State reaches agreement with landlord on €10m lease error on Department of Health headquarters

The State has reached an agreement on an estimated €10 million overpayment for the Department of Health’s 25-year office lease, which will the see the tenancy extended rather than the money being repaid.

It emerged in 2018 that there was a “mismeasurement” by the Office of Public Works (OPW) of the floor space of Miesian Plaza on Dublin’s Baggot Street before the lease began in December 2016. The building provides accommodation for more than 900 civil servants from the Departments of Health, Children, Finance and Public Expenditure and Reform.

Talks between the State and landlord Larry Goodman have been ongoing for years in an attempt to recoup the extra money paid due to the mistake.

Minister of State for the OPW Patrick O’Donovan said the parties had agreed to extend the lease on Miesian Plaza by nine months at a nominal rent of €10. Given the State paid €8.25 million in rent last year, this would equate to it receiving an effectively payment-free lease term worth nearly €6.2 million.

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The Government had previously estimated that over the term of the lease some €10 million would be lost because of the error.

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While the Minister did not reveal how much, if anything, had been lost because of the agreement, he maintained that “the OPW considers that this agreement is the best possible outcome achievable for the taxpayer in all the circumstances”.

In a statement to Fine Gael TD Jennifer Carroll McNeil, Mr O’Donovan said that “while this issue of measurement was unfortunate and should never have arisen, I would acknowledge the efforts of my own officials and the representatives of the landlord in bringing the issue to a conclusion”.

“When the issue was identified the OPW engaged with the landlord to mitigate the effect of this issue in a manner that would be acceptable to both parties,” he said. “A deed of variation has now been finalised to give effect to this agreement.”

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The Public Accounts Committee has examined the issue on multiple occasions, and last year produced a report expressing “concern that the OPW will not succeed in preventing taxpayers being exposed for an additional €10 million that is a direct result of a fundamental error by OPW”.

Sinn Féin TD Brian Stanley, who chairs the committee, said he will be bringing the OPW before the committee within the next two months, and would be seeking full information in relation to the deal that has been done. “I want to see that there has been full due diligence here, and that the taxpayer has not been left exposed.”