Department outline the restrictions, if any, on this or any other VEC in relation to having such a substantial overdraft for an ordinary or capital account? Is the money retained for superannuation contributions kept in a separate account, what interest accrues and what contribution does the local authority make to the account?

Mr. O’Brien

The figure for bank interest is for interest received, not interest paid. On the superannuation contributions, there is no contribution from the local authority.

Deputy Bell

Is the money kept in the bank?

Mr. O’Brien

Yes.

Deputy Bell

What interest accrues on that?

Mr. O’Brien

Part of the interest of £36,0000 accrued from that.

Acting Chairman

Is it agreed that we note the accounts, that the further information sought during the meeting will be supplied in due course and, if necessary, the matter can be raised again during the examination of the 1999 accounts? Agreed.

The witnesses withdrew.

The Committee adjourned at 12.55 p.m. until 11 a.m. on Thursday, 22 February 2001.