The committee has asked that the Department make a statement or presentation on planning, legal and process issues in regard to marine leisure projects at Caherciveen, Roundstone, Kenmare and Rosses Point. The committee will be aware of the background to these projects in light of its consideration of issues surrounding the Kenmare project at its meeting on 10 February on the Department's statement of strategy.
In view of the committee's wish to review the planning, legal and process issues in regard to all of these projects at today's meeting, it will be important that the committee is aware of how these projects came, as it were, onto the Department's agenda, the difficulties for the Department in progressing these projects, and the current state of processing by the Department of applications for assistance in respect of these projects by their respective promoters.
The Department considers it opportune, in view of exceptional circumstances surrounding the inception and processing of these projects, that its presentation in that regard should be comprehensive and clear and the Department asks for the indulgence of the committee in allowing me some time to do that. The crucial date in terms of the entry of these projects onto the Department's agenda was budget day, 6 December 2000. The Budget Statement allocated €5.7 million for marine access infrastructure. The allocation of funds to individual projects was made politically subsequent to the budget day announcement.
At the time, the Department was developing a competitive scheme, open to marine infrastructure project promoters nationally, under the tourism measure of the national development plan. This scheme, the marine tourism grant scheme, was one of five sub-measures of the tourism measure and was to be operated on an open, competitive and objective basis. The aim of this process was to select from an inevitably wide range of applicants the ones that would best serve the public policy objectives of the measure. This meant that fully-developed proposals, demonstrated to be viable, accurately costed and clearly articulated to contribute to tourism objectives, would compete within an objective process, with inevitably only a small number of projects surviving the rigorous selection process.
It is important the committee should realise the Department was in the early stages of putting together such a competitive scheme when it was asked to progress €5.7 million of assistance to the four marina projects in question. The operational guidelines for the scheme were not published until February 2002 and the scheme was suspended for budgetary reasons in December 2002. The task given to the Department was fundamentally at variance with the task it envisaged for itself within the structures and selection processes of the marine tourism sub-measure of the tourism measure. It is worth noting these fundamental differences as they go to the heart of many of the processes, and some of the legal and planning issues, in progressing the four projects.
The major differences were, first, successful projects under the sub-measure would have undergone a searching, competitive process which would have produced a clear rationale for State assistance - the criteria for selection of the four projects for inclusion in the budget day announcement of assistance were not known, or if they were known elsewhere, they were not communicated to the Department; second, the competitive selection process required fully-developed proposals allowing for comparison, ranking and selection of high value projects - virtually no relevant information on the viability or tourism value of the projects was made available to the Department at the time assistance was announced in December 2000; third, no commitment or other indication of support could or would be made to promoters under the competitive scheme until they had been identified as successful following searching evaluation - in contrast, strong political commitments were made to these four projects when only incomplete information was available in respect of them; fourth, the NDP scheme would have had bounded time periods for submission and completion of fully-developed schemes - the processing of the four marinas was not so bound, the result being that important issues are still the subject of dialogue between the Department and the planning authorities and the promoters over 3.5 years after the announcement of assistance; and, fifth, the selection, evaluation and decision-making processes envisaged under the NDP sub-measure were to be objective and independent. These four projects, on the other hand, were subject to very close political and ministerial interest and direction, from both inside and outside the Department, at all stages of the management process.
These fundamental differences presented the Department with very considerable difficulties in progressing the four projects. It was made absolutely clear to the Department there was a strong political wish that these projects progress. Difficulties arising for the Department were to be seen in the context of the projects progressing as rapidly as possible. The Department proposed, and it was accepted, that the projects be appraised in accordance with the criteria for marine access infrastructure under the upcoming scheme. In the event, this proved impossible and illusory, for reasons of the fundamental differences between the NDP processes and the four marinas, as outlined. The detailed criteria for the NDP scheme were not worked up at the time, and pre-selection had already occurred. Thus, the Department officials were being asked to "retro-fit" the selection criteria to projects that had effectively been already selected even though little was known about them at the time of selection.
This was an impossible task. One project, the Kenmare marine leisure project, comprised a sail-canoe training school and ancillary facilities, including the provision of a pier and slipway. It was not a marina project, and would have been unlikely to qualify for grant aid under the marine tourism grant scheme, which was to be specifically directed at marine access infrastructure. Thus, the application of the selection criteria to that project would have been meaningless and would have been virtually certain to rule it out. On the other hand, there was a clear and strongly communicated political need for this project to progress.
As regards Caherciveen marina, this project was for a 93-berth marina to be developed by Caherciveen Community Development Company at an estimated cost of €3.4 million. While the concept had the potential to meet the eligibility criteria under the marine tourism grant scheme, it was still at an early stage of planning at the point at which it was selected for support. When details did become available, the shortcomings in the plans for the project resulted in a scaling down but, with the same grant allocation - €2.54 million - the result was an 83% grant to cost ratio. Both the change in the scale of the project and the grant aid envisaged would have presented major problems were this project being progressed through the NDP scheme.
The Rosses Point and Roundstone marina projects are considerably behind the projects at Kenmare and Caherciveen. These projects, by reason of the passage of time since the strong political impetus in 2000 and immediately thereafter, the publicised concerns about Kenmare, in particular, earlier this year, the change of Minister in 2002, and the recent strong interest of the Comptroller and Auditor General, resulting in a detailed audit query of 3 June to the Department's Accounting Officer have, of necessity, been subject to particular scrutiny. Neither of these projects was developed in any sense when the relevant commitments were made in 2000. The Department only received a business plan in respect of Roundstone earlier this year, more than three years after the initial commitment to financing.
As evidence of how embryonic and superficial the concepts for these marinas have been, Rosses Point has had to be scaled back from 47 to 27 berths, while the grant assistance offer has been maintained, and Roundstone's costs have escalated from €1.75 million to €2.66 million, with the promoters currently seeking a grant of €1.91 million as compared to the original approval of €1.16 million in 2002.
It is almost certainly the case that the escalation of costs, repeated viability issues and scaling down of the latter projects would have resulted, were the NDP scheme up and running, in their not qualifying for assistance even having regard to these narrower financial criteria. There are also major questions as to whether State support for these marinas will create a public as opposed to a largely private good, meeting the tourism enhancement requirement of the NDP tourism measure.
Earlier comments relate mainly to process issues. The current status of the four projects points up a range of legal and planning issues. With regard to Caherciveen, the marina is operational since August 2002, all grant funds have been expended and the Marine Institute has been asked to carry out a post project review. It was intended that security for the grant aid would be put in place by way of a deed of covenant but pressure to expedite payment to the promoters meant the deed was not put in place in advance of payment. The Chief State Solicitor's office has drawn up such a deed but it is not yet agreed.
With regard to Roundstone, a technical difficulty remains relating to the foreshore lease. A difficulty is also presented by the apparent change of status of the applicants from Roundstone Community Development Council Limited to Roundstone Marina Limited. The Department's advice is that this may constitute a private project, attracting a maximum of 55% level of aid whereas the amount of funding on which the finances of the project are based requires a 75% grant from the Department. The fact that 25 of the 34 berths are reserved for private use, leaving only nine berths for tourism purposes, makes the value for money and tourism value of this project highly doubtful. These are issues for further consideration by the Minister.
With regard to Kenmare, the first payment in respect of this project of €332,312 was made in December 2002 on the basis of copies of planning and foreshore approvals and invoices in respect of matured liabilities. No requests were made for further grant payments and, as the committee is already aware, the Department became aware that the building was in contravention of planning approval in October 2002. Steps were taken by Kerry County Council to enforce the planning permission and in February 2004 the applicants informed the Department that the illegal building had been demolished and that it was intended to complete the project in line with the original planning permission and to apply for further draw-down of the suspended grant. On foot of legal advice the Minister has directed that the Chief State Solicitor's office be instructed to put in place the necessary legal formalities to regularise the position.
Regarding Rosses Point, the applicant, Sligo County Council, has still not been approved for a foreshore lease and has recently appealed to the Department for the valuation in respect of the lease to be reconsidered. Objections have been raised by the harbour master against the proposed site and moreover, the margins in the business plan have been assessed by an accountant on behalf of the Department and have been found to be very tight. The Department requires Sligo County Council to underwrite the project by undertaking to make sufficient working capital available to keep it operational for a period of ten years. The council has indicated a reluctance to do so to the satisfaction of the CSSO.
In addition, as the majority of the berths are to be let for private use, the tourism value of the facility is limited to 12 berths on the floating breakwater. As with Roundstone, this makes it questionable as to how the value for money and tourism value criteria can be satisfactorily addressed. Again, this is a matter to be addressed by the Minister and the Department.
In conclusion, the committee will be aware from the foregoing that these marina projects presented and continue to present severe process, legal and planning difficulties. Most of these difficulties would not arise from the accountability limbo within which these projects reside, neither the subject of clear ministerial direction nor permitted to be assessed in accordance with the normal public policy effectiveness review. Further decisions will be required in respect of progressing Rosses Point and Roundstone, namely, whether they should progress, having regard to the limited public policy objectives they are likely to deliver. The other legal, planning and viability issues will be progressed in accordance with relevant legal and other professional advice.
We have also been in correspondence with the Comptroller and Auditor General who has issued an audit query to us. We have responded to that and I presume it will be incorporated in his report to the PAC later this year.