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Social and Affordable Housing

Dáil Éireann Debate, Tuesday - 13 November 2018

Tuesday, 13 November 2018

Questions (614)

Eamon Ryan


614. Deputy Eamon Ryan asked the Minister for Housing, Planning and Local Government the decision making process from inception to delivery for the development by public-private partnership of new housing in instances (details supplied); and the decisions taken by him, the local housing authority chief executive or his officials and by the elected councillors. [46663/18]

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Written answers (Question to Housing)

The specific development referred to is being undertaken by South Dublin County Council as a joint venture development of 975 homes on 72 acres of council lands.

The plan to develop the site, including the selection of the preferred bidder, was discussed at a Council meeting in early October and the Section 183 motion to dispose of the land to the approved bidder was agreed. The successful bid was by Adwood Ltd, a consortium of established Dublin builders Adroit and Maplewood. Adwood Ltd. will make a financial payment to the Council and deliver 294 social housing units at competitive rates over four years.

As much of the master planning and pre-planning studies have been completed, Adwood Ltd. has committed to securing planning and being on site by early summer of 2019. This project is being led by South Dublin County Council directly. State support of €2m is being provided by my Department through the Local Infrastructure Housing Activation Fund (LIHAF), on foot of which the developer has committed to deliver 50 units at prices discounted to the market.

In general, for the Social Housing PPP Programme of 3 Bundles of sites that is currently under procurement by my Department, there are robust governance arrangements put in place to oversee implementation. These follow guidelines as set out by the Department of Public Expenditure and Reform.

For each PPP Programme there is a Sanctioning Authority, and in the case of the Social Housing PPP programme, my Department fulfils that role. The Sanctioning Authority is responsible for approving expenditure on the programme. A Sponsoring Agency is also appointed which prepares the Output Specification, the Public Sector Benchmark, which is an assessment of cost of delivering the project through traditional public sector means and in the initial stages ensures that the project is in line with the budget specified.

In relation to the Social Housing PPP programme the leading local authority with the greatest number of projects in each bundle is given the task of acting as the Sponsoring Agency on behalf of all the local authorities involved. In the case of Bundle 1 the Sponsoring Agency is Dublin City Council (DCC), and for Bundle 2 this role is being undertaken by Cork County Council (CCC). A Sponsoring Agency will be nominated for Bundle 3 once the potential sites for that Bundle are identified.

The National Development Finance Agency acts as financial advisers to the programme and is also responsible for the procurement and administration of the PPP up to completion of the project and handover to the relevant local authority. A Process Auditor is appointed for each Bundle and is responsible for checking that proper procedures and processes have been followed and providing assurance to the Accounting Officer of the Department that the procedures have been adhered to.

As part of the governance arrangements each Bundle has a Project Board which is made up of representatives from the Sanctioning Authority, the Sponsoring Agency, the other relevant local authorities, and the NDFA. It is responsible for providing the leadership to keep the project on track and to maintain governance over what is a complex process. It is also responsible for determining at each stage whether the Project continues to constitute value for money and whether it can proceed to the next stage, subject to the agreement of the Sanctioning Authority.

In addition, councillors in each local authority must agree to grant planning approval for each PPP development based on the initial designs as drawn up by the project's advisors in conjunction with local authority officials. The Part 8 planning process used for this purpose involves a vote being taken on each individual site by the relevant council, following the publication of the plans by the local authority.

Securing value for money (VfM) is an overarching concern throughout the PPP procurement process and the Central PPP Unit in the Department of Public Expenditure and Reform provides guidance in relation to PPP projects to achieve this objective. The guidance sets out four specific VfM tests that are applied in the case of PPPs over the course of the planning and procurement process. These tests focus on assessing whether or not the PPP approach compares favourably with the alternative cost of using traditional procurement to achieve the same result. The purpose, sequence and format of the four VfM tests in the PPP approval process are set out clearly in the central PPP guidelines.

The first VfM test is carried out when the preliminary appraisal of a Programme is being undertaken. This initial analysis assesses whether the programme has potential to deliver through the PPP model and achieve value for money.

The second test includes the preparation of the comprehensive Public Sector Benchmark (PSB) by the NDFA, which represents the full estimated life costs of procuring the project using traditional public sector procurement methods. All inputs used in the compilation of the PSB are reviewed and approved by the Department. The Contracting Authority (DCC or CCC) then compiles the second VfM test, which uses the costings in the PSB to confirm that the project should still proceed as a PPP, and that the additional cost of private finance is justified. This was undertaken and approved by the Department in December 2017 for Bundle 1, and July 2018 for Bundle 2.

The third VfM test involves confirming that the tender that rated highest in the tender evaluation process has the potential to achieve value for money for the State. This is done by comparing the cost of the highest-rated tender to the PSB. This was completed in September 2018 for Bundle 1, which led to the appointment of the Preferred Tenderer, and will be completed for Bundle 2 in due course.

The fourth test is undertaken immediately before financial close and the signing of the PPP contract. This updates the third VfM test with any changes that may have occurred during the Preferred Tender stage of the procurement process, in order to confirm that the winning bid continues to represent Value for Money.

Question No. 615 answered with Question No. 613.