Wednesday, 14 March 1990
Seanad Éireann Debate
This deals with the question of compensation and with a further question of interest on any compensation that is payable under subsection (1). What we are seeking to do is to ensure that no interest is payable on compensation. The reasons for that are fairly valid and straightforward already in section 19 (1) (a) compensation is available to an amount equal to the value of the estate. Why then should there be interest payable on compensation that has already been given?
First, the person may apply to the local authority not later than 12 months. A period of 12 months may elapse and then it is quite possible that the person or the body in question may appeal any compensation that is being offered and may go through a system of conciliation or arbitration. This may take another period of time, which could be two to three  years, and while the site may remain derelict they will not only get compensation for some dereliction they have brought about but they will receive interest, even though they have been negligent in the first place. It seems to me contradictory that they should be doubly compensated first by getting compensation to the value of the property and, secondly, interest on any intervening period before they actually received it.
I gather there is no such provision in the 1961 Act for interest to be given on compensation so it does seem to me to make a mockery of the intentions of the Bill that we should not only give compensation but that we should give that extra bonus of interest.
Minister of State at the Department of the Environment (Mr. Connolly): I can accept the amendment. The Derelict Sites Act, 1961 contains no provision on the lines of paragraph (b) and on that basis it is arguable that paragraph (b) is not essential. The CPO procedures of this Bill are very simple and they do not involve a notice to treat. Any automatic provision for the commencement of interest is therefore somewhat problematic in the context of this Bill. This matter will be better resolved by agreement between the parties or in the context of arbitration itself.
Mr. Costello: I thank the Minister. It is delightful and a relief to see that it is possible to get some changes on Bills that are proposed here. I think this is a worth while amendment and I certainly acknowledge the generosity of the Minister in agreeing to it.
Mr. Howard: This section deals with workers and compensation. I notice that under sections 4 and 5 certain sections of the Land Clauses (Consolidation) Act, 1845, are being amended and are being referred to. The Minister spoke earlier  of having had the best legal advice available to him, but there are very important land Acts from the end of the last century and the earlier part of this century and it has not been necessary to amend sections of them to accommodate the sweeping powers that would appear to be conferred on the Minister, and indeed on local authorities, under this legislation.
I am dealing with rural farmland and, as I said, there have been very important land Acts dealing with the ownership of land throughout the country at the end of the last century and the beginning of this one and they seem to be totally ignored. Why has it not been necessary or what advice is available to the Minister that indicates it was not necessary to deal with the matter of land ownership at the time of the enactment of these Acts?
Mr. Connolly: That is for another arena. Subsections (4) and (5) apply to certain standard provisions of CPO law relating to payment of compensation to persons not fit to manage their financial affairs or to owners who cannot be traced. Sections 69 to 79 of the Land Clauses Act provide a mechanism for dealing in the context of a CPO with these circumstances. Essentially, they involve the lodgment of the compensation sum for administration by the courts. In all of the codes involving CPO, for example, the Housing Act, 1966, the Planning Act, 1963 and the Canals Act, 1986, these Land Act provisions are expressly applied to compensation payments. They were omitted from the compensation by the provisions of the 1940 and 1961 Derelict Sites Acts. However, it is considered opportune to state them explicitly in the Bill. This means, for instance, that where a person is not capable of transacting his or her own affairs, it will then be decided by the court. In the case where a landowner cannot be traced, that, through the courts, is paid into a fund and held there until such time as the normal arrangements are made. This complies with all the Acts on our Statute Book. SECTION 20.
Mr. Howard: We have now proceeded down through all the measures which involve compulsory acquisition and so on. Section 20 deals with the use of derelict sites as acquired under this Act or indeed, other enactments. In relation to subsection (2) — again I am going back to a rural context — I now visualise that we have arrived at the stage where local authorities have become owners of substantial areas of farmland. In fact, they are the new landlord class because land on the hillsides, particularly in the west, has been seen to be derelict or in danger of becoming derelict. As a result of that, and as a result of the opinion of new people who have come to reside in the area, and the acquisitiveness of certain officials at local authority level, now we have a local authority with a substantial territory of farmland. They are almost farmers at this stage. The disposal of this land arises. The Minister is giving them authority to sell it, to let it, to transfer it or to exchange the whole or part, as the case may be, of that derelict site. That is the problem I see arising. That is the problem that I want to confront. Perhaps the Minister believes there is no problem there. Maybe he does not share my views on it but nonetheless I wanted to raise the point on section 20.
Mr. Cassidy: Is the Senator saying that the local authorities, who are the local development authorities of every county, cannot purchase land for industrial estates, for the development of industry, cannot purchase land for the massive new road infrastructure programmes of bypasses and road improvements and the development of communications and so on? As chairman of a local authority I believe the general public underestimate the great part that local authorities are playing at present in acquiring land in ideal locations, building small units and encouraging people to get involved in the development of rural Ireland.
 In County Westmeath, where I am chairman of the local authority, we have undertaken the biggest single individual programme ever undertaken by the county council, the Athlone by-pass, at a cost of £37 million. We had to purchase an enormous number of small holdings over the last number of years and we had to negotiate because we were the people on the ground and we knew the local people, we knew the best possible price at which we could purchase the land on behalf of the Department. That is the real importance of local authorities and the real part that they can play in buying small parcels of land. I would be totally opposed, of course, to their becoming enormous landowners and buying up land for speculation. As chairman of a local authority I can say that we do not do that. It is vital that we purchase land. We have the Mullingar by-pass and the Kinnegad by-pass to do. It is important that we acquire land at the right time. When the market was easy over the last two or three years we were able to buy land competitively. We have effected a tremendous saving for the Government and for the country as a whole while improving the whole road structure of the Midlands. I would ask the Minister to clarify this. It is of strategic importance and the local authority are playing a fantastic part in that at present.
Mr. Howard: May I short-circuit this because I know the Minister of State is anxious to get in? Senator Cassidy has totally misunderstood my contribution. At no stage did I oppose the wish of the local authority to acquire land for road widening, for industrial development, for housing or for any other purpose allied to that. The point I was making was far removed from that. Indeed, I join with Senator Cassidy in applauding the local authorities for the magnificent work they have done, not alone in his area but in many others throughout the country.
Mr. O'Keeffe: Before anyone became involved at all in industrial promotion, the IDA or private enterprise, the local authority were building small industrial  units. Senator Howard suggested that they were buying land and holding it in order to sell it off at vast profits. I would say what they did was strategic planning. They bought land and they made good use of that by promoting small industries within their own jurisdictions.
Mr. Howard: I admire Senator O'Keeffe's southern capacity for putting his own interpretation on it. I was simply making the point — I am sure it will be wearing on the Minister if I continue to make it — that at this stage with the various sections that have been agreed to and on the assumption that the Bill goes through, we will have conferred on the local authority the power to acquire derelict land. I was speaking about derelict agricultural land. I was speaking about what would be described as derelict farms and, indeed, more so than that, the power to acquire farms that in the opinion of somebody were likely to become derelict. I am speaking about lands on hillsides and the valleys throughout the country that are not required for road widening, not required for housing, not required for industrial development and so on. Therefore I was concerned at the methods which are open under section 20 to the local authorities to dispose of these particular lands. I was simply asking for the Minister's observations on it.
Mr. Connolly: Local authorities are responsible people and the members on local authorities, irrespective of who they may be, appreciate their position. Under this section which largely reinstates section 13 of the 1961 Act, a local authority may use any land acquired by them under this Act or under previous derelict sites legislation for any purpose connected with their functions. In the context of possible redevelopment of the land, a local authority would be required to respect section 39 of the 1963 Planning Act which prohibits them from affecting any development which would contravene materially their development plan.
The intention of this provision is to be non-restrictive. The legislature can  anticipate all of the circumstances relevant to particular sites which may be acquired by local authorities under this Bill. It is appropriate that it should, therefore, give full discretion to local authorities with regard to the best use of these sites.
We are all striving to have a good and appropriate Bill. A local authority does not go through a CPO procedure very lightly. They must show good reason for doing so. Perhaps I am pro-local authority membership; if I am, then I must be forgiven.
Mr. Connolly: The capabilities and the understanding of the local authority members and officials may be underestimated. They will use all commonsense and understanding and there is always consultation with the members. In many areas members of the local authorities have been looking for help for years and it is only now with money coming from Structural Funds that action is taking place. We cannot have it both ways. We have to be positive and understanding. This debate is now covering all aspects in great detail. I am answering the Senators' questions and problems to the best of my ability. I fully believe we are doing the right thing.
Mrs. Jackman: What happens where agencies such as the IDA or SFADCo have acquired land from a local authority for an advance factory which did not come to the stage of advancement and where the said structure and land surrounding it could quite reasonably be called a derelict site at this stage? It may be ten, 15 or 20 years in existence. Will the agency be directed by the local authority or will the agency be under the Minister?
I trust the Minister will accept this amendment and that we can continue in the same vein of goodwill. What we are seeking to do here is to discourage dereliction. The market value of the land would be assessed every three years rather than every five years.
It is a simple amendment. The appropriateness of this can be seen if we look at the market value of urban land five years ago and at present and if we contemplate what the market value will be in 1995 when there will be a European market as distinct from simply a national market. We have to take the future into consideration.
If we look at the record of the past we can see where there has been huge dips in property value and huge depressions and also times where property values have been shooting through the roof. That is purely in the national category. When we talk about the European category we are talking about a totally different matter entirely. I am not satisfied it is sufficient to say that a register must be updated once every five years because, in practice, local authorities or agencies or bodies responsible for matters of this nature take that as the norm, even though it does not specify the norm.
I suggest to the Minister that he should take that amendment on board and that it would have the benefit of helping to  discourage dereliction once the people who might be involved realise that they would have to pay the full market value of the land.
Mr. O'Keeffe: I suggest to the Minister that he should not adopt this amendment. The county development plan is a five year plan. What Senator Costello is exhorting the Minister to do is to bring in an administrative structure after three years which would be very expensive and very difficult for hard-pressed staff in local authorities to do. What can be done under the Bill if the local authority members decide they can bring in a review after the three years. I am suggesting to Senator Costello that what he actually wants he can do within the power of a local authority with the agreement of the members of that local authority.
I respectfully suggest that in view of the fact that our development plan is a five year plan he should accept the section as it appears and I urge him to withdraw the amendment on the basis of the information I have furnished.
Mr. Cassidy: I concur with Senator O'Keeffe because we in local authorities know that county development plans by their very nature are very sensitive issues and take a long time to tease out. The local authority I am associated with takes up to one and a half years to update our local authority plan because we take so many sections at every monthly meeting.
In relation to valuations and land valuations, anyone in the property market will tell you that you have an increase in the market for about three years and you have a downward trend in the market for another future three years. I think that the five year cycle gives a much more level overall indication and overall picture of what is really happening on the ground. As Senator O'Keeffe has stated, we in the local authorities, if the members wish to, can review the matter after three years or within the three year period if it is required, and that would probably be the best suggestion.
I concur with Senator O'Keeffe in  asking Senator Costello to consider withdrawing this amendment, because the one great thing we have at local authority level is that we have total freedom to discuss all matters pertaining to things like this. That is the one great open forum we have. However, there is a time constraint. If you have discussions at local authority meetings, perhaps taking six or seven hours, and they have to be adjourned, as in the case of bigger cities, not once but four, five and six times, then the putting together of a county development plan can represent a two year working programme for a local authority.
Mr. Howard: I find myself supportive of Senator Costello's argument — perhaps not for exactly the same reasons — but nonetheless I think there is quite an amount of merit in looking seriously at his amendment which would substitute three years for five years, because I believe the Minister is entering a minefield in this whole question of attempting to put a market value on urban land. There is only one market value; and it is expressed rather colourfully here in regard to the price it would “fetch”. I do not think I have come across the word “fetch” in this context before, but I understand it and that is good enough. There is going to be a minefield here in regard to this whole question. I find subsection (2) particularly loose, because it refers to the local authority authorising a person “suitably qualified” to inspect urban land. I would certainly like to know what sort of a genius we are talking about here. Are we talking about a professional valuer or an official of the council or corporation? Senator O'Keeffe is trying to help me but he has not an opportunity of doing so.
I think this whole question of attempting to value urban land is a minefield. If you spread it over five years, fair enough. You can take a particular piece of property, put a value on it now in 1990 and the local authority would not be required under the Minister's proposal to look at that valuation again until 1995. We all know the fluctuations that can take place  there and what might happen in 1993 to attempt to enforce this value. You have the various steps open to the person who owns that piece of property. He can appeal to a tribunal and he may finish up going to the High Court.
I think the whole system is going to get knotted up in trying to determine this. A lot of it is going to be determined in the High Court anyway. At least the three years would shorten the gap, having the requirement, as it were, to revalue it within three years. Attempting to enforce in 1995 the value put on it in 1990 is only going to cause confusion of all kinds. I support Senator Costello on these points.
Mr. Costello: Certainly Senators O'Keeffe and Cassidy have been helpful in putting this section in its context in relation to local authorities, stating that it coincides with the cycle of the county development plans and that, therefore, it would fit in very suitably in that area and that it does tie up into the local authorities. However, my concern in the matter is that we have to look at the Bill in its separate operation and what it seeks to do; and what it seeks to do is to deal with the problem of dereliction. The fact that it is located within the context of the local authority is another matter, but we must introduced in the Bill sufficiently rigid proposals to ensure that we are dealing with the problem of dereliction.
What I have pointed out is the enormous fluctuations in market values that have taken place in the past five years. I could at this stage, without being a crystal ball gazer, project that there will be even far greater fluctuations in the next five years. Senator Cassidy has presented the situation which may have existed from time to time, namely, that there is a three year increase and then a two year decrease, that there are certain cycles where there are valleys and peaks in the market. I think you will find that for the next two years there will be a different situation developing, where we will have a continuing increase followed by a dramatic increase in the following three years.
 As I said, we are now entering into a whole new market area — pretty much an international market area — where the price of Irish land may very well be the price of European land. We are an open market from 1992, beginning in 1993 onwards. That is a whole new situation. If we take it that there is an average increase of 10 per cent per annum in the market value at the present time — of course, it is much greater; away in excess of the rate of inflation; property prices are going through the roof — and if we take that on a five year basis, that is 50 per cent before it is even reassessed. That is not a sufficient timescale to deal with the question of dereliction if we allow the market value to get so far out of line with the real value, the value that is on our register compared with the market value. I regard this as an important point.
While I have listened to the points which have been made by the two Senators, I think we must take this Bill as a unit. Certainly, we take into consideration the plans of the local authorities and the county development plans that are made, but unless we have provisions that are of a sufficient structure to ensure that dereliction does not take place, that there is financial penalty for doing it and that our register is up to date in relation to the money market and the value of land, I think we will have failed. Therefore, I am not prepared to withdraw this amendment.
Professor Conroy: I find this argument a little difficult to follow. I would think that a period of five years is a very reasonable period. Putting through these processes can be very prolonged and I think that three years would be far too short a period. The argument being used about variations in the value of land is like saying “How long is a piece of string”? At least five years gives a reasonable spread, which can be repeated every five years. Three years, two years, one year — you can have fluctuations in six months, as far as that goes. Once we go down that line we would never be finished changing and chopping.
Mr. Cassidy: As far as I understand it, the local authorities and the executives of local authorities always get the best price possible; so if something is valued today it changes daily. I fully take Senator Costello's point that in the future there may be a great increase in price — but there may not. We have seen marvellous changes in the early seventies and we have seen the complete reverse in property for the last five years in the eighties. I know in my heart and soul that a chief executive officer, irrespective of what authority he represents, of what Department he represents, will get the best possible price on the market. They will call in their experts, and, as far as I know, they never call in one expert in any particular field — they call in two. They always get two opinions.
For that reason I think the safeguards are built in here. No matter what derelict site may come on stream, it is the location of that derelict piece of property which is important. It may not be worth a quarter to the person who owned it for that period of time, but on the property market if you get two people bidding for the same property they will determine what the market price is. The amendment seeks to empower the Minister to make this change mandatory. That is what causes me concern. I have no doubt that in the market-place the valuation is the best possible price that can be got on the day. It does not matter what valuation anyone puts on anything, it is a matter of how many people you have on the market who are going to purchase the property at the end of the day.
Mr. Connolly: I think five years is reasonable. I would not like to have a mandatory review every three years. What we are forgetting here is that the local authorities can review it earlier than five years. That is a matter for them. They have the powers under this Bill. It is stated in many places that local authorities are losing their powers. You should be all kind enough to admit that I am giving members of local authorities plenty of powers now. I do not wish to elaborate on that. I think you should  leave it to my good judgment. I appeal to Senator Costello to leave it to my good sense of judgment. The local authorities in Dublin have the same powers as any of us in the country. If they wish to review this earlier I am not standing in their way. I am saying to the councils and corporations that they may review it earlier if they wish. I do not want to make it mandatory on them to review it within three years because, if you look at other Bills, the general term is five years. In the UK, where they put in five years, there was a slippage there; it was not spot on. It is now over to the local authorities.
Mr. Costello: On the point made by Senator Cassidy, the question of the market value being whatever it is and that it will be there anyway, the problem we are referring to, of course, is the question of the levy, the levy of what might be much less than the actual market value five years, three years or four years down the road. Therefore, it is not so onerous on somebody who has accumulated derelict sites to pay a levy once it is nowhere near the real market value. That is a consideration. While I accept the Minister's trustworthiness and his good intentions in this matter, I am still worried that, even though the section states that the market value for the land on the register would be reassessed at least every five years, in these matters five years would become the norm. While the local authority have the option of having it less——
Mr. Connolly: I do not wish to interrupt, but I am trying to strike a balance here. What the Senator is forgetting — I am not saying intentionally — is that Dublin Corporation, Dublin County Council and every local authority have the right if they wish to do it. I am trying to be helpful here. If you think there is something wrong, go to your local authority. What could be better? I appreciate the Senator's concern, but I am trying to be helpful. I am only putting in five years because it must be done in five years. But the local authority, corporation or county council can do it more often if they wish  to; every year if they wish. What could be fairer? I am given you a good assurance now, but I cannot assure you that a local authority will do it. That is a matter for that local authority. I would not interfere in any corporation or local authority because I have found them to very capable of dealing with all these matters in a very effective manner. What really concerns me is that on one hand it is being said that powers are being taken away from local authorities, but here we are giving them power.
Mr. Costello: I agree entirely that the Minister has the very best of intentions with this legislation. The one last point I have to make is relevant to what he is saying, the question of staffing. While it is all very well to say that the local authority have the option and the discretion to go about re-assessing the value of the land after two, three or four years rather than the five year period, the question is: what local authority will do it unless they have to do it, considering the staffing levels they operate under at present and will have to for the forseeable future? That is why I am worried that, when this states the least, this must be the norm. Can you name a local authority in the country who will go out of their way to put some resources into assessing the value of the land in their area in respect of the register in fewer than five years when they are short on resources already? While the Minister has the best of intentions in saying that the powers are there, what use are powers if you do not have the resources to implement them?
Mr. O'Keeffe: Just one point on that by way of further elaboration. It seems to me that there is no impediment, for instance, to Senator Costello, if he finds there is a piece of derelict land for sale,  bringing that to the attention of the local authority and making his case felt that perhaps it has not been valued properly and asking for a valuation to be set. There is no difficulty there and I cannot see why we cannot get agreement on this section. By tying it down you are making something mandatory; and already under the Bill there is a facility whereby the local authority, if they wish, can have a revaluation every year. There is no difficulty with that. Why make it mandatory? It does not make sense to me when the facility is already within the section to do that if it is so desired.
Mr. Connolly: This amendment corrects a drafting error. The intention of paragraph (a) was to fix the amount of the derelict sites levy at 3 per cent for the first year in which the levy will operate. Instead, paragraph (a) referred incorrectly to the first local financial year after the passing of the Act. For a start, this expression is not entirely clear. If, as  seems likely, this Bill is passed early in 1990, would the first local financial year be 1990 or 1991? The main point, however, is that section 23 (1) already provides that the levy shall begin on such year as may be prescribed by the Minister. It is essential that the initial 3 per cent rate of levy should be co-ordinated with this provision and the amendment does this.
Where urban land ceases to be derelict at any time during a local financial year, any amounts paid by way of derelict sites levy in relation to that year shall be refunded to the owner and any amounts due or owing in relation to that year shall be waived.
This is very similar to the first amendment which was accepted by the Minister, that is, amendment No. 11, where I sought to delete the section relating to interest being given as well as compensation. The principle here is very similar, namely, that we should not once again be encouraging people responsible for a derelict site by allowing them to have refunded the amount they may have paid in  relation to a year. What should be inserted there is “in relation to the remainder of that year”.
What the provision itself is stating is that the person responsible for a derelict site would get a refund in respect of the entire year, whereas the amendment is saying that it should only be given for the remainder of the period for which the site does not remain derelict. This could be a quarter of a year, half a year, three-quarters of a year, or 12 months. It does not seem proper that people should be rewarded by being given that extra bonus when they have been responsible for dereliction coming about in the first place. For that reason I believe it would be useful if the Minister accepted this amendment.
Mr. O'Keeffe: I would just say by way of comment on that that, first of all, finance is, generally speaking, on a yearly cycle. Could I suggest to Senator Costello that actually what he is proposing is being destructive rather than constructive? Would it not be a lot better to have a carrot there for an individual who has a derelict site and to say to him, “If you bring your site into order within the 12 months you are going to get back the payment of the levy that has been set against you”? Surely that would act as an incentive to the individual, to make sure that the derelict site was brought into proper condition before the end of the year. It would be far more constructive to allow the section to go through as it is, as against the amendment proposed by Senator Costello, and I hope he agrees with me on that.
Mrs. Jackman: I would ask the Senator from Cork about the compensation for the local authority in view of the scarce resources they have. Why would you give back the levy to the person who has mis-demeaned in the light of the additional extra work on the local authority staff to acquire this site in the first place? At the initial stages of the Bill we said that the Bill would be a good one if it could be  effectively implemented by a local authority with additional resources. I certainly would not see that any moneys should be handed back, except perhaps with deducted expenses for the local authority in following through the whole derelict site acquisition in the first place.
Mr. Connolly: I appreciate the intention of these amendments. However, they are based on the premise that the derelict sites levy is apportionable over different periods of the local financial year. This is not the case. Under section 23 (1) the levy is to be charged as an annual one in relation to each local financial year. It is true that subsection (6) permits a local authority to allow for payment of the levy by instalments, but this does not alter the fact that the levy has been designed as an annual tax. As I have said, there is no means of legally apportioning the levy over different periods of the year. Therefore, these amendments would be unworkable. Apart from this technical problem, subsection (7) has in any event been deliberately drafted so as to encourage landowners to avoid the levy by undertaking remedial works within the year in question. The ultimate purpose of the levy is not to enhance local authority revenues but to promote better land use. That is the situation. So, I think there has to be a little bit of common understanding here.
Mr. Costello: The Minister states that it is in the context of the local financial year and that therefore we should not be chopping and changing. But then, of course, section 23 (6) states that the levy may be paid by instalments — so, in fact, there is chopping and changing within the legislation. I do not see why you apply one rule to the payment of the derelict sites levy by instalments and then suggest that the payment by the local authority back to the person who would be paying the levy should not be by instalments, or at least that the option should not be  there, and that the payment by instalments could reflect at what stage of the year the derelict site ceases to be derelict. I am not sure that the Minister's argument holds good because of the provision in the Bill. In relation to the statement made by Senator O'Keeffe that we should be——
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