Joint Committee on Housing, Local Government and Heritage debate -
Tuesday, 23 Jan 2024

Update on Affordable Homes, Public Lands, Strategic Planning and Projects: Land Development Agency

An Cathaoirleach

We are back in public session. We are meeting with representatives from the Land Development Agency, LDA. I apologise to the witnesses for the delay in starting. We had other business to deal with. I welcome Mr. John Coleman, chief executive officer, Mr. Phelim O'Neill, head of property, Ms. Dearbhla Lawson, head of strategic planning and Mr. Enda McGuane, head of asset management.

I will read out a note on privilege before we start. I remind members of the constitutional requirement that they must be physically present within the confines of the place the Parliament has chosen to sit, namely Leinster House, in order to participate in public meetings. Witnesses attending in the committee room are protected by absolute privilege in respect of their contributions to today's meeting. This means they have an absolute defence against any defamation action for anything they say at the meeting. Both members and witnesses are expected not to abuse the privilege they enjoy and it is my duty as Chair to ensure they do not do so. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks and it is imperative that they comply with any such direction. Members and witnesses are reminded of the long-standing parliamentary practice to the effect that they 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. The opening statement submitted to the committee will be published on the committee website after this meeting.

I now invite Mr. Coleman to make his opening statement on behalf of the LDA.

Mr. John Coleman

I thank the Cathaoirleach and members for the opportunity to engage with the committee and provide a progress update on the work of the LDA and to outline our plans for the years ahead.

The year 2023 was pivotal for the agency. The momentum built up will continue into 2024 and beyond. To the end of 2023, we delivered over 1,000 new homes. Much more importantly, this represents the beginning of a strong pipeline of delivery which is due to ramp up very significantly. In 2024 we will have at least 5,000 additional homes delivered or under construction. This trajectory has positioned us to target the delivery of 14,000 homes by the end of 2028, including about 1,000 already delivered to date, with an ongoing run rate of at least 2,000 homes a year from then on.

In order to communicate how this will be achieved, I would like to take some time to explain our delivery mechanisms and to outline how we intend to fund our growing pipeline of affordable and social housing. I would also like to mention some of the continued challenges we face including the current high cost of construction and the impact this has on cost-rental rates. I am also eager to mention that we appreciate the committee's patience in affording us the opportunity to finalise our funding arrangements with the Government prior to attending the committee today. This has enabled us to prepare a much more certain and detailed account of our expected affordable housing output.

The LDA’s core purpose can be summarised as ensuring the delivery of affordable and sustainable homes in the right places at the right time. To achieve this purpose we deploy two primary delivery mechanisms. The first is direct delivery on lands sourced from the State or on lands purchased by the LDA. The second is through the Project Tosaigh initiative, whereby we partner with home builders. This diversified, multichannel delivery model provides the LDA with the flexibility to produce affordable housing without being reliant on one particular source. Having both delivery channels allows us to deliver faster and at greater volume than would otherwise be possible.

I will now outline the progress made to date in both delivery streams, the future opportunities and the challenges we are working to overcome. Direct delivery by the LDA involves the appointment of construction contractors to build homes on lands that we acquire from the State or market sources. These housing developments are designed by the LDA and put through the planning process by the agency. Using this delivery stream, the LDA has made considerable progress. From a standing start, with no corporate infrastructure and limited access to a relatively small portfolio of difficult sites, the agency is now on track to be one of, if not the, largest housing producers in Ireland within the timeframe of its 2024 to 2028 business plan. At present, our direct delivery pipeline involves over 10,000 homes, with developments at various stages from design to nearing completion, with more being added as new lands become available or are acquired by the LDA. We have made major progress in bringing schemes through planning and around 6,000 of these homes now have planning permission. Our housing pipeline will continue to be added to in 2024, and this allows us to project the direct delivery of around 6,000 completed homes in the years to the end of 2028, representing almost half of our overall delivery in this period. This level of delivery excludes our Project Tosaigh output, which I will outline later. To provide a handle on this scale, the direct delivery of the LDA is trending towards matching or exceeding the current scale of the largest Irish house builders.

Our first direct delivery homes are nearing completion and will be made available in Shanganagh in Dublin later this year. Construction is also under way, to give another example, at the site of the former St. Kevin’s Hospital in Cork city, where we are building more than 260 homes, and Devoy Barracks in Naas in Kildare, where work on 219 units began in December. In total, we estimate we will have around eight directly controlled sites under construction in 2024. This number will grow as new sites are ready for construction.

The path to expanding direct delivery involves some challenges, which we are determined to overcome. For instance, the idea that there are vast amounts of State lands in optimal locations ready for housing development is generally not the case. In early 2023, the LDA published the first ever comprehensive directory of State land, which involved the analysis of 180,000 separate legal folios. While this exercise revealed extensive land opportunities that the LDA is pursuing - 83 sites that could potentially yield around 67,000 homes - the reality is that there are significant constraints in releasing, accessing and developing much of this land. Notwithstanding this, we have made excellent progress on accessing some key sites from the State. For example, I mentioned Devoy Barracks, which was transferred to the LDA by the Housing Agency. Shanganagh, to give another example, involves a partnership with Dún Laoghaire-Rathdown County Council. We have multiple local authority partnerships such as Shanganagh in train. We recently published a master plan to deliver over 600 homes on the HSE-owned St. Joseph’s hospital site in Limerick. Meanwhile, as we have previously reported to the committee, advanced design and planning work is under way for 200 homes at a site on the Dyke Road in Galway owned by Galway City Council, 185 on a Teagasc-owned site in Kinsealy in Dublin, and 350 on an ESB site in Wilton in Cork, among many others. The help of the Government in securing these lands and the co-operation and support of the State bodies involved is critical because the LDA has no powers to compel a landowning body to provide access to its lands.

As we continue to access State-owned sites, the agency is also making strategic acquisitions of land on the private market in cases where value can be obtained.

At the end of 2023, we acquired a large site from NAMA, next to Clongriffin DART station in north Dublin. This has the potential to deliver approximately 2,300 homes. We intend to commence construction on this site this year and we already have issued a tender for building contractors. Developing State-owned land for housing is complex and lengthy. It can be difficult to get access to sites due to their existing uses and in cases where access is confirmed, the design, planning and procurement process for large-scale developments takes time. It is important for the LDA, as a State developer, to be upfront with our stakeholders, including the committee, and to provide realistic projections for housing delivery timeframes. From the point at which land access is granted, the delivery of housing for large sites typically takes at least five to six years and this assumes there are no setbacks along the way. These timeframes are well accepted in the industry and I indicatively set them out in a diagram in this statement.

Of course, setbacks are a common occurrence in development, not least when it comes to securing planning permission. While the LDA experiences delays in the planning process just like the rest of the industry, we are encouraged by recent progress. Judicial reviews can be initiated and this mechanism can sometimes result in a small number of existing homeowners effectively delaying the delivery of homes for a large number of people. The LDA is not immune from this. For example, one single individual has initiated a judicial review challenge against our Dundrum Central scheme, at the former site of the Central Mental Hospital, which will delay the delivery of 852 affordable homes in an area of extremely high need. This is despite no objections arising from the residents' groups due to extensive community consultation that we carried out. Such delays significantly add to the cost of projects and we are hopeful that the pending enhancements to planning laws will help reduce such delays in future. Notwithstanding such issues, I have outlined how the LDA is well on track to becoming one of the country's leading home builders, with the unique distinction of being exclusively focused on affordable and public homes.

Our direct delivery stream is complemented by Project Tosaigh, our partnerships mechanism. Project Tosaigh is our second major delivery channel. It involves the LDA partnering with house builders to ensure the delivery of stalled or unviable housing schemes and making the homes available through cost rental or affordable purchase schemes. This delivery mechanism is critical to keeping industry output going at a time when private build-to-rent schemes have fallen away and developers are experiencing difficulties accessing finance. Without State intervention in this area, primarily through the LDA but also through approved housing bodies, AHBs, the majority of the housing developments in question, particularly apartment developments, would not otherwise be delivered. Project Tosaigh also expedites overall LDA delivery while our direct delivery stream is ramped up. Through this initiative, we are now targeting the delivery of 8,000 homes over the course of 2024 to 2028, with a firm pipeline of approximately 2,500 homes already delivered, contracted or in advance negotiations. Approximately 1,000 of these homes will be built by the end of 2023 and we are delighted this month to release over 600 cost-rental homes into the market across four new developments in Dublin and County Kildare. The same day we made this announcement, there were fewer than 1,200 homes available to rent in Dublin. This release is excellent news for those struggling to source affordable rental homes and we intend to make further significant releases and announcements through 2024 and beyond. We are excited to be launching a new phase of Project Tosaigh in April this year, which will drive value for money by structuring it as a competitive process where prospective partners will be selected on the basis of best bids. With both delivery channels, the delivery outlook for the LDA comprises approximately 14,000 high quality and affordable homes delivered in total by the end of 2028, subject to ongoing funding.

On the topic of funding, we were pleased with the Government's decision to increase the LDA's equity capital from €1.25 billion to €3.75 billion, in addition to a borrowing permission of up to €1.25 billion. In total that is €5 billion of capital, which will enable us to continue to commit to direct delivery and Project Tosaigh schemes for the foreseeable future.

However, construction costs remain high and the recently confirmed secure tenancy affordable rental scheme, also known as STAR, is critical to providing cost rents that are affordable. In the interests of time, we provided further commentary on this in the appendix to this statement, which committee members can review at their convenience.

To summarise, the LDA has made major progress since its inception around five years ago, from a standing start with no staff, no bank accounts, no sites and no service providers to help bring forward projects, we are broadly following the growth trajectory of Ireland's largest house builders on our direct delivery projects. This output will be doubled through our Project Tosaigh partnerships. This level of delivery makes the LDA's work critical to addressing the country's housing need. The impact of our delivery will be felt beyond the specific homes that we produce because affordable housing, at this scale, will have a moderating effect on private rents too, while the A-rated, high-quality homes we develop are carefully designed to add to and create new, sustainable and well-serviced communities. Such a high volume of activity requires considerable resources. Our staff headcount is approximately 130, all of whom are dedicated to ramping up delivery. We intend to increase this headcount to more than 300 in the next two years. The staff base mainly comprises skilled professionals such as quantity surveyors, engineers, accountants, solicitors, planners and so on. These skills are in demand and we compete directly with the private sector for them. However, any visit to our office will confirm that our people have a genuine motivation and resolve to make a positive contribution to Ireland's housing solutions. We believe in what we are doing.

Looking ahead to 2024, our focus will be on three major themes, namely, advancing more direct build projects to construction stage, expanding Project Tosaigh and critically, attracting and retaining the talent necessary to continue this upward trajectory. We value our relationship and engagement with the committee and I look forward to our discussions today.

An Cathaoirleach

I thank Mr. Coleman. He probably is aware that some committee members visited the Shanganagh site just before Christmas and saw some of the work that was going on directly on the ground. I monitor the progress on the new DART station every morning as I pass it at Shanganagh; it is a welcome addition. It is a transport orientated development and that is what we should be about. Mr. Coleman also gave a commitment before to provide quarterly updates, which this committee receives and they are very helpful to stay up to speed with the work as well. I will now turn to members and to Senator Fitzpatrick first.

Senator Mary Fitzpatrick

I thank the witnesses for coming here today. I was with the Cathaoirleach on the visit to the site in Shanganagh and I congratulate everybody at the LDA. It is great to see the progress. The quality of the build and the development is really impressive and hugely encouraging. It is exactly what we all imagined the LDA would be delivering when we passed the legislation.

In terms of the LDA's presentation at the committee today, while recognising the quantum shift from delivering 1,000 homes in the first five years to getting to 14,000 homes in the next four years, which is really welcome, if we are honest about it, the target should be 14,000 homes every year. That is the kind of quantum increase in social and affordable homes we need to see and is what the LDA was set up to deliver, namely, the right type of housing in the right places at the right time.

When I look at Dublin city and specifically Dublin Central, I congratulate the LDA on establishing the registry of State-owned lands, as it is helpful for us to understand where the land banks are. Mr. Coleman's opening statement mentioned the 83 sites with the potential for almost 70,000 homes. I looked again at the sites in Dublin Central and he called it out as a barrier to moving forward. I could get into a debate about the five-to-six year timeline. The State should be in a position to reduce that by 36 months. Laws were passed in order that social and affordable homes could bypass planning. Everybody in the country understands there is a housing emergency. There should not be objections to social and affordable homes on State-owned lands in particular. They are public assets and the lands should be used to deliver the housing that is desperately needed. As for these State-owned sites in Dublin Central, they are owned by Dublin City Council, Dublin Bus, CIÉ, the ESB and Dublin Port. Am I to understand that they are prevaricating? Am I to understand that they are delaying the delivery of social and affordable homes in Dublin Central? That is my first question.

Mr. John Coleman

I thank the Senator for her questions. On access to land, everything is always more nuanced than it appears at the outset. In respect of the State bodies, it is really only local authorities that hold land for housing. The Housing Agency has some sites but mainly it is the local authorities. We have hit a rich vein with local authorities. We have multiple local authority site partnerships, including a number with Dublin City Council. Indeed, the site we acquired just before Christmas that can deliver 2,300 homes is in the Dublin City Council local authority area.

We are focusing on trying to deliver more homes. We got a number through planning quite recently and we are out to tender on two Dublin City Council sites, one at St. Teresa's Gardens for over 540 homes and another 140 at Cromcastle. We are making progress with Dublin City Council. When the LDA was set up just over five years ago, there were a lot of questions around how the LDA would interact with local authorities. Is it competing with them or is it overstepping the mark with them? We have landed in a comfortable place with local authorities because we are firmly seen as a service provider and an assistance to local authorities to help them deliver on their mandate to provide affordable homes. Hence we are in a comfortable partnership.

As for non-local authorities and those State bodies that do not hold land for housing delivery, it is a more complex question. I would characterise the relationship with most State bodies as them understanding the great housing need of the country. There is a will to try to do things to help assist and to play their part in that. Quite often, there are operational aspects of their own essential businesses as well that they have to consider and deal with. To give a good example, we engage quite a lot, and collaboratively I might add, with CIÉ. We are working with it and it helped us facilitate a major scheme in Cork city on the docklands for 302 apartments to get going. Without its help, we could not have got it moving at all, CIÉ has been highly pragmatic and have been of assistance to us. We are working with them in other areas as well, such as the Limerick Colbert project. To take Dublin city centre, for instance, it was looking at the Conyngham Road site and at Broadstone bus depot. The fact is they are in operational use as bus depots. As the trajectory for buses and bus transport is towards electrification of the fleet, that needs roughly one and half times more space than they have existing. There is always this tension, between essential services like transport, health, hospitals or any other type of service and the critical need we have for housing. I would describe the approach that most State bodies take with us as being pragmatic, notwithstanding the constraints. For instance, it is entirely possible that we could get going at Broadstone on a part of that site. It is the same with Conyngham Road. As for whether we could explore opportunities to move that activity of a bus deport to another location, I think CIÉ and Dublin Bus are willing to do that. It is just more complex than delivering on a site for a local authority that is held for the purposes of housing.

Senator Mary Fitzpatrick

I wonder if any of those stakeholders and those landowners have an appreciation of the pressures under which the Land Development Agency is trying to operate. The reality it that the agency has a plan here from 2024 to 2028. All the Opposition parties opposed the Land Development Agency legislation and if they are in power in 14 months after an election, they are likely to scrap the Land Development Agency. I wonder whether those other bodies have any appreciation of the need for the Land Development Agency to be able to demonstrate its capacity to deliver, at scale, social and affordable homes on State-owned lands. A really good example is the Broadstone depot in Phibsborough. I am very familiar with the site, which has been spoken about as a development site all my life. Thankfully, TUD in Grangegorman has got on with its side of it and it is the most spectacular world-class campus. Dublin City Council owns Constitution Hill Flats. The council has been talking about regenerating them for more than ten years. CIÉ and Dublin Bus own the depot lands. There could not be a better site where there could not be greater need for affordable and social housing, as well as a potential for all of the State bodies to demonstrate excellence. Is there a realisation amongst the other parties of the need and the opportunity that exist there?

Mr. John Coleman

I think there is. They try to balance that with their own operational requirements. On the manner in which we engage with the landowning bodies, we know everyone in the landowning bodies and engage with them regularly. The relationship is collegiate and collaborative but obviously, we are pushing to get these lands released as that is what we are all about. It is not just us knocking on the door and hoping for the good will of the landowning body as there is also a forum chaired by the Department of the Taoiseach that monitors progress in this regard and that also exerts pressure on different Departments and line departments in relation to these various landowning bodies to work with us. To answer the Senator's question, I believe these landowning bodies do feel pressure to try to do as much as they possibly can do with us. We are making some progress in that respect. It is in the country's interest and everyone's interest that we try and yield as much as we can without unduly upsetting other essential services. I will ask Ms Lawson, who engages directly with the landowning bodies and the Department of the Taoiseach on this matter, to add further colour to that.

Ms Dearbhla Lawson

I thank the Senator and Mr. Coleman. Certainly, it is worth looking at the context here and the Senator referred to the report on relevant public land. We are on a journey here because we published that at the end of March. That was the first time identifying lands that have potential for development for affordable and social housing had been done. As Mr. Coleman said, a lot of those lands are in operational use at the moment. That is the first step in the process that we have taken and it has identified some 83 sites that could deliver up to 67,000 homes. Now that could be into the long term and there are choices and opportunities there as to how we do that. Therefore, there is good collegiate and collaborative working with the various State agencies. There are of course different pressures and priorities and there are policy choices into the future as well. In the likes of Dublin, there are 24 different sites and they are classed from nearer-term to longer-term sites. As Broadstone, for example, is a class 3 site, it is recognised there is operational interest, things need to be moved, there is a cost to that. We need to find a way, while working with CIÉ and the various parent Departments, to try to look at that. We started with a feasibility study and now we are moving on to a master plan. As it is a plan-led approach, we need to develop the evidence and support to try to find a step plan to move this forward. Similarly, there is a very significant amount of land around Inchicore, about 40 ha, owned between the ESB, CIÉ and the OPW , as well as by DCC across the canal in Bluebell.

An Cathaoirleach

Sorry Ms Lawson, I must interrupt you there as we are a little bit over time but I am sure we will return to that. I will go next to Deputy Ó Broin.

Deputy Eoin Ó Broin

I thank Mr. Coleman for the opening statement. I will be frank. I appreciate it is his job to give the best possible presentation as to what the LDA is doing but I have to say it is doing enormous damage to the very idea of cost rental at its very inception stage. The reason I say that is because when I look at the rent the LDA is charging on the most recent round of offerings - let us take Citywest in my own constituency - the agency is offering rent in the region of €1,400 a month for a one-bedroom unit and, for a three-bedroom unit, rent of almost as much as €1,800 a month. That means to get access to these properties under the LDA's own rules, where the rent can be no more than a third of disposable income, for the one-bedroom unit one would need to have a gross income of €75,000 and for the three-bedroom unit, you would need to have a gross income of €100,000.

The problem is that when I look at our social housing eligibility thresholds, the gap is huge and is growing because these prices are significantly higher than last year's prices for Archers Wood and elsewhere. In the case of a one-bedroom unit, as somebody above the local authority threshold would be on a gross income of €55,000, all those people from €55,000 to €75,000 are locked out. If you take a three-bedroom unit, the upper limit at the very top end for social housing is €70,000 and that is a very large family. There is a €30,000 gap between that and the eligibility to get into the agency's properties.

Consequently we need to be honest with ourselves and say that for a large number of people, cost rental was meant to be the solution, that is, intermediate housing for those who cannot buy, cannot rent on the private market and cannot get social housing. The vast majority of those people, however, are excluded from the properties the LDA is putting on the market. In some senses, that is not its fault, as I accept it has been given this scheme. It is one of the reasons why we opposed the legislation. The LDA goes to Citywest and buys apartments for half a million euro each, more or less. According to the information I have, it is paying more for turnkey units than are approved housing bodies. It did that in Archers Woods and it is doing it again and the rents are too high.

The problem is there is very little the LDA can do about that with the funding and the legislative framework it has been given. My understanding is that in some of its earlier projects, the agency is already starting to increase the rents and I would like Mr. Coleman to confirm that. In which projects have tenants received rent increases and why, because I do not see how the LDA's cost base has gone up within a year given that it is being funded through ISIF?

Given that rents have increased significantly from the LDA's first projects to these current projects, does Mr. Coleman expect rents to continue to rise? Second, is it the LDA's policy to introduce annual rent increases in line with the legislation, even if costs are not going up? Third, at what point, if any, does Mr. Coleman think the LDA's entry-level rents will come down to a level where people who are above the threshold for social housing but are below the appropriate level of income to get into an LDA property will be able to afford them? If the LDA is not providing intermediate accommodation, who is?

Mr. John Coleman

I thank the Deputy. They are all good questions. The LDA has not increased rents from its initial rent setting on any properties.

Deputy Eoin Ó Broin

Has any tenant in an LDA property received a rent review notice?

Mr. John Coleman

Not yet.

Deputy Eoin Ó Broin

Okay. I ask Mr. Coleman to give a commitment to check with the LDA's property management agent and confirm in writing to the committee at his convenience that this is the case.

Mr. John Coleman

Yes. As far as I am aware, the LDA has not issued any rent increase notices but I will come back and confirm that to the committee.

Deputy Eoin Ó Broin

Perfect. I thank Mr. Coleman.

Mr. John Coleman

Second, on the Citywest development, the LDA has not paid €500,000 per unit. It was quite a bit less than that.

Deputy Eoin Ó Broin

Can Mr. Coleman tell the committee what the average cost per unit was?

Mr. John Coleman

It will eventually come out. I would rather not say, because we are in commercial discussions with other similar parties that we will get delivery through and it might injure us commercially to state the figure publicly. But it is-----

Deputy Eoin Ó Broin

But the LDA paid more than it did in Archers Wood for duplexes and apartments.

Mr. John Coleman

I will have to check that information, but it is certainly less than €500,000 per-----

Deputy Eoin Ó Broin

Is it much less than €500,000? I am not trying to be awkward; the reason I am asking is because rents at this location, which is in a similar suburban location, albeit Archers Wood is in Delgany, are considerably higher. My understanding of the price range for Archers Wood was that it was approximately €440,000. Therefore, to move up to these levels of rents for the larger units in particular, although it may not exactly be an average of €500,000 across the three topologies, but certainly for the three-bedroom units I suspect the LDA is probably paying €500,000 in Citywest.

Mr. John Coleman

The LDA looks at this in composites. It has hundreds of homes in Citywest. It does not necessarily structure it that it pays X amount for specific units.

Deputy Eoin Ó Broin

Sure, but the entry-level rents are ultimately determined by the price of the property. The LDA is increasingly using turnkey developments and incidentally, these are developments that were not stalled or delayed; they were well advanced before the LDA purchased them. If the LDA is buying expensive units in the suburbs, the entry-level rents are going to be very high under this scheme.

Mr. John Coleman

The units that the LDA acquires and is contracted to deliver in the suburbs are not expensive relative to the market. They may appear expensive because that is what the cost of delivery is but they are not expensive relative to the market. The LDA does not pay more than the market.

Deputy Eoin Ó Broin

The LDA pays more than the AHBs do, Mr. Coleman.

Mr. John Coleman

The LDA does not pay more than the AHBs. The LDA does not pay more than they are worth. The agency runs very extensive underwriting on how much it pays. It runs competitive processes on a bid basis in terms of how much it will pay.

Deputy Eoin Ó Broin

Is Mr. Coleman stating unequivocally to the committee that on comparable properties in places like Archers Wood and Citywest, the LDA is absolutely and under no circumstances paying more than an AHB?

Mr. John Coleman

For comparable properties, the LDA does not know exactly what the AHBs are-----

Deputy Eoin Ó Broin

Okay, so the LDA does not know if it is paying more or less than them.

Mr. John Coleman

My understanding, from discussions and interactions with the Department, is that we will pay no more than AHBs.

Deputy Eoin Ó Broin

This is quite important because we have raised this concern regularly. If I am a AHB and I want to do a turnkey, for example in Dublin city, I must clear that through a Dublin City Council housing manager and if one AHB is in negotiations, nobody else can enter negotiations. My understanding is that the LDA is paying more than AHBs in certain locations. I am not criticising the LDA for it. It is able to; it has a different process. There is no actual clearing mechanism to make sure that there is no competitive pressure put on prices. But its rents are also higher than the AHB cost rents in certain instances.

Mr. John Coleman

That is not-----

Deputy Eoin Ó Broin

There is a real concern. I refer to incomes of €100,000 to be eligible for cost rental or €70,000 gross to be eligible for a one-bedroom unit. Is that what Mr. Coleman thought was going to be the entry-level income when he took this job?

Mr. John Coleman

To be clear, the LDA is not paying, on a total like-for-like basis on similar properties-----

Deputy Eoin Ó Broin

It is just that the LDA does not know. It is his understanding, from talking to the Department, but he does not know.

Mr. John Coleman

That is my understanding. The Deputy is stating that the LDA is paying more.

Deputy Eoin Ó Broin

My understanding is that but-----

Mr. John Coleman

I am telling him that my understanding is that we are not.

Deputy Eoin Ó Broin

---- if the LDA publishes the figures, even in some sort of anonymous form, we could make that comparison. The committee gets the AHB and local authority figures from the Department. If the committee had the same visibility from the LDA, it would allow everybody to know definitively.

Mr. John Coleman

The Department has full visibility on what the LDA is doing.

Deputy Eoin Ó Broin

Yes, but this is the Oireachtas housing committee. Our job is to scrutinise its work.

Mr. John Coleman

The local authorities have full visibility on what the LDA is doing.

Deputy Eoin Ó Broin

I know.

Mr. John Coleman

There is nothing the LDA is doing that the local authorities or the Department do not know about.

Deputy Eoin Ó Broin

This committee would like full visibility on that. Is there some way this can be achieved?

Mr. John Coleman

I would say that could be achieved by discussions with the Department. I imagine it could provide that visibility. It sees everything that happens, including from the LDA, the AHBs and the local authorities. I have no doubt but that it can provide those comparisons. It is my belief, as I sit here today and give evidence to this committee, that the LDA is not paying any more than AHBs.

On the criticism on the level of rents, the LDA is a policy taker from the Department. The LDA sets the costs rents based on the acquisition but also based on our funding mechanism, which is partially funded through direct investment by the State but also by the Government's STAR scheme. The end objective of this is that LDA's cost rents and the AHBs' cost rents will be the same. There should not be a like-for-like property in one development versus another with massively different rents. The same issue applies to AHBs to the extent that-----

Deputy Eoin Ó Broin

Yes, absolutely.

Mr. John Coleman

Also, the Deputy selected the three-bedroom units in the Citywest development. The LDA has relatively few three-bedroom units. It mainly targets one-bedroom and two-bedroom units, as three-bedroom units are expensive.

Deputy Eoin Ó Broin

The agency's one-bedroom and two-bedroom units are also very expensive. The rents are actually higher than the Residential Tenancies Board figures for average rents for existing renters. I live not very far from that location. In fact, I live in a more advantageous location in terms of access to services and public transport. While I live in and rent an older building, the LDA's rents are almost €600 more than the standardised average rent for an equivalent property of the same size and same location. However, they are lower than new rents. The problem is that more renters live in existing long-term rentals in that area. At some point, if the private rental market tips, the LDA's rents could be higher than new rents in that area over the lifetime of the cost rental, because the LDA is locked into those rents.

Mr. John Coleman

That would not be possible. If private rents came down to be lower than cost rents, the LDA would have to lower its rents or otherwise everyone would leave.

Deputy Eoin Ó Broin

But it is locked into a funding model where in order to repay its costs, surely, it has to pay down that-----

Mr. John Coleman

That is the risk but to say that-----

Deputy Eoin Ó Broin

So Mr. Coleman is saying it is possible?

Mr. John Coleman

Of course, it is a risk. But on presenting our cost rents as being far more than the market rent, one must consider what is the new market rent. The idea that someone could go out and rent a property at €600 less than what we are offering-----

Deputy Eoin Ó Broin

That is not my point.

Mr. John Coleman

It is not possible.

Deputy Eoin Ó Broin

Absolutely. My point is a different one. The LDA is locked in for 40 years or more. It has to recover costs I presume; although I will come back to the financing model as I have some questions on where that has gone. In a rental market, market rents are made up of two types of rent; namely, the new asking rents, which LDA rents undoubtedly are below, and existing rents. It is highly likely, not in the short term but at some point over the next 40 years, that all market rents could start to dip. Many people have expressed a concern, including other providers of cost rental, that at some point the LDA's rents could fall below even new market rents. That is a real risk. I am wondering to what extent is the LDA modelling and checking that risk to ensure that it is insulated against it. Mr. Coleman is absolutely right in that if new asking rents in that area ever fall below those of the LDA, it would be losing tenants. That would be a significant amount of public money, as well as hard effort from Mr. Coleman and his staff, that would be at risk. Is this something the LDA is assessing? Has the LDA modelled it, given what is known about rents in the long-term?

Mr. John Coleman

Of course it is something the LDA considers. It is a factor. At present, the LDA believes the risk of that happening is marginal, given the chronic need that there is for rental housing.

Deputy Eoin Ó Broin

In the short term.

Mr. John Coleman

It depends. I cannot see there being any significant alleviation of that in the next few years.

Deputy Eoin Ó Broin

Sure. I agree with Mr. Coleman.

Mr. John Coleman

We believe our job is to deliver into the system. To not do that because market rents might drop is not a reason for us to stop.

On the rents that we offer, Deputy Ó Broin highlighted the three-bedroom unit at €1,750 a month but we have lower-cost properties in that scheme. In that scheme, we have six homes at €1,750 a month, 162 homes at €1,580 per month and 68 homes at-----

Deputy Eoin Ó Broin

I referenced all three prices.

Mr. John Coleman

Also in Citywest we have three-bed houses at €1,350 a month and we have four-bed houses at €1,460 a month. We have a broad range. When we get down to €1,450 it is generally affordable to the lower end. It is just above the social housing limit, say, at-----

Deputy Eoin Ó Broin

It is not. There is a €20,000 gap between the social housing upper limit and your entry-level rate.

An Cathaoirleach

We need to bring this session to an end. Deputy Ó Broin has had 13 minutes there.

Deputy Eoin Ó Broin

I appreciate it.

Senator John Cummins

I hope we will all get that leeway. I thank Mr. Coleman and his team for coming before the committee, albeit a bit later than we would have hoped. Certainly it is welcome they are here. That is not the case regarding the Peter McVerry Trust, which we were discussing prior to the arrival of our witnesses today. I welcome the fact that the LDA is here.

I and my party fully support the LDA in its goal to expand social and affordable housing throughout the country. It is not something that every party supports. I accept Mr. Coleman's contention in his opening statement that the LDA has come from a standing start. Anyone involved in any organisation, from a local team to a corporate entity, knows that beginning from a standing start takes a considerable period of time. When it is a State vehicle involved in construction, which is subject to the same rigours of the planning process as any other, it takes a considerable period of time. I accept that it has been a slow start but I believe that over time the LDA will be seen to be a very strong vehicle for the delivery of social and affordable homes.

Regarding affordable homes, much of the previous discussion was about cost rental. This is where the LDA will have the biggest impact. Where I feel it will have less of an impact, and where I would like it to have more of an impact, is in the area of affordable purchase homes. Through Project Tosaigh it has entered this space. It has a number of homes available for affordable purchase in Shanganagh. Prior to Christmas I had the pleasure of visiting there with the Cathaoirleach and Senator Fitzpatrick. Unfortunately no other member of the committee was in a position to attend and see the great work going on there.

I ask Mr. Coleman to correct me if I am wrong but I believe the LDA's structure is more geared towards the delivery of cost rental and is not geared towards the delivery of affordable purchase. I am aware of a site in Waterford in this respect. There have been challenges in terms of the interaction between the developer, the LDA, the council and the purchasers in getting all of these wheels to work in tandem with one another to ensure the closure of the sale. The LDA is more set up towards cost rental and this is more the area it wants to be in as an organisation. I would like some reassurance about the affordable purchase element. While the rental sector is very important, the delivery of affordable purchase homes for people is equally important.

Mr. John Coleman

I thank Senator Cummins. It is a good point. We do not conceptually or fundamentally have a bias against affordable purchase homes. In some respects it is a function of the sites that we have. I will explain this. Most of the sites to which we have access are in and around 80% for apartments. Apartments are more expensive and complex to deliver than houses. There is not a strong sales market, to say the least, for apartments in the country at present, albeit the Government's Croí Cónaithe scheme will help with this. We are keen to try to facilitate it if we can.

With regard to the need for us to intervene with developers for housing sites, it can accelerate development where we work with developers. Perhaps the greatest need is with regard to apartments in order to make them viable for the schemes to be delivered. Otherwise they would not be delivered, or certainly delivered much more slowly. Because we are focused on apartments, by and large, it almost by default brings us more towards cost rental. With the higher delivery costs we can make them work better for rent. Having said this, we have some schemes, including Waterford as Senator Cummins mentioned. Not all of the schemes that we are delivering directly are for apartments. In the coming months we will release in and around 51 houses in Shanganagh for sale to qualifying affordable purchasers. We will also have other sites. For example, in my opening statement I mentioned the Teagasc site for 185 homes in Kinsealy. They will be for affordable sale because of the housing typology; we do not plan to hold houses for rent. We would like them sold as affordable purchase housing.

Senator John Cummins

Is the LDA set up to sell houses? This is the question I will put to Mr. Coleman. The experience I have had would suggest the organisation is not yet set up adequately to sell houses. I will give the example of Summerfields, not to be parochial but because it is the scheme I know best. Many months have gone by and there is no signage on the site to say there are homes for sale under the scheme. No sales agent was put in place to sell the houses. The LDA was relying on the council to do some marketing for the houses. The main marketing done on the scheme was a newsletter that I put out throughout the city. The biggest take-up through converting purchasers was due to interviews I did on local radio about it. At this moment in time, is the LDA is adequately set up to sell the 50 houses in Shanganagh and the other houses under Project Tosaigh?

Mr. John Coleman

I believe we are. I appreciate the intervention of Senator Cummins on Kilbarry in Waterford. I am delighted to say that things have improved and the process has improved. The affordable purchase scheme is brand-new and we are the first to implement it, working with local authorities. The application process is brand-new. The contractual arrangements between us, the end-users, the purchasers and the developers are brand new. There has been a bit of settling that had to happen. In Kilbarry many of the homes have been sold, with 33 sold and 31 at sale agreed stage. Things have improved. We have other schemes in Mallow and Navan for affordable purchase that have worked better. Things have settled. We have more resources internally to manage them also. We believe we are in a better position to handle them going forward. We will be in good shape for the 51 houses we will release in the coming months in Shanganagh. We are appointing agents on all our schemes. In fact, we have agents on all our schemes at this point. I accept the criticism of the process but it has worked out in the end. People have got into their homes and it is a much smoother process now.

Senator John Cummins

I will come back in during a later round of questioning. The 92 units in Kilbarry were split into five phases, from phase 2.1 through phase 2.5. All of the units were completed prior to Christmas. The main queries I am now getting are from people in phases 2.4 and 2.5. They are predominantly purchasers of the four-bedroom houses. They were the very first people to purchase houses in the scheme. They see their houses were completed prior to Christmas but they still have no timeline for when they will be in them. When will the people in phases 2.4 and 2.5 be in their houses?

Mr. John Coleman

I do not know the exact up-to-the-minute information but I will come back to Senator Cummins directly with a progress update. We are very keen to work to get the people into them. As I have said, 33 have been sold and the process is working. We want to get the other 31 that are at sale agreed stage across the line, and there will be another 28 to go after this. I will come back to Senator Cummins directly on this.

Senator John Cummins

I thank Mr. Coleman.

An Cathaoirleach

I will take the next speaking slot.

The two Acts that we passed in 2021, the Affordable Housing Act 2021 and the Land Development Agency Act 2021 are, to me, probably two of the most significant pieces of legislation that have been passed by this Government. It takes time to deliver, and I appreciate that. Sometimes I think people have these massive expectations that we can just build houses overnight in huge numbers. It is borne out of frustration because there is a housing crisis and people want to see affordable housing, whether it is affordable purchase or affordable to rent. They just want housing, and I do not think they are too particular with regard to who supplies that housing or what avenue it comes through, once they have got a safe, secure, comfortable and warm house for them and their family to grow up in. However, there is a reality to it between the planning, tendering, the feasibility, getting the finance together and the boots on the ground. We have a bit of work to do to explain to people why a process takes so long. Often, people say "the planning process". That is planning with a small "p". It is planning the entire thing from start to finish, from concept to turning the key, not the Planning and Development Act 2000 or the system. It is important to clarify that.

The map that was produced is a very important body of work as well. It is something I often refer to. I want to go straight to Project Tosaigh because I am interested in how it works, and the process that is followed on it. In one of these stalled developments, who approaches who? Does somebody ring up the LDA saying, "I have a development here, are you interested?", or does the LDA trawl out there to see what developments are stalled, and whether it could get involved in them?

Mr. John Coleman

What we do is we put out an open call for expressions of interest. On Project Tosaigh phase 1, we are just finalising it with regard to the number of homes that we have yielded from that, which is around 2,500 that are either delivered, in construction, contracted or about to be contracted. The process for that was that we put out two calls for expressions of interest where the market comes to us with proposals for the LDA to buy at a certain amount of money on completion of the homes. That is unique because we are the only ones who put out these open calls, and that creates a competitive tension. There is an even greater competitive tension that comes in Project Tosaigh phase 2, which is formal procurement process where bids have to be submitted. Only the best ones will win. Not all of them will be selected. That is where we will give staged payments. That will drive value for money because there will not be financing costs lost out of the system.

An Cathaoirleach

To clarify, the cost of financing is because the LDA is going to fund it, so it will sometimes have to borrow from the commercial market.

Mr. John Coleman

Yes, in a risk-adjusted way with safety mechanisms put in because we are handling State money here, at the end of the day. We plan for the day when something goes wrong but we work to ensure that does not happen. We give staged payments on a monthly basis for a large portion of the delivery costs. We are running that through a public procurement process so only the top-bidding counterparties will win. That will be very significantly on the basis of cost but also quality and location.

To sum up, we deal with the market in an open and transparent way. We seek to invoke structures that drive value for money such as competitive processes.

An Cathaoirleach

Okay. I am glad Mr. Coleman mentioned the quality and the location. I remember when we were considering the LDA Bill and looking at some of the principles of the LDA, including the delivery of cost-rental and affordable housing etc., something with that bit of State weight behind it that could achieve those economies of scale. One of the other parts of the principles was the piece about creating sustainable communities and the design etc., creating communities rather than just a block of homes. Has the LDA come across Project Tosaigh developments that have stalled and do not meet those criteria for sustainability, liveable communities etc.? Is there scope for changing some of those designs and some of those things that have come to the LDA, or does the LDA just say it is not suitable and does not meet its guidance?

Mr. John Coleman

For procurement reasons, we do not get into design changes in the current phase of Project Tosaigh. We would reject those schemes that we did not feel had sufficient placemaking, or that were not attractive schemes in that they were not, for instance, properly energy-rated. We look at everything through the lens of sustainability and EU taxonomy. It is no longer optional to have sustainability characteristics associated with the stock that we build directly and acquire ourselves. That is why we have gone with the passive house standard out in Shanganagh, which is Europe's largest passive house scheme. It makes financial sense as well. It costs a certain amount of money per additional home to ensure there is airtightness and other things that apply to passive houses. It may be a qualitative factor as opposed to a materials factor, as in ensuring the build quality and common areas are airtight. It costs a bit more but one will get it back over the operational costs of the scheme through reduced energy costs. We look through all of that.

Also from the sustainability perspective, for instance, our scoring with regard to the second phase of Project Tosaigh will be very significantly on price but also on quality of location. Is it adjacent to public transport? Is it, in the case of Dublin, on a Luas line? All of those things will be factors in our decision-making and ultimately the ranking of the schemes that we progress with.

An Cathaoirleach

It is a really important consideration. The affordability factor can be considered in terms of how much one is paying in one's mortgage or rent. If that house is miles away and one is incurring €100 a week in petrol or diesel costs, or the minute one turns on the heating, one is heating the back garden or the attic, such aspects of affordability have to be counted.

Did Mr. Coleman say Shanganagh is the largest passive house scheme in Europe? That is quite impressive. It kind of deals with the argument where you hear some commentators saying that the LDA will buy these rubbishy, build-to-rent and low-standard ones. It is encouraging to hear that the LDA has got a very high standard, and a high bar that has to be got past before engaging in Project Tosaigh.

Mr. John Coleman

Indeed, and what we are discovering from counterparties we deal with in the development sector is that they are asking us questions about that, in terms of how we went about getting the passive house certification, and if it caused any issues. It is hard for a contractor to price that because of the quality, the taping-up and all of those things. We have had a lot of inbound engagement from the wider development sector asking if there is something to this, if this is something they should invoke, or if it is something that will make the developers' product more saleable into the future because it has high sustainability credentials. We would like to think we have set a trend, particularly with regard to passive housing. Our approach is the more, the better with regard to this high level of sustainability achievement, so we will share information with people to help them to focus on that too.

An Cathaoirleach

The strategy plan for 2024 to 2028 was mentioned. Going beyond 2028 - in the opening statement it was said that some of these projects can take four to five years - the LDA must be looking at projects now that it knows are four to five years out. How do they fit in to the strategy? When is the next strategy crafted, or does that depend on the attitude of future governments to the LDA and housing?

Mr. John Coleman

For sure, it will depend on the next Government, and our shareholders of the day will have a significant input into our strategy. However, we would like to think we have a very sustainable strategy that is going to be attractive and acceptable across the political spectrum, regardless of who the Minister is. Broadly speaking on what that strategy looks like, yes, it can take years for a scheme to come through and for it to start yielding. We are achieving a lot of delivery already through Project Tosaigh but we want the direct delivery side of the house, where we have full control over the land that we source, bring it through planning, look after design and specification ourselves and can deliver ourselves. We want to build that side of the business very significantly. Our ambition is to bring that up to the level of in and around 2,000 homes per annum in direct delivery. It will start exceeding what we are doing on Project Tosaigh and will give us a lot more options going forward. Broadly speaking, that is the strategy. We will be updating that annually with the shareholders. We have a rolling five-year business plan that we work on with them every year. Broadly speaking, our strategy is to ramp up the direct delivery, and eventually we think that will eclipse the delivery through Project Tosaigh.

An Cathaoirleach

I thank Mr. Coleman. Will move on to Senator Moynihan.

Senator Rebecca Moynihan

I thank Mr. Coleman for coming in today. I want to return to the theme of what cost rental is, and the costs that are associated with it.

In the presentation, Mr. Coleman stated that the SCSI figures are broadly what the LDA is encountering, except when land and other costs are stripped out. Does that mean that what the LDA is delivering under Project Tosaigh costs approximately €114,000 more for the delivery of a house and €106,000 more for an apartment? What is the difference between the LDA's direct delivery projects and Project Tosaigh? Is the gap as large as €100,000 and is that what is impacting on the cost base for the affordable rental or the cost rental? I understand some of that might be commercially sensitive but Mr. Coleman may address it in broad strokes.

I also have a couple of questions on my local area, if Mr. Coleman would not mind answering them. First, what is the timeline for the delivery of the all-weather municipal sports pitch on the St. Teresa's Gardens land? Are there any updates on the delivery of housing on the digital hub lands? This morning, I visited the Oliver Bond complex, which is directly adjacent to it. Built in 1936, it is one of the largest State housing projects. There are other issues there that are not for Mr. Coleman, but I refer to the delivery of affordable housing on that site for a digital hub.

The Heuston master plan, including the Conyngham Road depot, was presented by CIÉ in 2021. There has been zero movement on it since. I refer to the site in the corner there as well. That is opposite the Ashling Hotel. There have been lengthy discussions about buying that and trying to parcel together that land for Conyngham Road, the private site at the corner and CIÉ.

I will leave Mr. Coleman to answer. I have a couple more questions there as well.

Mr. John Coleman

First, I will try to address the Senator's first question on the difference in delivery costs by going to a developer with Project Tosaigh versus direct delivery. Even when we are not going through a developer, we, like all State bodies such as local authorities, but it is mainly the LDA that is delivering directly in the State at the moment, go to main contractors. We would not go down a level to subcontractors or anything like that. It would just be impossible to manage from a procurement perspective. We would go to a main contractor and we would go to the market.

We look for fixed prices. There is a cost to that because it is on the contractor if something goes wrong. Essentially, it is their problem. That is the way we-----

Senator Rebecca Moynihan

So they build in a margin to protect against that.

Mr. John Coleman

Exactly. They will have to take a view on how much the price of steel will be over the three years it will take to build this scheme, how much the cost of labour will be, whether they will have trouble sourcing labour, subcontractors, etc. It is quite a complex risk for them to manage. A developer has more flexibility. They, particularly the larger ones, would not go to a main contractor. They would bring in their own subcontractors, who might work with them across all of their schemes. They would be able to drive their supply chain a bit better. That enables them to reduce their pricing or cost a bit better by not going the main contractor route. What it does is narrow the gap a little bit. As well as that, for the Project Tosaigh transactions we are focusing on, we are focusing on areas where the land value element is very small. If someone shows up to our door with a scheme where the embedded land cost is €75,000 per home, we have no interest. It is not for us. The land cost has to be approximately less than 5% of the overall cost of delivery. That is our sense of things. The differential for the land might not be huge as well. When all of these things are taken in aggregate, it narrows the gap between what it costs for us to deliver directly and what it costs to source through Project Tosaigh. It is not massively different as a result.

I will bring in my colleague, Mr. O'Neill, the head of property, for an update on the digital hub and the St. Teresa's Gardens brownfields.

Senator Rebecca Moynihan

Specifically the pitch in St. Teresa's Gardens.

Mr. Phelim O'Neill

I thank Mr. Coleman and the Senator. On St. Teresa's Gardens, we successfully got planning permission there and we are already out to tender for the delivery of the 540 homes, which are split between social and cost rental. The Senator will be aware the boxing club is still in active occupation of the building on Donore Avenue. The plan is that the boxing club will be decanted into the newly developed St. Teresa's Gardens units. We would hope to be on site with St. Teresa's Gardens at the back end of this year, and once the boxing club is decanted into the new space that will be provided to it within that development, the pitch will be in a position to be delivered at that stage. We are in close-----

Senator Rebecca Moynihan

It sounds like 2025.

Mr. Phelim O'Neill

It will more likely be 2026. We are obviously discussing closely with Dublin City Council the delivery of all of the joint infrastructure. The adjacent developments for which Hines has recently been granted permission obviously will be transformative for the entire area, but the Senator can rest assured we will ensure all of the community facilities will be delivered in conjunction with Dublin City Council.

On the digital hub, we have had a long and fruitful relationship with the agency, which itself provides fantastic services in the locality. We have a design team appointed and we are progressing planning applications on a phased basis over the site. For those who are not familiar with it, it is a number of blocks in The Liberties. We expect in the order of 540 units on a number of phased applications which will be delivered over the coming years. We expect the initial application to be lodged at the back end of this year and then on a rolling basis. Obviously, we are conscious to keep the digital hub operational while all the development happens in the area.

Senator Rebecca Moynihan

What of the Conyngham Road depot and, specifically, the site on the corner opposite the Ashling Hotel? Has there been any movement on the Heuston master plan? I have not seen any movement on it since the initial-----

Mr. John Coleman

The LDA is not involved per se with the Heuston master plan with CIÉ although we are in discussions with CIÉ about accessing Conyngham Road. We can expand on that a little bit. I will ask Ms Lawson, who has been handling that interaction, to address it.

Ms Dearbhla Lawson

Conyngham Road is one of the sites that is identified under Housing for All. That is a prime infill site located within a conservation area. We have been doing feasibility on that and looking at some private land acquisition as well. The reality is it is an operational depot at the moment. That will need to be relocated and provided elsewhere. CIÉ is looking at that and how that can be rationalised and reprovided. The expectation is that should be achievable within a period of five to seven years. There is a piece of work to do on that to move that forward through planning.

Deputy Cian O'Callaghan

I thank the LDA for coming in and Mr. Coleman for his opening statement and reports on its work.

First, the issue of the creation of sustainable communities was discussed quite a bit, as was the environmental aspect of it, which is very important. There are other parts of sustainable communities such as community facilities, infrastructure, amenities, schools, etc. For quite some time, in large new planned areas, an important part of that planning process has been the reserving of school sites. Until the Department of Education confirms that a site will not be needed for a school, generally, that is respected within the planning process. Can the Land Development Agency, in terms of any areas it acquires, give us a commitment that it will also respect those school reservation sites and that it will not seek to build on them unless there has been confirmation from the Department of Education that the site will not be required for a school?

Mr. John Coleman

We do not think necessarily like a profit-making developer. We are here to make an impact in the interests of the State and the public for the long term. As a result, amenity and going the extra mile to provide those facilities is important to us and we are always open to it.

From a schools perspective, we were fairly clear that, unless there is schools capacity and unless we consider the use of schools in an area, we have to allow for that. We are looking at various sites at the moment where there is a school allowance made.

We view that as sacrosanct. It is not something we would ever try to muscle out just to squeeze in an extra block or something like that. That is very short-term thinking. I will ask my colleagues, Mr. O'Neill and Ms Lawson, to add to that by giving some examples.

Mr. Phelim O'Neill

We have numerous examples of where we work hand in hand with the Department of Education. We are working very closely with it in the Cork docklands, for instance, where there is some State land and a school reservation. There is a provision for a school on the recently acquired lands at Clongriffin train station, but we are in open discussions with the Department of Education to understand the timing, quantum and typology of school. One thing that is very important is it is no longer about a two-storey school that sprawls over many hectares. We have to think about compact, good use of land. These are the discussions we are actively having with the Department of Education.

Deputy Cian O'Callaghan

In the area of tenure mix and affordable purchase, the LDA is saying that generally, apartments are much more likely to be cost rental because of the finance model and the price at which those lands may have been acquired and so forth. It is Government and national policy to promote sustainable and compact development. I often hear from people who say they would like to be able to move out of a family-sized home into an apartment but because virtually all the new builds are rental only, that is not an option. They are very frustrated that there are no options, or affordable purchase options, for people to buy apartments. What can be done to address that?

I will use the example of Clongriffin which I am familiar with because it is in the area where I live and is the largest project the LDA is involved in. Have decisions on tenure mix been made? How are they made? If there is to be consultation and engagement with the community, can the tenure mix change if people say they want to have more affordable purchase? How does the LDA respond to that? Can it respond or give some insight into that?

Mr. John Coleman

I can. I will take the Clongriffin example first and then give another example of the way we are thinking around this. We have gone out to tender on Clongriffin because we just want to get going on the first 408 homes out of the potential 2,300 on that site. We want to get going and start construction this year on that. That is the urgency that needs to be put into these situations. We are keen to get going on them. We are very likely to go back to look at the plans for the overall site again. In an area that can yield approximately 2,300 homes, affordable purchase has to be part of that.

I will give an example of our thinking on that. At Shanganagh, there are affordable purchase apartments and houses that will be released to the market this year because we wanted to ensure a good mix of tenure there. As well as that, on a site we are looking at through Project Tosaigh at Horgan's Quay, Cork, we are exploring with the house builder the potential for the Croí Cónaithe scheme to be applied to make some of those apartments saleable to people for purchase as owner-occupiers in order that not all of the properties would be cost rental and social, but homeowners would be in there as well. We are quite keen to push that. It even makes sense from our perspective if we can sell some homes. The LDA is very capital intensive because we put out all the money to build and acquire homes but because we hold and rent them, it only trickles back in over a very long period.

Deputy Cian O'Callaghan

In the LDA's overall model, it can make sense to have affordable purchase-----

Mr. John Coleman

Absolutely. We get money back which we use to build more homes-----

Deputy Cian O'Callaghan

-----and more cost rental and so forth. It will not necessarily mean we will get less cost rental in the wider scheme of things. It could mean more in more locations.

Mr. John Coleman

It could mean more because we cycle it back in. We like that.

Deputy Cian O'Callaghan

On large projects, I will again reference Clongriffin because I am familiar with it. When the LDA goes into existing communities such as that, how does it do community engagement? Who does it consult and engage with? What sort of timeline is it on? Will Mr. Coleman talk us through that?

Mr. John Coleman

Sure. I will bring in my colleague, Ms Lawson, on this shortly. We have a very specific strategy and policy around community engagement. It is our obligation and duty as a public body to do that. We have to listen to the public in existing communities that we impact with our developments. We have to talk to them. It also makes total business sense for the LDA to do this. In our experience, if we are looking to reduce the risk of objections, observations or even judicial reviews, talking to locals and local community groups is critical. It makes good business sense for the LDA even if we could not care less about community engagement, which we very much care about.

We have had a pretty good hit rate for planning approvals as a result of that, barring one in Dundrum. That was disappointing because no residents' groups had opposed that scheme; an individual did. Generally speaking, we find that community engagement helps the projects along and increases their chances of getting delivered along the timeframes. I will ask Ms Lawson to expand on that a little more.

Ms Dearbhla Lawson

We have our own consultation and engagement strategy. It forms an early stage of the process. Before we even design schemes, we think about listening and gathering. It is proportionate to the area and involves thinking about what the context is, who the stakeholders are and what we need to do to support delivering sustainable communities, as well as thinking about compact and low-carbon development. It is about looking at what is in the area, what its needs and requirements are and how we can support that. We recognise that where there are places of significant change, we need to look at what the issues are for the local community so that we build inclusive, integrated communities, which respond to the needs and contribute positively to the area. We have that strategy. Mr. Coleman referenced the Dundrum example where we had a five-stage consultation over a number of years involving thousands of different engagements. It was very helpful because that helped to build into the design consideration and to improve the scheme overall.

Deputy Cian O'Callaghan

I will ask for one point of clarification. Sometimes, developers, when they are building big projects for example, talk about having some community facilities with it, but what they are actually talking about is communal facilities for the people who go into their development but that are closed off to the rest of the community. When the LDA talks about community facilities in a project, is it talking about facilities that will be open to the whole community and not just the residents it is building for? Is that its approach?

Ms Dearbhla Lawson

It certainly is. Dundrum is another very good example of that, where we are looking at adaptive reuse of some of the existing facilities to repurpose them and open them up. There is a lovely rose garden at the Dundrum site, and facilities including the old church, which could be opened up and made into a community facility so it is a welcoming space. I mentioned we do social and community audits so we understand what the deficiencies and needs in an area are. We talk to local groups so we understand and are contributing to the area.

Deputy Cian O'Callaghan

Does the LDA do that for every project or its larger projects?

Ms Dearbhla Lawson

It is proportionate and responsive. We need to do it in that way. It all depends on the area and the opportunity. We try to make the most of what we have got because it is about optimising public land in the public interest.

Deputy Cian O'Callaghan

Does the LDA take that approach for larger projects?

Ms Dearbhla Lawson

For larger projects, but for smaller projects also we talk, we try to publish and consult on the proposals, and look at how we can improve that and make it work.

Mr. John Coleman

We think very much like a local authority in that respect. The reality is many of the sites we are directly developing ourselves have been sourced from local authorities. They do not just hand them over to us and say, "Off you go". We engage with them very heavily on what is required on a site. They are listening to councillors and the community regarding what is needed and on the wider infrastructure. The idea of developments being gated off would not really be in our ethos. The Deputy can be assured that we are very much thinking of the wider public as opposed to just the residents.

Senator John Cummins

I will follow on from where I left off on Kilbarry. I made a point about the visibility of the LDA in the context of that site. I know the LDA is involved in that site but if you asked anyone, other than people who are potentially in the process of buying in that scheme, nobody would know that the LDA is involved in it. There is no signage up on the site.

The first thing any developer does when it is developing a site is say "there are houses for sale here". There are no signs up on the site and there are none on Six Cross Roads, which has thousands of cars passing every day. That is a simple thing. I raised this previously and as it is still not the case in January 2024, will the LDA commit to putting up that signage? Will these properties be put on daft.ie? Will the LDA undertake an educational marketing campaign on local radio to tell people what they have to do to purchase one of these homes? They are three very reasonable suggestions. Will the LDA commit to doing those?

Mr. John Coleman

They are reasonable suggestions. The good news is that we are two thirds of the way through the sales on that site. We have appointed an agent regarding them. As part of coming back to the Senator regarding the next phases of those, I will undertake to come back to the Senator directly about how we advertise and get communication going more effectively to get the remaining houses into the hands of the people who need them as soon as possible. I will come back directly to the Senator once I engage with my team.

Senator John Cummins

I did not hear a "Yes" but as I think they are very reasonable suggestions, it would be reasonable to expect a "Yes" to them.

Mr. John Coleman

I do not see that being a problem.

Senator John Cummins

I hear the points made by Mr. Coleman about phase 2 of Project Tosaigh and that it is going to be a best bid process. He stated that the LDA was going to engage in staged payments as part of that. Is that correct?

Mr. John Coleman

That is correct.

Senator John Cummins

If the LDA is purchasing those homes from the developer, are these homes not then classified as second homes when it comes to a purchaser using the help-to-buy scheme because we know that scheme is only applicable to new build first purchase homes? Has the LDA managed to circle that? Is it an issue with regard to what Mr. Coleman said about phase 2 of Project Tosaigh?

Mr. John Coleman

It is my understanding that these homes will be considered first to market, so there will be no restrictions on help-to-buy and so on.

Senator John Cummins

That is important.

Mr. John Coleman

Agreed.

Senator John Cummins

I ask Mr. Coleman to come back to me about that because I do not see how that is possible. Perhaps there is something in the background that I am not aware of that enables that to happen. The help-to-buy scheme is a critical piece. I suspect that everyone who has purchased the LDA's affordable purchase homes thus far has used the help-to-buy scheme. Would that be a fair observation?

Mr. John Coleman

I do not have that information to hand but that is a fair assumption. Where there are rules or regulations that can be adjusted at ministerial or departmental level, we found the Department to be quite open to that if there is an anomaly or some sort of blip that needs to be corrected in regulations. We engage with the Department all the time on this. We are okay regarding these homes being first to market and the help-to-buy purchasers not being ruled out.

Senator John Cummins

The next topic will not be news to Mr. Coleman because I have said it to him in the past. I genuinely believe that the litmus test for his organisation will be its ability to intervene in regional cities. I am thinking in particular of Waterford and the North Quays as one of those critical brownfield waterfront city centre sites that without State investment will remain empty forever more. This is why the Government has invested €170 million in enabling infrastructure but as part of that master plan, 300 units will be coming in from Harcourt Developments, which is the developer for the site. It is an SDZ and will get approval shortly. For a site like that, what is the preferred delivery mechanism for the engagement of the LDA in the context of affordable purchase and cost rental? If an organisation like the LDA is not involved in the scheme for the North Quays, those apartments will not be viable. I think Mr. Coleman would accept that.

Mr. John Coleman

I would accept that. Regarding the North Quays scheme, we have engaged with the local authority and its chief executive extensively on that. We have seen the site for ourselves and we know it quite well and have a high regard for it and for what the local authority is trying to achieve there. We think we have a role in making that happen. Regarding how that could look, if a developer has been selected, and we are not part of that process, we could play a role through forward funding arrangements funding the developer to deliver that scheme for cost rental. There is also an opportunity there similar to what we are looking at with Horgan's Quay in Cork to ask whether an element of these could be made available to owner occupiers through the Croí Cónaithe scheme. That is something we would always be open to as well. Our role in that could involve us underwriting so that if 100 people do not show up on the day in three years' time when they are built with mortgages to buy the homes, the LDA will be there to take them in as cost rental or sell them on itself. That is the type of role the LDA plays in that situation. We are interested in that scheme and have written to the local authority to express our interest and support.

Deputy Thomas Gould

On the LDA website, it announced that the first homes on the St. Kevin's Hospital site in Cork would be available in 2023. The latest update we got last year was that the first homes would now not be available until 2025. This is a two-year delay in one of the LDA's flagship projects. What has caused this delay and will the homes be delivered in 2025?

Mr. John Coleman

We are delighted to be on site regarding that scheme. As the Deputy knows, it has lain there as a blight on the horizon for many years and it is a really good achievement to have planning now and to get construction going on that site to get diggers implementing that build. We are very keen to advance the construction as quickly as possible. I will ask my colleague, Mr. O'Neill, who is head of property, to give the Deputy more of an insight into how we are going on with regard to that site.

Mr. Phelim O'Neill

St. Kevin's is obviously a very challenging site that we took over from the HSE. We carried out a very significant programme of enabling works to de-risk the overall project. Those enabling works have been completed. As I am sure the Deputy will have seen, the St. Kevin's Hospital building itself, which was badly damaged by fire a number of years ago, required significant stabilisation to stop it falling in on top of itself. As Mr. Coleman mentioned, we are delighted that we have had a main contractor on site for the past four to five months and units are being delivered. The foundations of new homes are already in and the rising walls are coming out so we are very confident that the target of early 2025 will be met despite a number of challenges on site from knotweed to asbestos to environmental challenges. Thankfully, we have overcome all of those. One of the critical infrastructure projects Irish Water has been delivering for the north side of the city involved the St. Kevin's site. As Irish Water has completed that work from the Lee waterworks up to the reservoir, all of those challenges have been overcome and I am pretty confident that we have a clear road ahead of us for unit delivery in 2025. We expect to market those units in quarter 3 of this year.

Deputy Thomas Gould

Has the LDA engaged with the NTA regarding public transport because there is no public transport there?

I raised this matter when I put in a submission about the development of the site. I have been advocating the development of St. Kevin's site since 2011. Comments were made earlier about delivery according to timelines and the success of the LDA. I am frustrated that the site has remained unused for years, although I appreciate that work is being done on it now. There were at least three major fires there. It will probably cost tens of thousands of euro to do work that should have been done at the time. Between the Government, Cork City Council and the HSE, it was a wanton disgrace that the building was left the way it was and that it collapsed. Now the LDA is picking up the pieces. When the site is delivered, how will people get to work, school and college? I have engaged with the NTA on BusConnects. There is no bus service for the site, on which we are building the bones of 200-odd or 300 houses. Around the corner and up the road there is another site – the old Good Shepherd Convent – where there is planning permission for another 210. A developer got planning permission for the site and then flipped it, and now the site is still lying idle. There were another half dozen major fires there. Therefore, we are facing the possibility of 500 houses in an area without bus service or cycle lanes. Those who know the Sunday's Well layout will know the traffic is gridlocked.

One of the things we raised with Bus Connects, which was raised by people locally, was the possibility of a new bridge by the Lee waterworks, going over the Carrigrohane Straight. Is that something the delegates considered and discussed? I am referring to a bridge for vehicle traffic but also for cycle lanes and walking because it would take the pressure off farther down. It would be very close to the colleges and CUH. Have the delegates engaged on that?

Mr. Phelim O'Neill

We have engaged with the NTA, but also obviously with the city council also on the transport strategy as part of the planning application, and more recently as part of the overall delivery of the scheme. The Deputy mentioned that proximity to the major areas of education and employment will be critical. What we are trying to do is deliver permeability through existing schemes, down to the Lee Road. We are not in control of the bus service but we are certainly advocating improved bus services in the area.

Deputy Thomas Gould

We see new housing developments in Cork. There is one on the Old Mallow Road but there is no bus service. We are talking about global warming and climate change but we are building housing estates where families will be forced to have multiple cars. That is why I am really anxious to have sustainable transport corridors and services at the St. Kevin's site.

My other point is on the prison in the Glen. A new prison was built several years ago but there was an old prison. There was talk at the time to the effect that the LDA was considering housing on its site. Has anything come from that?

Ms Dearbhla Lawson

On the Deputy's point on the transport strategy and links, many of those under the NTA are very good. It is demand led. Once the housing is delivered, the BusConnects plans will be reviewed over time. Therefore, I believe there are opportunities for improvement. It is certainly something we want to commit to.

The Deputy asked about the prison site. It was included in our report on relevant public lands. There has been engagement with the Irish Prison Service and the various Departments. I understand they have a need for the building at the moment but we are awaiting the Government's consideration of the report on relevant public lands. We shall await the response to that. The building is certainly included as having potential, but that is subject to its becoming available to us.

Deputy Thomas Gould

As part of the agreement when the new prison was built, commitments were given to the community in the Glen and surrounding areas. Anything that happens on the site will have to involve discussions with the local community.

Have the witnesses any idea of the rent for the St. Kevin's site? It is probably sensitive information but I would like a ballpark figure. Will the rents be affordable?

Mr. John Coleman

We set the rents when the properties are ready. We do so by working out with the Department of Housing, Local Government and Heritage the level of subsidy we can get, which essentially sets the rent. We will do that when the units are completed. We are very much focused on pushing to get the rents down as much as we can and on landing them roughly in the middle of the affordability level of the people we are targeting. That involves the middle tier of income earners, particularly for affordable housing. We will need to let the project advance a little more, but once we get closer to the end we will have good clarity on what the rents will be.

Deputy Thomas Gould

The only point I would make – Deputy Ó Broin made it earlier – is that our concern is that people who cannot qualify for social housing because they are just over the threshold will be caught. I ask the witnesses to be very conscious of that.

Mr. John Coleman

We are listening to that.

Deputy Francis Noel Duffy

I thank Mr. Coleman and his team for attending. I have been listening upstairs. It has been a very interesting and open discussion. I thank them for that. I have a few short questions, one of which relates to what was said earlier. Are any of the units that have been completed to date, including social housing and cost-rental units, vacant?

Mr. Enda McGuane

As of today, all the units available for rent have been rented. We have launched 621 units in the past couple of weeks. The process is ongoing.

Deputy Francis Noel Duffy

I assume that when they come on the market, they are taken up pretty quickly.

Mr. Enda McGuane

There is a process we go through, outlined in the Affordable Housing Act, to make units available for rent. We work our way through that process. The units are advertised on our website for seven days, at a minimum, and we go into an eligibility-checking process and lottery. We try to accelerate the move-in as much as possible. In some instances, we have potential residents who are already in lease arrangements and want to give their notice. We facilitate that process. The aspiration, as our pipeline gets more developed, is to be in a position to do as much as possible before rent and have residents selected in advance of units being delivered so homes can be-----

Deputy Francis Noel Duffy

Essentially, there are none vacant. Once they are ready, they are occupied. That is great. I thank Mr. Coleman.

I know things have changed in the LDA. When I met Mr. Coleman four years ago, there was a remit of 450,000 units over 20 years. That changed because of off-balance-sheet financing. It went back to 400,000 units over 20 years. Is that still the remit, or might the agency go beyond that target?

Mr. John Coleman

That was put out at the very start, namely, at the time of our launch. I think there was a good basis. Proportionally, there had been similar historical achievements in other jurisdictions, mainly around planning schemes with the equivalent of our strategic development zones. These involved the planning and resourcing for delivery of large-scale areas. The figure would not be achieved even doing larger-scale infill developments. It would be for much larger-scale, strategic-level developments. I am referring to the likes of Clonburris, as a strategic development zone, and Adamstown, which can yield 9,000 or 10,000 homes per project. The good news is that we are considering areas of that scale. The Colbert area, Limerick, and Inchicore, Dublin, around the train works, and the Tivoli docks, Cork, are examples, although I grant that they are longer term. While we are very much focused on the near-term delivery, as the Deputy will gather today, these areas will in time become suitable for housing delivery. They have many constraints and these take time to work through, but we have a unit set up in the LDA dedicated to this. We should consider that each of the several large-scale areas we are working on can release 2,000, 4000 or 6,000 homes and the idea that the LDA's separate short-term delivery operations can probably get to a run rate of around 3,000 homes per annum in the next few years. Applying a 20-year lens at a rate of 3,000 homes per annum and adding in the homes from the major large-scale areas that can be planned and resourced to be delivered, you start to get a picture of delivery approaching the level the Deputy mentioned. However, it is a longer term aspiration.

We are focused on our business plan to 2028. As the LDA matures and we show we are on track in the context of that business plan, we are always discussing with our shareholders and the Minister as to how we scale up further and how the ambition can be expanded. We cannot lose sight of that big picture.

Deputy Francis Noel Duffy

That is great. From what Mr. Coleman just said, it is fair to say the LDA will exceed those targets.

Mr. John Coleman

We are pushing all the angles as much as we can.

Deputy Francis Noel Duffy

My final question is also a short one. Last year, Mr. Coleman noted that the LDA would be procuring 100% public housing on all the public lands it is working on and that 75% of the units would be cost rental and the remaining would be social. Is this still the objective?

Mr. John Coleman

It is broadly the objective. It is down to the type of site involved. We predominantly work on sites that are suitable for apartments, and that is our direct delivery. For our partnerships delivery, we are predominantly focused on apartments as well because that is where the need is. There is no market really in the private sector for apartment delivery. That is why the LDA and approved housing bodies are stepping up into that space. Apartments tend to suit cost rental better. We generally target them being on good transport links, for example, in Dublin, on Luas or DART lines. That is creating not a bias but it is leading us towards more cost rental of the order of what the Deputy stated or perhaps even higher. We will have elements of affordable purchase on social in there as well, but cost rental is our focus.

Deputy Francis Noel Duffy

It is still around that 75%.

Mr. John Coleman

Yes, or possibly even a little bit more.

Deputy Francis Noel Duffy

That is great.

Deputy Violet-Anne Wynne

I thank the Cathaoirleach for allowing me to come in, and I thank the witnesses. I have been watching proceedings. It has been a great discussion.

I wish to focus on County Clare, which is where I am based. Recently, I conducted my own audit, via parliamentary questions, of State land in my constituency. It emerged that there is not 1 sq. ft of land – greenfield, brownfield or other – that would be suitable for the type of development that the LDA is involved in. What does Mr. Coleman think the LDA can offer a county like Clare? If he feels the LDA is more geared towards urban areas, does he a space where the LDA could have a remit, in particular in towns like Ennis and Shannon?

Shannon is a growing town of more than 10,000 people with a vast array of industries employing people from all over the mid-west. I met with the chamber and industry leaders. They conveyed to me that the housing stock simply is not there. The council, through its hard work, was granted leave in principle for just ten affordable units in Shannon, which is one unit for every 1,000 people. We need to respond to the growing population there. Can Mr. Coleman give his thoughts on that? Obviously, ten units would not be sufficient in a town that big.

Previous speakers referred to cost rental versus affordable purchase in terms of the space Mr. Coleman would like the LDA to be in. As he may be aware, cost rental is not viable in County Clare. Can he outline whether the LDA has alternative plans in areas where cost rental is not viable?

Is the LDA working with developers that are using modular housing units? If not, is the possibility of doing so being explored or planned for in the near future?

Mr. John Coleman

We are focused on the main urban areas of country, which is in line with our mandate. As we are essentially a start-up agency - or have been, albeit maturing now – we have devoted much of our energy to the larger sites in order to achieve some of that scale in light of the chronic need for delivery. I understand the point about housing being an issue outside the five city areas. We discuss this issue all the time with local authorities outside Dublin, Cork, Limerick, Galway and Waterford. There are jobs and investment that can depend on housing availability outside of these areas. However, our focus has been on the main areas.

We released a report on State lands earlier this year that focused on the top ten urban areas by population in the country. Later on this year, we will be issuing a second version report that will encompass many more of the leading towns in the country. I have no doubt it will include Ennis and Shannon. That will reveal where the State has landholdings that could be released for housing development, and I think we can play a role in shining a light on some of those opportunities.

The avenues that are open to the LDA are also open to local authorities in respect of dealing with developers to bring forward affordable purchase schemes and so on. This means there are other avenues through the State that homes can be released. However, we will pay greater focus to the larger towns going forward. Our remit is towns and cities with a population of over 10,000. I think, off the top of my head, Ennis and Shannon are well above that.

Our experience is that the use modular as a construction methodology is increasing in terms of schemes that we use but also in what we encounter with developers. It tends to be elements that are, say, precast concrete that are done off-site that are brought in to construct the scheme. For instance, on Shanganagh, there are precast concrete for quicker, cleaner delivery. Others that we deal with employ similar methodologies. Timber frame houses are another initiative that other developers are using. We have some experience with modular but there is greater potential to use it more.

In this country, 3D volumetric modular has not been a big part of delivery yet. It has been used successfully in other jurisdictions but mainly the economies you get with it only start coming apparent above ten storeys. We tend not to like going too high in this country. Where buildings are of 20, 30 or 40 storeys, they can mushroom up quite quickly. The cost is roughly the same but the saving is in time. We think our focus will be on off-site elements of the construction as opposed to pure 3D building off site, where you crane them in and bolt them together. We think they are more suited to the schemes we have.

Is there another question in the Deputy's list that I have not answered?

Deputy Violet-Anne Wynne

I think that covers everything. I thank Mr. Coleman.

Senator John Cummins

Could Mr. Coleman remind me about the LDA staff complement and where the agency is going in that regard? He already outlined the position but, unfortunately, I missed what he said.

Mr. John Coleman

That is no problem. We have a current staff of in and around 130. I use the phrase "in and around" because the number growing every day. We have staff joining us every week. This is in line with the growing impact and trajectory of the LDA. We intend to get to around 300. We have a staffing plan for the LDA and we intend to get to in the region of 300 by around the end of 2025. Where that is being driven is we did a bottom-up exercise where we projected forward the level of sites that we would have under direct delivery and the level of sites we would have under Project Tosaigh as well. Do not forget that with Project Tosaigh, given that we are in receipt of State payments, there is a much greater involvement of the LDA in monitoring the delivery of those sites.

Senator John Cummins

In future ones-----

Mr. John Coleman

Exactly. It is the State's money, so we have to make sure things are going according to plan and that we do not put out more money than is already built into the scheme at any one point. It is quite a level of oversight, as necessary, when one considers that at the end of the year, we will have at least eight direct delivery sites up and running.

By the end of the year, we could have at least that number again in partnership delivery sites, all of which require monitoring and oversight. There could be 16 to 20 open sites towards the end of 2024 into 2025. That is a lot of construction to keep an eye on.

Senator John Cummins

So the employees being hired are mainly in monitoring.

Mr. John Coleman

No, it would be in design as well. If you think through the life cycle of-----

Senator John Cummins

Is the LDA bringing design in-house, as opposed to contracted?

Mr. John Coleman

We have development management teams that work with architects, QS firms and others to arrive at a design. We do a lot of work directly with the local authorities. We are well placed to manage that process, we believe. We do much work directly with communities on consultation. It takes quite a heavy amount of work to put out to contract or tender a scheme of the scale of Shanganagh, which is a high-value scheme. A similar amount of work has to go into assessing the tenders when they come back in and then monitoring the scheme on an ongoing basis.

Senator John Cummins

Perhaps Mr. Coleman sees where I was going. I hear all of that. I do not want the criticism to be able to be levelled at the LDA that it has become top-heavy and there are people there doing jobs on salaries that are probably unnecessary. That is what I do not want to see. I am putting that out there as a helpful comment. I saw a recent one. What is a "resident experience executive"?

Mr. Enda McGuane

That is a recently advertised role related to somebody with digital marketing experience who will understand how to promote cost rental and make people aware of what is involved in applying for that tenure. It is also for post occupancy. When residents move in, it is helping us to create communities and engage with people who reside in our properties. Those are the elements of the role across the entire portfolio.

Mr. John Coleman

To give the Senator a handle on the level of staffing, 300 might sound like a lot but we look in concept like a large house builder bolted to a large rental housing provider. In the private sector, that might be Cairn or Glenveagh plc bolted to IRES. Cairn and Glenveagh might have around 250 employees each and IRES might have about 100. That gives a handle on the level of management and staffing needed. We critically analyse whether every role is needed or not. We do not take any roles unnecessarily. We look at the bottom line as much as possible. I take the Senator's point.

Senator John Cummins

On funding, Mr. Coleman mentioned in response to Deputy O'Callaghan the affordable purchase, which was the premise of my first contribution. I would like to see the LDA doing more with it. It would be helpful to its bottom line and its recycling of finance. I listened carefully to what was said. Mr. Coleman said the rent would be a drip-feed. It is significant in terms of numbers, does he not think? If you take 1,000 units, the vast majority are cost rental. Even if they were only €1,100 per month on average, that is over €13 million of a rent roll on those units in a calendar year. That is a significant sum and, as the LDA builds up, it will increase. The rent roll is important but recycling is also important to how the LDA will finance. Will it always be going to the State to look for an extension of its capital expenditure? I appreciate markets are challenging at the moment. The cost of finance is impacting the whole sector in terms of viability and it is no different for the LDA. Do LDA representatives see themselves on the market more when interest rates are more favourable?

Mr. John Coleman

I think so. Our debt strategy is essentially that debt is too expensive for us right now. Debt can be part of our capital structure. We are allowed borrow up to €1.25 billion but right now it does not make sense. Once the rent roll from cost rental proves itself, becomes consistent and builds to a level, off the back of that the Senator is correct that we would be able to borrow on the market, rather than just looking for additional equity contributions. That is something we are keeping live. We have a debt strategy in review, which will involve scenario analysis. Much commentary now is that debt will loosen towards the end of this year and into next year. We are looking at that closely to see if there are any opportunities but we intend to meet the majority of our needs for the foreseeable future by the equity injections we get from the Government. They are critical to us. We will never be able to borrow massive amounts of debt. We want to be lowly geared and not to create any situations whereby we could cause ourselves problems by being over-indebted into the future. We will take a prudent approach based on the opportunity available in the markets in the years ahead.

Deputy Eoin Ó Broin

That neatly leads into my next round of questions. I am trying to understand how that equity model is working. Under the Affordable Housing Act and with the approved housing bodies, they raised debt through the Housing Finance Agency and the cost-rental equity loan they acquire through their turnkey. They charge rent, over 40 to 60 years the debt is paid and then the rent roll generates a surplus. That is clearly not how the LDA is structuring the finance for its equity model. In as simple terms as possible for those of us not accustomed to the financial wizardry of these things, will Mr. Coleman explain how the funding model works? I am particularly interested to know, because it is ISIF funding, what is the return to ISIF. At what point is the equity paid out or returned? Will there ever be a surplus generated from the rent roll in cost rental? That is an integral part of cost rental and I am not sure it will be in the LDA model. Maybe Mr. Coleman can explain it.

Mr. John Coleman

Indeed, no problem. We are differently funded from the AHBs, which fund their cost rental through a cost-rental equity loan. It is a high level of gearing and is repaid over the very long term. We are not funded by debt. Today and next year, we are very unlikely to have debt. It is all equity. Why do we charge a certain level of rent? It is largely determined by Government policy in the area. We fund it by, where the LDA buys a home, it calculates the minimum level of return it needs on an ongoing basis. The reason for that is around state aid protection. There is a minimum level of returns. That level, without going into details because it is a sensitive issue for us and there is risk entailed in it, is a minimal return. The objective, every time we look at our financial models, is to work out what the financing is.

Deputy Eoin Ó Broin

How long is that return paid for? Is it a return to the LDA and held by the LDA or is there a monthly or annual transfer of the return to ISIF or somewhere else in the State? Does the LDA accumulate that return?

Mr. John Coleman

We recycle that return into funding other projects. There is no return paid out to ISIF. The Minister acquires the shares in the LDA and pays us but the Minister gets the money from ISIF. That is how it works. We do not have any relationship with ISIF on the face of it. Theoretically, a dividend could be paid to the Minister out of the cost-rental rents that come in but we have not been requested to pay any dividend and I understand there is no objective at this time for any to be paid. The objective is to recycle it back into developing more cost-rental housing. That is roughly how it works. Any return we achieve is recycled straight back into more housing.

Deputy Eoin Ó Broin

I have two questions. Obviously that return is quite small in real terms.

Mr. John Coleman

It is.

Deputy Eoin Ó Broin

Therefore, it would take quite a lot of cost-rental properties paying quite a lot of rent that would allow the LDA to deliver, for example, a significant increase in units in terms of that recycling. ISIF is giving money to the Minister, who is giving the money to the LDA. That is investment capital from ISIF. What is Mr. Coleman's understanding of what ISIF gets out of this relationship and when will it get anything or does that money just indefinitely sit with the LDA?

Mr. John Coleman

No, the ISIF fund is just reduced by that amount.

Deputy Eoin Ó Broin

What amount?

Mr. John Coleman

The amount of the capital that is given to the LDA. There are two shareholders: the Minister of Public Expenditure, National Development Plan Delivery and Reform and the Minister for Housing, Local Government and Heritage. The Minister for Public Expenditure, National Development Plan Delivery and Reform subscribes to all our additional share capital. He funds that by transferring money out of ISIF to buy our shares. There is no payback to ISIF.

Deputy Eoin Ó Broin

Exactly. That is my point. The first €1.25 billion and then the second €1.25 billion or whatever it is, that is basically money that goes to the LDA, which spends the money. The LDA makes a very minimal commercial return on that to cover day-to-day costs. That money is never paid down in the sense of a traditional cost-rental debt. Does that mean the LDA will never get what we call the kind of stock maturation surpluses that typically come with cost rental after 40 years plus?

Mr. John Coleman

I presume the surplus from cost rental would be that the approved housing body would own the property outright-----

Deputy Eoin Ó Broin

The debts are paid down.

Mr. John Coleman

It can go and do whatever it wants. It can gear it up again to do more housing. It is the same with us. We own the property outright from the start.

Deputy Eoin Ó Broin

But the difference is that at a certain point in time - this is really important for the long-term viability of cost rental - under the debt-financing model, debt is paid down and the AHB physically owns the unit and therefore the rent that was previously paid whereby approximately 50% of it was paying down the debt, is an additional revenue surplus from that point on. Under the LDA's model, we do not ever get that, we just get the minimal return annually.

Mr. John Coleman

We do, but we also have the full value of the property.

Deputy Eoin Ó Broin

Yes, and the LDA can borrow against it if it wants to borrow.

Mr. John Coleman

Exactly, we can borrow off the back of that straightaway. Unlike the AHB, we do not have the borrowing upfront.

Deputy Eoin Ó Broin

Sure. That leads me on to borrowing. Obviously the cost of borrowing is too high. How much would interest rates have to come down before it would be sustainable for the LDA to borrow, given where rents are at currently?

Mr. John Coleman

We look at debt not as a way to drive returns, which the private sector might, but to expand our capital capacity.

Deputy Eoin Ó Broin

I understand that, but my question is a separate one. Obviously the LDA is fully State funded currently by the ISIF. The original idea of this funding model is that the LDA would be able to leverage the State fully for private borrowing. What is the rate at which the LDA could borrow privately given what the current rent structure is at?

Mr. John Coleman

I think it would have to come down to the level of return that we seek to achieve from our-----

Deputy Eoin Ó Broin

So, it would be pretty low.

Mr. John Coleman

It would have to come back a bit.

Deputy Eoin Ó Broin

This is my final question. I got a response back to a parliamentary question on recapitalisation. I will come to this if there is more time, Chair. The interesting point is that, if I am correct, there is a member of the Department of Housing, Local Government and Heritage currently on the LDA's board.

Mr. John Coleman

No.

Deputy Eoin Ó Broin

The reply to the parliamentary question said there was a representative of the Minister for Housing, Local Government and Heritage on the board, but I also understand there is a request from the Department of Finance. Am I correct in saying there are now requests for two new board positions, one from the Department of housing and one from the Department of Finance?

Mr. John Coleman

We do not have clarity on that point just yet.

Deputy Eoin Ó Broin

But it is not a surprise that I have raised it with Mr. Coleman.

Mr. John Coleman

I have heard it discussed, but we do not have any clarity on what the requirement is yet. That is a matter for the Minister who makes appointments to the board.

Deputy Eoin Ó Broin

Sure, but ultimately these are also matters for the LDA. Has any formal request for additional board positions from the Department of housing and the Department of Finance been made to the LDA to date? Is Mr. Coleman saying no formal request has been made?

Mr. John Coleman

The Minister is in charge of making appointments to the board of the LDA, not the LDA itself.

Deputy Eoin Ó Broin

But Mr. Coleman is not aware of any such appointment.

Mr. John Coleman

No, I am not aware at this point.

Deputy Eoin Ó Broin

I will make a final point, with your indulgence, Chair. I am desperately trying to get a copy of the NewERA report into the LDA but the Minister will not give it to me. I have submitted a freedom of information, FOI, request. I am sure if I send an FOI request in to the LDA it would refer to "commercial sensitivity". Could Mr. Coleman tell us anything about the report, because there are all sorts of wild rumours circulating about what it may or may not contain? Given the significance of the money involved, I think there is a value in that report being published in as fulsome a form as possible. Could Mr. Coleman tell us anything about what is in the report? I presume he has read it and the board has considered it.

Mr. John Coleman

I do not think any great reveal will come out of the NewERA report.

Deputy Eoin Ó Broin

Does Mr. Coleman agree with everything that is in the report?

Mr. John Coleman

The report is essentially a statement of fact. It took our business plan and financial model and reviewed it for accuracy. Let us say, for instance, I said to Deputy Ó Broin that we do not see debt as a huge part of our future, but if I said we were going to gear ourselves up to 90%, I am sure the report would have had something to say about that-----

Deputy Eoin Ó Broin

Is Mr. Coleman happy enough with the report? Does he think it is a fair and accurate depiction of what is going on?

Mr. John Coleman

I think the report was a sensible outlook on the proposals in our business plan, which I have outlined to the committee today. I think it was just a validation more than anything else. I do not think there will be anything earth-shattering coming out of it.

Deputy Eoin Ó Broin

I have more questions but I will take them after. Somebody else can come in now.

An Cathaoirleach

I am going to take the next slot. I think Mr. Coleman may have answered the question for me but I will ask it again to be sure. The cost of construction has increased hugely in terms of the cost of materials and the capacity and resources that are in the industry. Contractors are attracted to the most lucrative builds. We have covered interest rates, the supply chain, and all the rest of it. The quality of what is being built now is incomparable to what was built in the 1970s, 1980s and even in the 1990s but that obviously adds to each unit cost for the LDA. That is what we see from the SCSI reports as well. When the LDA builds a unit for cost rental, the rental should be set at the cost of construction, plus maintenance and interest rates. How does the LDA make a decision on how much equity it will sink into each of these units in order to get to a rent that we consider is a STAR-type rent? How does the LDA keep working that out?

Mr. John Coleman

Our calculations and our financial model starts with the rent and how we get it to a point where it is affordable for the target market. That is where we point it all the time. We discuss and negotiate with the Department through the Housing Agency to get STAR. For a start, we would like the maximum amount available that we can, but it is allocated based on a rules-based system. Our objective is to try and produce rents that are as competitive as we possibly can.

An Cathaoirleach

The cost of the units increase as the input factors increase. The LDA tries to set the rent at 35% so that it is an affordable rent, but if unit costs keep going up and incomes are not going up at the same rate, does the LDA have to sink in more equity in order to achieve the 35%?

Mr. John Coleman

That is correct. It is more equity but mainly more STAR. Let us say that if we all woke up tomorrow and homes were €600,000 a unit – we are nowhere near that, but if they were, that would require significantly more subvention to keep rents the same.

An Cathaoirleach

The target numbers that the LDA could deliver would be reduced because they would chew up more of the equity and the LDA would have to go back to the Government and say it needs a lot more money. I support that concept of subventing the affordability gap. The Croí Cónaithe scheme in cities has an element of that as well. These units will not be built because there will not be a market for them.

Mr. John Coleman

The STAR, in particular for cost rental, is critical in keeping rents down. The way we look at it is, overall, whether it is the LDA or STAR, the funding is coming from the Government. It is all State money. It is the left pocket and the right pocket of the same pair of trousers. We always focus on what is the top level way to drive value for money at the build or acquisition price and then, assuming that we have got a competitive price to deliver the home, the financial allocation between LDA equity and STAR is all about trying to get the rents down to an appropriate level.

An Cathaoirleach

Mr. Coleman covered some of the issues I was going to ask about modular housing. I think he said a player the size of the LDA is comparable to the largest housing construction companies that are in the Irish market at the moment.

One of the things we were trying to address in a report we did on low-carbon construction was to set a target for the amount of housing that would be constructed with that type of technology. In light of that signal to industry that this is the direction it wants to go, have targets been set for the LDA? Does trying to build using low-carbon technology come across its design? Mr. Coleman briefly referred to this earlier.

Mr. John Coleman

Our objective is to get to a scale where there will be a long visibility into our pipeline. Since we started, we have developed or designed multiple schemes with multiple architects. More recently, we have standardised our approach to design. Although the properties might look different from location to location as there can be different facades or skins, in essence, the fundamental fabric of the homes, apartment blocks or other properties are the same underneath the skin. That means modular providers would be able to influence our design in order that what we have designed and will build will be done in such a way that it facilitates their methodology of construction, which could yield a much larger modular homes industry in Ireland. That is a longer-term ambition but we have a role to play in that regard.

An Cathaoirleach

I thank Mr. Coleman. I agree in the context of something of that size, with such a high target of delivery.

As regards the acquisition of State lands, if the LDA goes into negotiation with a State agency, Department or other body to acquire a site, there is a requirement for the site to be offered to the LDA first. Does the payment for the site go to that agency or organisation or, alternatively, back into central finance?

Mr. John Coleman

If it is from a commercial State body, the payment will go to that State body. The land payment is minimal, however. It is existing use value, which is almost immaterial in the context of the overall development cost.

An Cathaoirleach

As regards the cost-rental sites, who will manage the rent collection once they are up and running and populated? There would normally be a management company made up of residents that would deal with day-to-day issues, but who will manage the rent and rent collection?

Mr. John Coleman

Mr. McGuane will elaborate on that point.

Mr. Enda McGuane

We have externalised rent collection. We use licensed property service providers, procured through a framework, that collect the rents. In some instances on sites where we are co-located with other tenures, such as homeowners who have an owners' management company on site that is run by a managing agent covered by the Multi-Unit Developments Act, we engage with them, just as any homeowner would. The rent collections are externalised at this point to facilitate our growth.

An Cathaoirleach

I thank the witnesses.

Senator John Cummins

Mr. Coleman addressed the Cathaoirleach's question on minimal land cost. Many of the sites with which the LDA is dealing have minimal to no land cost. I would like the witnesses to comment on an assertion that was put out in the public domain prior to Christmas. It is political but it also is not political. The assertion is that the LDA can deliver homes for €300,000 because the land cost has, in essence, been taken out. Has the LDA been able to deliver its affordable purchase homes at Shanganagh for €300,000 without any equity?

Mr. John Coleman

The delivery costs at Shanganagh encompass everything you would see in a private sector development except for the land. The land cost is minimal. We paid for the land but it was a minimal amount in the overall scheme of things for a development on that scale. We have to pay things such as levies, charges, connection fees and all the normal things one would expect to see. In terms of the delivery cost per unit, there are houses and apartments there. It is a mix.

Senator John Cummins

I ask Mr. Coleman to address the delivery cost of the houses. They are the properties that will be sold.

Mr. John Coleman

We put Shanganagh out to tender. The bid comes back on an aggregate level. It is 51 houses and the remainder in apartments. My colleague, Mr. O'Neill, is passing me a note on delivery costs. It is commercially sensitive, but the cost is in excess of €300,000.

Senator John Cummins

It is considerably above €300,000.

Mr. John Coleman

It is a bit more than €300,000, yes.

Senator John Cummins

Without the equity.

Mr. John Coleman

The cost that the contractor charges us-----

Senator John Cummins

I am asking about the actual delivery cost of the unit.

Mr. John Coleman

-----is quite a bit more than €300,000.

Senator John Cummins

Yes. The Government introduced a scheme to waive water and levy fees, as Mr. Coleman is aware. They are applicable at the moment. Shanganagh had started before that scheme was brought in. If those fees or charges were removed, would the cost have been at €300,000 without any equity?

Mr. John Coleman

Removing levies and things like that always helps.

Senator John Cummins

Water and development charges are approximately €15,000 per unit.

Mr. John Coleman

Removing things like that helps. There is no great secret in respect of our delivery costs. I do not wish to provide exact figures in deference to commercial sensitivity. We have multiple projects out to tender right now. They are in line with the SCSI numbers that are published. In our experience, those numbers are accurate. It is what we are seeing in open market tenders as well that-----

Senator John Cummins

That would be considerably more than €300,000. It is in the range of €470,000.

Mr. John Coleman

There are components to that. There are land costs, levies and things like that. If you-----

Senator John Cummins

What I am trying to get to is whether it is possible to deliver homes in Dublin for €300,000 if one removes the land costs, as has already been done in this case, and water and development levies, which only equate to €15,000.

Mr. John Coleman

If the Senator is trying to draw me on whether it is possible to deliver homes for €300,000 and to put a price against that, we would have to be clear on what it is that I am being asked to price. Would it include a margin, finance cost, land cost------

Senator John Cummins

It definitely includes finance costs. We are talking about a three-bedroom semi-detached house, which is what the LDA has delivered. I am asking this because the LDA is in the process of bringing the properties at Shanganagh to the market this summer. I suspect that, with an equity share, they may be for sale in that territory.

Mr. John Coleman

It would need considerable equity from the affordable homes fund.

Senator John Cummins

The equity will be €100,000. The price at which those units go on the market, less the €100,000 in equity, is in or around the delivery cost of those units, which will not equate to €300,000.

Mr. John Coleman

No. If the Senator wants a good handle on this, the SCSI recently published the cost of building a house.

Senator John Cummins

It did.

Mr. John Coleman

We think that estimate is correct. Its numbers have been borne out in our experience. It helpfully breaks it down by component, such as site, finance, margin, VAT, levies and professional fees. The cost of building is a minority of it, if you like.

Senator John Cummins

It is 52%.

Mr. John Coleman

There is a lot of extra stuff there. If the Senator wants to get a good handle on it, in our view the SCSI numbers are accurate.

Senator John Cummins

That answers the question without answering it. I appreciate that Mr. Coleman is trying to be politically correct in the answers he is giving.

Deputy Eoin Ó Broin

I have a final question on the financing model, just so that I understand it. One of the principles of cost rental is full cost recovery. The idea is that at a certain point the full cost of financing and delivering the product is meant to be paid down. I may be simplifying it, but let us take the example of a single unit, whatever the price of that unit may be, of which I am the tenant. I pay my rent each month.

Obviously, tax has to be paid on that rent roll. That tax is paid, so 75% of the rent I pay is left after the passive rate of income tax for commercial landlords has been taken, if that is the tax paid by the LDA. What I am trying to work out is where that money actually goes month on month. Mr. Coleman is telling me a small bit of it is the return. Is that a small or a significant bit of the rent I pay? Obviously, as well, there are management and maintenance costs, etc., which are not paying down the cost of delivering the unit. Will these units ever be paid for?

I ask this because this is a very different model of financing than any of the cost-rent models we have come across, not just in Ireland but elsewhere as well. I am trying to work this out, because otherwise the only way the LDA can continue to deliver more homes, unless interest rates for borrowing come down, is if the State just keeps piling in more equity through the Ireland Strategic Investment Fund, ISIF, or the secure tenancy affordable rental investment, STAR, scheme. In terms of the rent each tenant pays after tax, where does the remainder of the money go?

Mr. John Coleman

After the tax, we operate on what we call gross-to-net basis. There is the gross rent, the operational costs and then the net rent. A market average might be the net rent amounting to 22% or 23% less than the gross rent, so-----

Deputy Eoin Ó Broin

That is when the operational costs, the day-to-day costs of running the facility, are taken out.

Mr. John Coleman

Yes. The issue for the LDA-----

Deputy Eoin Ó Broin

I am sorry for cutting across Mr. Coleman. That 22% is minus the tax component and the day-to-day operational costs.

Mr. John Coleman

No. The tax is the tax on profit, if you like. If the rent is €100, and the costs are €20, then the tax is paid on €80.

Deputy Eoin Ó Broin

The LDA pays 25% on the 22% net rent.

Mr. John Coleman

Yes, we are taxed on the €80, in the context of my example. In terms of the published entities, and there is only one now, the market would operate in and around 22%.

Deputy Eoin Ó Broin

Yes.

Mr. John Coleman

I think they operate on a gross-to-net basis. Their net rent is 77% of the gross rent. We would not be that high because our rent is lower, at the top level, our quantum rent. We would be more like, say, 60%. If the rent is-----

Deputy Eoin Ó Broin

Some 40%, therefore, goes on management and maintenance-----

Mr. John Coleman

Exactly. It goes on all those costs.

Deputy Eoin Ó Broin

-----and then 60% is left over.

Mr. John Coleman

It is in or around that, just to give the Deputy a handle on it.

Deputy Eoin Ó Broin

The LDA pays tax on the 60%.

Mr. John Coleman

Correct.

Deputy Eoin Ó Broin

Okay. The 25% rate of tax is levied on that 60%. Where does the remainder then go? Is all of it eaten up by that return the LDA must take account of?

Mr. John Coleman

Yes, that is the return we receive. It can then be recycled into either raising debt or----

Deputy Eoin Ó Broin

This is all concerned with what Mr. Coleman was talking about earlier as the return.

Mr. John Coleman

Yes, correct.

Deputy Eoin Ó Broin

Okay. Mr. Coleman, though, did say that is quite small.

Mr. John Coleman

It is small compared with what we might expect on the open market.

Deputy Eoin Ó Broin

Okay. Perfect. I have a couple of other quick questions. Turning to the LDA and land costs, it was mentioned earlier that in projects, and obviously this is particular in respect of Project Tosaigh, if the unit price of land goes up to about €75,000, the LDA will be out of business in terms of that scheme. I presume that is before the STAR investment initiative comes, or is this the case even with the STAR?

Mr. John Coleman

No. We just would not consider it because we think it is too expensive.

Deputy Eoin Ó Broin

I refer to what this means for the prospect of there being any inner urban Dublin cost-rental projects. Again, if we were to look at SCSI reports, for example, they posit a unit price for land of about €69,000, including inner urban, suburban and commuter belt areas. Generally, speaking, inside the canals, then, and I know land prices are a tricky thing to quantify, we would not be getting many turnkey properties or Project Tosaigh projects there with a unit price for land of much below €70,000 to €75,000, or would we?

Mr. John Coleman

I would not say it is €75,000 but-----

Deputy Eoin Ó Broin

It would be too expensive for the LDA.

Mr. John Coleman

The issue does not arise for direct delivery, so-----

Deputy Eoin Ó Broin

No. I am just talking about Project Tosaigh.

Mr. John Coleman

For that project, this situation does, unfortunately, push us out of the higher-value areas, but the reality is that the value of the land there is based on what the end acquirer will pay.

Deputy Eoin Ó Broin

Yes, sure.

Mr. John Coleman

We do not have an ability to pay an amount of money for the end product based on that including a high land cost. This is why we focus on better-value areas. Just to give the Deputy a handle on this, things are changing in this regard. Clongriffin is 18 minutes on the DART from Connolly Station.

Deputy Eoin Ó Broin

Yes.

Mr. John Coleman

With planning, we paid around €19,000 per home in terms of land costs. In terms of the overall delivery costs, it is low.

Deputy Eoin Ó Broin

Absolutely. Again, I know of Clonburris and Citywest, and the unit prices for land there are very competitive. I accept this. It does mean, however, that what Mr. Coleman is kind of saying is that there is unlikely to be a large volume of cost-rental units constructed within the urban core of Dublin, say, just given where land prices are now inside the canals.

Mr. John Coleman

Yes. If some of that land repriced, which it may-----

Deputy Eoin Ó Broin

Yes.

Mr. John Coleman

-----we would be quite interested.

Deputy Eoin Ó Broin

In a quickfire round, in terms of new direct delivery, what is Mr. Coleman's expectation in this regard concerning the number of units to be completed this year, next year and the year after that?

Mr. John Coleman

They can ebb and flow. Something could be pushed from the calendar year, from November of one year, for example, into February of the next year.

Deputy Eoin Ó Broin

For substantial completion, though, does Mr. Coleman have a notional target for each of the next three years?

Mr. John Coleman

We have internal targets that we work towards-----

Deputy Eoin Ó Broin

Does Mr. Coleman have anything he can share with us?

Mr. John Coleman

-----but our overall targets are on the basis of the business plan objective we have, which is around 6,000 homes.

Deputy Eoin Ó Broin

I appreciate that. What Mr. Coleman is saying is that he is not in a position to share with us what the LDA's internal targets are for direct delivery.

Mr. John Coleman

It will build to 6,000 homes. In the-----

Deputy Eoin Ó Broin

I appreciate that, and I can get it from the business plan. I do not want to be rude; I just have limited time.

Mr. John Coleman

That is okay.

Deputy Eoin Ó Broin

Likewise with Project Tosaigh, is Mr. Coleman in a position to tell us what he believes would be handed over to the LDA this year, next year and the year after in terms of completed or substantially completed units?

Mr. John Coleman

Well, Project Tosaigh is a bit more difficult because it is dependent on the outcome of processes that we do not have-----

Deputy Eoin Ó Broin

Yes, but does Mr. Coleman have a figure he can share with us? It is okay if he does not. It is just so I know what is likely to come from those two delivery streams over the next three years.

Mr. John Coleman

Yes. If we add them up, by taking the 6,000 direct delivery units and the additional 7,000 units, from today, of Project Tosaigh delivery, it ramps up in a fairly linear way.

Deputy Eoin Ó Broin

I know. I am just trying to get visibility on the trajectory of the ramp-up in 2024, 2025 and 2026. Is there something in this regard that Mr. Coleman can share with the committee, even in writing at a later stage?

Mr. John Coleman

Yes. I can just outline the situation to give a sense of it. I can outline that for the Deputy here and now. With Project Tosaigh, we are targeting the delivery of additional units, and I will provide the overall number that we are targeting, but there is no distinction-----

Deputy Eoin Ó Broin

I am actually not being awkward. I am just looking to find out what the hope or expectation is for each delivery stream for 2024, 2025 and 2026.

Mr. John Coleman

For 2024, our overall delivery will target around 1,250 homes.

Deputy Eoin Ó Broin

This will be across the two delivery streams.

Mr. John Coleman

Yes. For 2025, it will be over 1,700 homes.

Deputy Eoin Ó Broin

That will be across the two delivery streams again.

Mr. John Coleman

Yes. For 2026, it will be over 3,000, and then it will also be over 3,000 for 2027 and over 3,000 as well for 2028.

Deputy Eoin Ó Broin

Okay. If at some point the LDA is able to provide our committee with a breakdown of those figures between the two delivery streams, we would be interested to see it.

Mr. John Coleman

Yes, sure.

Deputy Eoin Ó Broin

My last question is on who is doing the LDA's property management at the minute. Mr. Coleman said it is "externalised". That is a wonderful word, but who has the LDA contracted to do this work?

Mr. Enda McGuane

We have just completed the framework, so we have several licensed property service operators in the context of that framework.

Deputy Eoin Ó Broin

Who are they?

Mr. Enda McGuane

For example, we have Wyse Residential, Hooke and MacDonald, Dillon Marshall and Property Management Ireland.

Deputy Eoin Ó Broin

Why are there so many different ones? Is it geographically-based or scheme-based? It just seems unusual to have so many.

Mr. Enda McGuane

It was based on our procurement mechanism. We procured a framework. Successful tenders were added to that framework to give us a selection. We aspired to have six operators on that framework.

Deputy Eoin Ó Broin

Does that mean the LDA will have six property managers managing the organisation's estate at any given time, with them managing different portions of the estate?

Mr. Enda McGuane

Potentially, yes, that is the way it will be delivered. If we look from a contextual-----

Deputy Eoin Ó Broin

How many are doing it now?

Mr. Enda McGuane

In total, as we are delivering units right now, and we are handing over units literally this week, we have three property managers but we will have five of them by the end of the month.

Deputy Eoin Ó Broin

This is kind of interesting. Is that not more complicated to deal with? How many occupied units does the LDA have now?

Mr. Enda McGuane

At the moment, we have 149 units, but we will have 621 units launched this week.

Deputy Eoin Ó Broin

The LDA, therefore, has fewer than 1,000 units. How many property management companies did Mr. McGuane say were managing these units?

Mr. Enda McGuane

We have five, but if we look at-----

Deputy Eoin Ó Broin

It is five for less than 1,000 units.

Mr. Enda McGuane

Yes, but we have 621 units being delivered imminently now. The absorption capacity across the market of one operator is very limited now.

Mr. John Coleman

Just on this point, we intend to deliver more than 10,000 cost-rental homes over the terms of our business plan. No one, two or three agents could handle that. We put in place, therefore, the procurement framework not for the LDA of today but for the LDA of the years ahead. That is the-----

Deputy Eoin Ó Broin

I get that, but the LDA is using five of those companies now. Do they all do the same thing but on separate sites? I refer to making people aware that they can apply for the cost rental unit, helping them to move in and settle in, and doing all this type of estate management element.

Mr. Enda McGuane

They do the estate and tenancy management across the sites. It gives us an opportunity as well to benchmark across different operations and, ultimately, as we continue to grow over the next two years, to drive down costs through that mechanism.

An Cathaoirleach

Deputy Ó Broin, I will have to move on.

Deputy Eoin Ó Broin

I have one last question.

An Cathaoirleach

Three people want to contribute and we only have ten minutes left.

Deputy Eoin Ó Broin

It is a 30 second question. Given the scale of what is being proposed, has the LDA assessed whether it would be more cost-effective to do it in-house rather than having multiple private providers?

Mr. John Coleman

It could potentially be.

Deputy Eoin Ó Broin

I thank the Chair for his indulgence.

An Cathaoirleach

I will go to Senator Fitzpatrick, Deputy Gould and Deputy McAuliffe. We only have ten minutes so I ask them all to be direct.

Senator Mary Fitzpatrick

I apologise that I came in at the tail end. I had to attend another committee. Is €300,000 for a three-bedroom home a cost that can be delivered in Dublin city at the moment?

Mr. John Coleman

It depends on what the €300,000 is pricing.

Senator Mary Fitzpatrick

It is for a three-bedroom home in Dublin city, that is somewhere in Dublin 1, 3, 7 or 9, for example.

Mr. John Coleman

In our schemes, the cost is higher than that, but it depends on what components of the delivery cost we are pricing. We are in line with the recent Society of Chartered Surveyors of Ireland, SCSI-----

Senator Mary Fitzpatrick

Is anybody delivering a three-bedroom home in any part of Dublin city for €300,000? The SCSI says it costs €470,000. The LDA is not aware of it being done.

Mr. John Coleman

We are not aware of it. However, it is important to work out what is being priced, that is, what are the components. We are in line with the SCSI costs.

Senator Mary Fitzpatrick

It has indicated a cost of €470,000.

Mr. John Coleman

We do not have land costs and such things, but we are in line with the components of those costs that apply to us.

Senator Mary Fitzpatrick

Those costs determine the sales costs or the affordable cost-rental rents.

Mr. John Coleman

Yes, they do.

Senator Mary Fitzpatrick

That is what determines the cost Mr. Coleman mentioned earlier of €1,400 for a three-bedroom home in Citywest. I will not hold him to the exact amount. I appreciate there were varying amounts.

Mr. John Coleman

Yes, it was in or around that.

Senator Mary Fitzpatrick

Rents are determined by the fact that it costs a certain amount to build these homes.

Mr. John Coleman

That is correct.

Senator Mary Fitzpatrick

The SCSI report tells us that without the Government interventions of waiving the development levies and water charges, the help to buy scheme that helps people to get their deposits together and the first home buyers scheme, no one would be buying a home because they would not be able to afford it. That is putting even more pressure and expectation on delivery from the LDA, especially in the city. We need to see the LDA in the core city centre. I am returning to the issue of getting agreement on State-owned lands as that is a real cost that could help to reduce the end price. Does the LDA need compellability?

Mr. John Coleman

It always helps to have the authority in a situation where you are trying to access land. We do not have the authority, but we are supported by the Departments and the Government. In fairness, most of the landowning bodies we work with work with us collaboratively. There are often genuine State services that are important to the State that are provided on the lands we try to access.

Senator Mary Fitzpatrick

There will always be competing interests and competing priorities. To be fair, the objective of a transport company is to provide public transport. I understand that. However, our narrow interest in this discussion and the LDA's responsibility is the provision of social and affordable homes in a timely manner where they are needed. They are needed in the city centre. They were needed five years ago. I will finish now. I appreciate the time and space the Chair has given me. I jotted down the numbers Mr. Coleman gave us. I will not hold him to them exactly, but it would be really helpful to get from the LDA a breakdown of where in the city we can expect to see social and affordable and cost-rental homes in the next five years. I presume the LDA is engaged in the exercise to review the Housing for All targets and that it is contributing to identify ways for the achievement of bigger targets.

Mr. John Coleman

Yes we are engaging with the Department of housing on that. We understand there is a desire to press on and to expand ambition.

Deputy Thomas Gould

Following on from Senator Fitzpatrick, is the figure she mentioned of €470,000 to build a property the cost of building a three-bedroom terraced house in Dublin? If it is, and we are looking at affordable and social housing, at the current rates of rents and house prices increasing, that means in the next year or two, the average standard terraced house will cost €500,000. That means no ordinary person will be able to afford a house under the current situation and Government, unless it is hugely subsidised. That means no one on the average industrial wage, including gardaí, doctors and nurses, will be able to afford a house. Is that a fair assessment?

Mr. John Coleman

I understand that the SCSI figures are based on a three-bedroom semidetached house. It made certain assumptions about the cost of land, the cost of finance and the profit margin. Not all of those will apply to us, but it-----

Deputy Thomas Gould

Would it be less if it was a terraced house?

Mr. John Coleman

Yes, typically it would be less if it was a terraced house. Every development is different but, typically, yes.

Deputy Thomas Gould

I have a few other questions. I will not spend too long on that because I am caught for time.

Mr. Coleman mentioned earlier that there is a property next to the former St. Kevin's Asylum development called Atkins Hall, half of which was developed privately and the other half of which was not developed. Did the LDA consider bringing that in as part of the development of the St. Kevin's Asylum development?

Mr. John Coleman

Not at this time. We are focused on driving on with St. Kevin's which is an extremely challenging site in itself. We are open to opportunities all the time, but at this time we are only focused on St. Kevin's.

Deputy Thomas Gould

I would make the point, that was the old mental hospital building. One half of it is kitted out and people are living there. The building is there for the other half. St. Kevin's is right beside it. When you look at the scale and the cost of developing a site, the LDA should consider looking at that site. That site is on the derelict sites register. It should be purchased with a compulsory purchase order, CPO, and turned into social and affordable or cost-rental housing. I ask the LDA to look at it.

I will return to the docklands in Cork that we discussed earlier. One of the main components needed to open the docklands is the Tivoli bridge. The Tivoli docks site does not seem to be progressing. Mr. Coleman spoke about Horgan's Quay, but if we want to deliver the scale of social and affordable housing required, we need to get the bridge in and we need to open up Tivoli and Horgan's Quay. Is there any update on where we are with the Tivoli docks and the bridge to open up those developments?

Mr. John Coleman

We have had a lot of engagement. There are a number of impacts the LDA can make in the Cork docks. The first is on Horgan's Quay, which will be the first apartments to be delivered in Cork in many years. The second is on the significant State lands that are owned by the State bodies, the ESB and Bord na Móna, on the south docks, the old Marina Power Station and a Bord na Móna site behind it. They are slightly longer term as contamination and other things will have to be dealt with. Nonetheless, they are significant tranches of State land in the middle of the docks. The third point is Tivoli. I agree with the Deputy that Tivoli is a big opportunity. Significant infrastructural work is needed to open it up. There are existing Seveso sites on it including blast zones and other impediments that have to be considered, but the engagement with the Port of Cork is positive. We are making a lot of progress on understanding what it will take to open up at least elements of that site, to get it going in the nearer term. That will require a lot of infrastructural investment by the State, but it has to be done anyway. To sum up, there are nearer term opportunities for the LDA in the Cork dock area, but Tivoli is firmly on our radar and we are in good discussions with the port on it.

Deputy Paul McAuliffe

Will I take my full seven minutes at this point? I apologise to Mr. Coleman and his colleagues. I had business in the House so I am only getting the opportunity to come in here now, although I was monitoring some of the debate.

The breadth of this discussion can be divided into two pools. There are people on this committee who never believed the LDA should have the powers it has, did not support its establishment or funding, did not vote for it and have openly stated that they do not intend to allow it to continue with its job if they enter government. On the other side, there are those who supported the LDA but are expressing our frustration because we want more. We want its delivery and ambition to be scaled up, for landowners to work harder with it to unlock their lands, and for the LDA to do everything in its power to be the land development agency and deliverer of public housing on public lands that we wanted it to be. As such, it is with some regret that I use the votes of the people in my constituency to come in here and vote for the LDA when I do not have an LDA project in my constituency. This is not being parochial. Rather, it is about delivering housing for the people of my area. The boundary review might have saved the LDA slightly with the Cromcastle underpass project on a site close to my constituency – it is a good project – but there are more than 15 local authority-owned sites in Ballymun earmarked for development in the LAP and many of them are being developed by the local authority. I am surprised that the LDA did not have an opportunity to deliver on many of them, given that Dublin City Council and others have capacity constraints. AHBs and the local authority are involved in these large-scale sites, but the LDA is not. In particular, the Ballymun shopping centre site is one that the LDA was built for – it is complex, has multiple uses and is on the metro line. It is ideal for an LDA-type development, yet my understanding is that there has not been extensive engagement on it between DCC and the LDA. Is that something the LDA would consider? In the weeks since I met DCC, has there been further engagement to try to unlock the site’s potential? There are other sites across the constituency in respect of which I hope the LDA will be more proactive.

Mr. John Coleman

We would have an appetite for considering it. We work extensively with Dublin City Council. It is one of our top partners and we have a strong relationship with it. We are on a number of its sites, essentially as a service provider driving on their development. We had a good relationship with the old chief executive but also with Mr. Richard Shakespeare, for which we are grateful. We have advanced to the planning stage a significant number of sites that had lain for years without anything being done on them. Like everyone else, we have a limited capacity, but we have devoted our energies into the likes of Cherry Orchard, Cromcastle and St. Teresa’s Gardens. With the local authority, we are examining other sites with a view to bringing them forward. However, we have not been able to consider the Ballymun site yet. It might be more complex in some respects than some of the others on which we are ready to move, but we are prepared to have another look at the sites the Deputy referenced. The more we can do with the council, the better.

Deputy Paul McAuliffe

It is a greenfield site. Every time I walk through Ballymun, I see a large site that could deliver public housing. At this moment, though, there is no plan to do anything with it. The market is not coming forward with a plan either. This is exactly what the LDA should be doing. Will Mr. Coleman give me a commitment to consider that site with DCC and then revert to me with an outline of a potential timeline for LDA involvement? I understand that the city council would be supportive of the LDA’s involvement on the site. This would be one way of helping to deliver much-needed housing at a time when the local authority and AHBs are doing a great deal of other work within a short distance of there.

Mr. John Coleman

We will talk to the council and revert to the Deputy directly.

Deputy Paul McAuliffe

I thank Mr. Coleman.

An Cathaoirleach

I thank the LDA representatives for their time. It has been helpful to us.

So that we are clear on them, I wish to go over a couple of the requests that have been made. There was a request from Deputy Ó Broin for confirmation that there had been no rent increases. I believe the LDA committed to reverting to us on this matter. A commitment was given to revert to Senator Cummins regarding a site in Waterford. Deputy McAuliffe asked about the Ballymun site. Could the LDA furnish us with a copy of the No. 2 report on State lands when it is completed? I do not know if it has to go to the Minister first and then he releases it, but if it is for the LDA to release, the LDA might forward it to us.

Mr. John Coleman

It will be the end of this year.

An Cathaoirleach

Okay. The witnesses were also asked for an approximate five-year plan for the delivery of social and cost-rental homes and, as best they can, for a breakdown of the figures for direct delivery and Project Tosaigh. We would appreciate that update.

Senator Mary Fitzpatrick

And specifically for Dublin Central.

An Cathaoirleach

I mentioned the five-year plan on social and cost-rental homes in Dublin.

Senator Mary Fitzpatrick

City.

An Cathaoirleach

Dublin city.

Senator Mary Fitzpatrick

It could cover the whole country – I do not mind – but I would like to see-----

An Cathaoirleach

By constituency, if possible.

Senator Mary Fitzpatrick

Yes.

An Cathaoirleach

That is grand. I am sure the witnesses will do their best to furnish us with all of that information. I will adjourn the meeting now. I thank the witnesses for their engagement.

The joint committee adjourned at 6.06 p.m. until 3 p.m. on Tuesday, 30 January 2024.