Offaly house price hike feared if levies go up

BIG hikes in development charges could result in higher prices for new houses, it has been claimed.

Proposals under consideration by Offaly County Council would see the levy on house builders soaring from €3,010 to €5,660 per residential unit in nine towns across the county.

The towns affected are Tullamore, Birr, Edenderry, Clara, Portarlington, Daingean, Kilcormac, Ferbane and Banagher.

New houses in rural areas would be hit by a smaller rise, increasing from €3,010 to €4,310 per dwelling.

Development charges are paid by developers to the council to fund infrastructure provided by the local authority.

The charges are also levied on industrial and commercial development and the draft scheme presented at the October meeting of the council sees those going up from €14 per square metre to €23 in the nine towns and €20 per square metre in the rest of the county.

Gabriel Conlon, administrative officer with the council, told councillors that this was the first review of the development contribution scheme since 2013.

He presented figures which showed that Offaly's existing levy of €3,010 for residential development is lower than the national average (excluding Dublin), which is €4,635.

The charges vary widely across the country, with nearby examples being Westmeath at €1,362, Longford €2,260, Laois €4,000 and Kildare €10,000.

The charges per square metre for industrial development also differ substantially from county to county, with Offaly's current levy of €14 being pegged lower than Westmeath's, which is €16.20, Roscommon's €20 charge, and Cavan's levy of €25. Longford's existing charge is €15.

Mr Conlon said the council tried to avoid levies which were too high and they should not act as a deterrent to development.

The charges should not impede job creation but the scheme should also not be used as a mechanism for competitive advantage over other counties.

He told the councillors: “We're trying to raise enough funds to develop a capital programme that you'll be asked to adopt here next month as part of the estimates meeting.”

The new scheme will be in place for five years from 2021 to 2025.

Part of the rationale for the proposed increases is inflated costs over the last seven years and he cited research from chartered surveyors which indicated they rose by 48%.

Another factor feeding into the dramatic increase in residential development charges in towns is the need to fund surface water management.

Heretofore surface water has been absorbed by the public sewage system. “That's just not feasible going forward. The actual cost of treating that is incredible,” said Mr Conlon.

Irish Water is asking every council to deal with surface water separately and the issue does not affect one-off houses in rural areas because they must provide their own mechanism at the time of construction.

The current scheme also includes a €10,000 per megawatt charge on wind farm developers and councillors heard there is no proposal to increase that.

No increase is proposed for solar farms either. The existing charge is €10,000 per half megawatt.

The scheme includes a new charge of €23 per square metre for data centres. “If we get a data centre in Offaly, something of a sizeable development, it could help us considerably in delivering our capital programme,” said Mr Conlon.

Income from development charges was only €396,000 in 2015 but jumped dramatically to €2.265m in 2016, before dropping to €949,000 in 2017, €729,000 in 2018 and €702,000 last year.

It has rebounded considerably this year and amounted to €1.5m at the end of September but half of that figure was from one development, a Bord na Mona wind farm.

Mr Conlon stressed that the charges form a crucial income stream for the council for spending across a range of areas from land acquisition, roads, car parks, waste and water works, to open spaces, recreational and community facilities and broadband.

He predicted that infrastructure costs between 2021 and 2025 will be €23.5m and explained that the new charges were also calculated based on the expected number of house completions and the level of industrial development over those five years.

The council plans to spend nearly €1.6m on repairing road bridges, €6m on the Kilbeggan-Tullamore link road, €1m on the Edenderry inner relief road, €1m on the road between Rochfortbridge and Rhode, and €900,000 on Grand Canal greenway work.

Another €2m is budgeted for the library and arts centre in Edenderry, €1m on the Tullamore arts centre and €3.7m on the surface water network.

The revamp of O'Connor Square in Tullamore benefitted from €1.5m in funding from the scheme.

Reacting to the proposals, Cllr Neil Feighery said they represented a “huge jump” in the levy on house building and he called for that to be reexamined, especially when attempts were being made to make housing more affordable through the Help to Buy and Rebuilding Ireland schemes.

“The policy makers national and local are all trying to incentivise the supply of housing and encouraging people to get onto the housing ladder,” said the Fine Gael representative.

His party colleague Cllr John Clendennen feared the new charge on data centres might be a deterrent to developers and he also feared the levies might discourage other developments in villages.

Cllr John Leahy, Independent, echoed remarks of Cllr Feighery by saying the increased residential charges would hit rural dwellers in particular and he felt the resulting spend from the levies was not spread evenly across the county.

Cllr Eamon Dooley, chair of the strategic policy committee which brought the draft scheme to the full council, viewed the increases in the context of a “lack of support” from the Government for Offaly.

The Fianna Fail member said the lack of support on just transition had been “stark” and also said a proposal that community gain form part of the requirements for planning approval for wind farms had been ignored.

There are a number of exemptions to the charges and appeals can also be made to An Bord Pleanala.

Councillors can make submissions on the draft scheme by November 2 and it will then go out for public consultation. The council aims to have it adopted by February 25 next.