The State’s spending watchdog has sharply criticised University of Limerick (UL) over two botched property deals that resulted in combined financial losses of more than €8 million.
In a report published on Friday, the Comptroller & Auditor General (C&AG) found UL’s €5.2 million overpayment when buying 20 student homes in 2022 resulted in a “significant loss in value for money”.
The 107-page report also found it was “difficult to see” how a separate 2019 Limerick city property deal that led to a €3 million loss “represented value for money”.
The C&AG report into the two transactions follows months of turmoil in UL that led Prof Kerstin Mey to resign as university president in June.
In a separate recent development, Limerick gardaí arrested a man in connection with the “alleged” harassment of a UL official. The man was released without charge and a file was sent to the Director of Public Prosecutions.
The student housing deal at Rhebogue, 3km from the UL campus, was previously the subject of a special report for the university’s governing authority that found the settled €10.9 million price rose by more than €1 million when the final contract was signed only nine days later.
Now the C&AG has raised further concerns about the Rhebogue transaction, saying there were “significant” due diligence failures even though UL had adopted new procedures because of problems with the Limerick city deal.
“The university obtained formal valuation reports prior to finalising the purchase. However, the purchase price proposed to the governing authority was based on the net rental-yield method for valuing the property,” the C&AG’s office said in a statement on the report.
“Even though the accommodation was generally configured as a standard housing development, information on the sales price comparison method for valuing property, which would have yielded a much lower valuation, was not provided to the governing authority.”
In addition, the report noted how UL failed to identify that the final €11.4 million purchase price was liable to stamp duty, resulting in an “additional unanticipated cost” of just over €1 million.
“Prior to the purchase, planning advice from relevant professionals was not conclusive but the university did not seek clarification from the local authority,” said the C&AG’s office.
“In December 2023, after the purchase had been completed, the University received a warning letter from Limerick City and County Council stating that the change of use to student accommodation without planning permission may represent an unauthorised development.”
A determination is still awaited from An Bord Pleanála on the planning status of the development.
“A number of specific concerns about the handling of the acquisition raised with the Governing Authority in a protected disclosure were investigated by an independent senior counsel,” the watchdog said.
“However, the more general implications of the issues raised for the University’s system of control and decision-making were not adequately considered or investigated.”
Concern about the Limerick city deal was raised after UL bought a former Dunnes Stores site at Honan’s Quay for a new city centre campus.
The C&AG report said that property was acquired for more than €8 million after UL sought Higher Education Authority approval for a €45.2 million city campus project that included €3 million to buy a site for the development in Limerick’s Opera quarter.
“Because there is no evidence of any additional benefits of the Honan’s Quay property compared to that at the Opera quarter that would warrant the increased purchase cost, it is difficult to see how the purchase represented value for money,” the C&AG said.
“A retrospective valuation of the property at Honan’s Quay in 2023 concluded that the university had paid around one third more than the market value of the property in 2019.
“The university has proposed that a €3 million impairment charge, or write-down loss, be recognised in its 2022 – 2023 annual financial statements. The University remains without a clear development and funding plan for the Honan’s Quay property.”
The C&AG went on to say UL obtained “some valuation advice” in relation to Honan’s Quay prior to the purchase, but not a formal valuation report.
“This was contrary to provisions of the public spending code. Nevertheless, it was represented to the university’s governing authority that a valuation report had been obtained.”
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