*Kevin Corrigan, Pat Dowling, Carmel Kirby. Photograph: Brian Arthur
€2.2m of the €10m loan for Ennis 2040 DAC has been spent on company setup, ongoing operating costs, overheads plus the design and planning of four key projects.
These projects are the controversial Abbey Street car park development which is earmarked to become a retail and office space, the county’s first affordable housing scheme on Francis Street, a residential/mixed use development on Parnell Street car park at Harvey’s Quay and an amenity for the post office field.
In a fiery debate on Monday, the Chief Executive of Clare County Council questioned if individuals had an ulterior motive in continuously questioning the Ennis 2040 DAC. This remark drew sharp criticism from Cllr PJ Kelly (FF) who said some aspects of the strategy contained “the most stupid proposals ever known”.
At Monday’s meeting of the Council, Cllr Tom O’Callaghan (FF) gave copies to all those present in the Chamber of the minutes from the June 2021 meeting when a vote was passed to draw down a €10m loan for the Ennis 2040 DAC. Mr Dowling in June 2021 stated that the Chief Operating Officer of Ennis 2040 DAC would report directly to him and also report to elected members.
What followed was a lengthy debate whereby Cllr O’Callaghan was the only member of the Ennis Municipal District to contribute. Cllr Pat Daly (FF), Cllr Johnny Flynn (FG) and Cllr Ann Norton (IND) were absent from the debate, Cllr Norton had been online earlier in the meeting but not for this motion. Cllr Clare Colleran Molloy (FF), Cllr Paul Murphy (FG) and Cllr Mary Howard (FG) did not comment at any stage during the discussion.
Referencing the loan, Cllr O’Callaghan asked its cost and duration, the schedule of loan repayments by Ennis 2040 DAC, the current assets the DAC owns, the purpose of the loans and if the Council has guaranteed all liabilities. He also questioned if the Council is “financially liable in any event of unfortunate financial misadventure”.
Director of Finance and Support Services, Noeleen Fitzgerald who also sits on the DAC’s Board in a detailed fifteen page response said the strategy “provides a comprehensive framework for the sustainable development of the town and seeks to support compact growth and realise sustainable economic, social and environmental opportunities in Ennis and Clare over the next twenty years”.
Of the approved funding for the strategy, the Council has drawn down €5m of the approved funding with €2.2m of this advanced to Ennis 2040 DAC “for the purpose of funding the work programme underway”. She said the €5m loan tranche “was drawn down for twenty years at a fixed interest rate of 2.6 percent with the first three years interest only”.
There is an interest charge of €57,000 for the first three years and from the fourth year onwards the annual repayment depends on the level of drawdown. Noeleen outlined that this will be €142,500 based on the amount drawn down by the Council to date.
As of 31st December 2023, the draft net book value of assets owned by Ennis 2040 DAC amounted to €14,791. She said “the purpose of the €10m loan approved by the members at the June Council meeting in 2021 was working capital finance as preliminary expenditure on a planned works programme for Ennis 2040 DAC”.
Funds drawn down to date have been applied “to the design, planning and progression of key projects on behalf of Clare County Council such as, Abbey Street – Retail and Officer, Francis St – Affordable Housing, Harvey’s Quay – Residential/Mixed Use, Post Office Field – amenity,” the Director of Finance explained. “In addition the funds also covered company setup, ongoing operating costs and overheads. Such overheads are fully allocated to each project in proportion to the duration of time spent on each project”.
She advised, “where loans are advanced for the development of infrastructure, this Council secures the loan as a charge against the asset. Where Clare County Council have advanced loans to associate companies, we have secured these against the assets in order to protect this Council against any risk. An economic impact assessment is conducted by independent consultants for projects that are brought forward. Each project is further substantiated by a robust business case for consideration by the board of Ennis 2040 DAC or by Clare County Council where delivery is under an agreed service level agreement (SLA). Loans provided by Clare County Council to its 100 percent owned subsidiary Ennis 2040 DAC are fully guaranteed. The annual accounts of both Clare County Council and Ennis 2040 DAC are subject to independent audit”.
Addressing Monday’s meeting, Cllr O’Callaghan equated the value of assets owned by Ennis 2040 DAC priced at €14,971 as “the equivalent of a good second hand car”. He stated, “my concern is Clare County Council is fully on the hook if any losses materialise”. He added, “my opinion is that the DAC is insolvent and a high liability to Clare County Council”. Referring back to the minutes from 2021, the Kildysart native noted a commitment was given to the COO to “report directly to elected members” but that this has not materialised.
This commitment was “a very important point” according to Cllr Kelly, “that to me was a deciding factor in the majority supporting the vote on the day, since then the very opposite has transpired”. The county’s longest-serving politician continued, “it is a conflicting situation, it is frightening, we adopted and agreed to give a loan of €10m on the basis that the recipients would be responsible and report back to us, that has not happened, the very opposite has happened”.
Elected members were given assurances the loan would be repaid, “today we are told according to Cllr O’Callaghan’s report that there is a schedule of repayments, if I can do my sums properly the DAC cannot meet the repayments and the Council is at risk,” Cllr Kelly added.
Cathaoirleach of the Council, Cllr Joe Cooney (FG) interrupted his contribution to inform him he had exceeded his speaking time prompting Cllr Kelly to shout, “this is crazy, we should call a special meeting, this is crazy”.
Curtailing Cllr Kelly through standing orders was “regrettable,” Cllr Gerry Flynn (IND) stated. He recalled that he was one of five councillors to vote against drawing down the loan, “I voted against it and supported the amendment from Cllr Kelly, that should not have been thrown it, it didn’t refuse the granting of the loan, he said he wanted it to be deferred”. The Shannon representative added, “the whole process of funding limited companies is a problem for me, I’m not happy our Head of Finance is on that board”.
Responding to the contributions, Ms Fitzgerald was not confined to the same time restrictions under standing orders and told the meeting “the purpose of subsidiaries or associated companies is not new, DAC is only one type of subsidiary”. She pointed out that in 2000, Ennis Town Council created a DAC called glór “to operate a Council asset on its behalf”. She said Kilrush Amenity Trust is another such example together “a number of tourism companies which have been very successful”. She explained, “one of the main reasons for these vehicles is to get the advantages of commercial space, being able to leverage finance or specialist skillsets, it is clear to me there is a lack of understanding on the entities we own”.
A briefing is required so that elected members can better understand the areas and entities, the Head of Finance said. In the UK, local authorities “have entered into areas of huge risk,” she said. Borrowing within assets will not occur, the Galway native stated. “The Minister allows us to borrow, the Minister doesn’t look for a charge of the asset. There is a very specific loan agreement in place, once an asset comes into place we will have the first charge on the property, we have lent to the development of some of our associated companies like Lahinch Leisure Centre and Kilkee Waterworld”. An interest rate of 2.6 percent has been agreed “only because we are still in the infancy stage of the key sites of the 2040 strategy,” Noeleen commented.
There are no assets to make a repayment to, Cllr O’Callaghan responded. “To me it doesn’t make financial sense,” he said.
O’Callaghan’s interpretation was “not an accurate reading of the situation or the balance sheet,” the Director replied. “The entity has done considerable work across a number of projects which it will invoice back to the local authority”. She said the Ennis 2040 DAC COO has previously presented before the Council and advocated for representatives of all the DACs owned by the Council to do likewise.
Offering his views, Council Chief Executive, Pat Dowling admitted he was “concerned that this persistent concentration on one of our subsidiary companies on a daily or weekly basis”.
Dowling remarked to elected members, “we’ve one which makes a loss every year and none of you are concerned with that”. He questioned the motive behind the “picking on one little piece for whatever purpose, I’ve no idea what it is. All our subsidiary entities operate appropriately and with financial prudence”.
“This is not a horse that has bolted and is not out of control, I assure elected members and the public that all these subsidiaries are operating with proper procedure,” the Chief Executive added.
His comments infuriated Cllr Kelly who declared, “there is no ulterior motive”. The Lissycasey man attempted to speak but was stopped until Cllr Flynn who Chairs Standing Orders insisted that he was allowed to do so. “I’m working by the standing orders, I want to keep a level playing field,” the Council’s Chair, Cllr Joe Cooney (FG) stated.
When he was given the platform to speak, Cllr Kelly stated, “I had no ulterior motive expect the good interest of the Council, quite clearly in the document in front of me no conditions of the repayment of the loan have been written down but they have emerged in the last few days”.
According to Cllr Kelly “a real question arises now, did we give full consideration to the decision because we didn’t know the repayment terms”. Voicing further criticism, Cllr Kelly said, “friends of mine with businesses are being strangled with the most stupid proposals ever known, there are businesses choked, in the name of heaven press the reality button, I’ve never seen such a disaster in all my life, daft DAC”.
Legitimate concerns on the spending of public money form the motivation for the questioning, Cllr O’Callaghan told the Chief Executive, “I have a duty of care”.
Cllr Cooney committed to organise a meeting with elected members on the subject of DACs and the Head of Finance said that the clár should include an audit of Council subsidiaries and associated companies when completed.
