Minister for the Environment John Gormley is under pressure to bail out Galway City Council over a €60 million housing purchase scheme which has run into serious difficulty.
In a separate development, Galway city manager Joe McGrath has denied that the local authority intends to pay €6 million to the developer who walked off the Eyre Square refurbishment scheme just over two years ago.
The Department of the Environment says it may not know for some months if it can provide additional funding to the city council for social housing, following a row at Monday night's council meeting over the purchase of private property for the scheme.
The local authority had begun to buy second hand houses and apartments for its housing list on the basis of a €60 million application to central government. However, Galway's City Tribune has reported that the deals collapsed when just over €20 million was drawn down, leaving a shortfall of €40 million.
Up to 25 homeowners who understood that they were selling their properties to the local authority were informed that the deals were not now going through. A number of these homeowners who had received booking deposits from the city council had already initiated purchases elsewhere. These people are now in serious financial difficulty, according to deputy mayor Padraig Conneely (FG).
The department told The Irish Times that the council was allocated €20 million for social housing in April 2007, which was an increase of €4 million on last year's allocation totalling €16 million. The previous year, Galway City Council had been granted €6.5 million for this purpose. The spokesman said the local authority had only spent €12.7 million of its €20 million allocation to date.
It was "highly unlikely" that the local authority would get a further substantial increase, in the light of the previous year's allocation, the spokesman said.
However, the overall budget for all local authorities of €1.2 billion for this year would be analysed, and there might be some adjustment if other local authorities did not spend all their allocations, he said.
Director of services with the council Joe O'Neill told Monday's meeting that the local authority had honoured its commitments. "Any contract we signed, we honoured," he said. "We did not go into the market without funding."
Following angry exchanges between city officials and councillors, a motion was passed unanimously instructing city manager Joe McGrath to seek funding from the department to proceed with the purchase of properties from the 25 affected owners.
Fianna Fáil councillor Mike Crowe also queried whether some of the houses already purchased by the local authority could only be sold on for affordable use. Mr O'Neill admitted that the council's legal team was studying some of the contracts involved in house purchase.
Sinn Féin councillor Danny Callanan, who is a practising solicitor, said that contracts were not 50 pages long and would not take long to read through. He demanded that the council get new legal representation.
Mr McGrath also denied the local authority would have to pay €6 million to the contractor who walked off the Eyre Square project before it was finished in June, 2005. The project was eventually completed at a cost estimated to be between €9 million euro and €11 million, well over the original tender of €6.3 million. Mr McGrath said the matter was still the subject of arbitration, and a final report was expected in several months.