Dereliction on O'Connell St: city council to blame

The Carlton site has been derelict for 27 years. In part because Dublin City Council inexplicably issued a compulsory purchase order on the site and then sought to deliver the site into the hands of a favoured developer. By Frank Connolly

A central site on Dublin's O'Connell St has remained derelict since 1979, in part because of a series of extraordinary decisions taken by Dublin Corporation and its legal successor, Dublin City Council. The property concerned is the Carlton cinema site and surrounding properties, opposite the Gresham Hotel.

In December 2001 plans for the development of the site, which already had obtained planning permission, were to go ahead with a completion date of April 2004. But the council intervened and issued a compulsory purchase order (CPO) on the site, for reasons that have never been adequately explained. The council subsequently entered into agreement with another developer – who has an unchallenged legal title to only a fraction of the property involved – to develop the site.

Because of legal challenges to the CPO and to the contested ownership of the greater portion of the properties, it is likely that the development of the site will not be completed until 2011, some 32 years since the site first became derelict.

In August 1999, An Bord Pleanála upheld planning permission for the development of this strategic site. The plan was to develop an entertainment and retail complex, stretching from O'Connell St through Moore St to the Ilac Centre. Almost immediately, a rival developer, a subsidiary of Treasury Holdings, applied for a judicial review of the planning permission granted in August 1999. This held up the development for a year but was ultimately unsuccessful.

The site was owned by a number of property owners, including Paul Clinton and Richard Quirke, who owned most of the site (see map of site), and a much smaller portion owned by Colm Carroll. An adjacent property is owned by Dublin City Council (see site map). The property owners registered themselves as the Carlton Group.

In October 2001, Richard Quirke said he wanted to sell his portion of the property. The group opened discussions with Grovesnor Properties, owned by the Duke of Westminster, which, incidentally, is also involved in the Liffey Valley site. Grovesnor Properties indicated their interest in becoming involved and so informed Dublin Corporation.

By December 2001, the Carlton Group was ready to proceed with the development at a cost of £72.9m (€100m). On 4 December 2001 they told Dublin Corporation they had in place a bank loan for £80m and their builders, PJ Walls, were ready to go on to the site. The plan was to complete the development of the site by April 2004, ie two years ago. (We reproduce on these pages the plans for the completed project.)

But a week afterwards, on 12 December 2001, Dublin Corporation served a CPO on the site, claiming later its entitlement to do so because of delays in developing the project and because the developers lacked the necessary expertise. But only days before the CPO was issued, the Corporation had raised no such objections.

And then in late 2003 the Dublin City Council (which had replaced Dublin Corporation) entered into an agreement with another developer, Joe O'Reilly of Castlethorn Developments to develop the site. O'Reilly had been the developer of the Dundrum shopping centre and the council claimed that it was because of the success of that venture that it was preferable for him to develop the Carlton site.

There are a number of curious aspects to this agreement.

• First: the agreement was not disclosed until some months later, in February 2004, and then only in the course of litigation when the Carlton Group brought a judicial review application challenging the CPO.

• Second: a commitment had been made a year previously by the Dublin city manager, John FitzGerald, and the assistant city manager, Sean Carey, that there would be an open tender for the site – they said there was intense "international interest" in the development. (A 58-page brochure advertising the property and what was referred to as the proposed "Spire Centre" was prepared but the site was never placed on the open market.)

• Third: this agreement, concerning one of the most prominent sites in the city of Dublin, was not disclosed to Dublin city councillors until May of this year. A number of councillors, including Gerry Breen of Fine Gael, Kevin Humphreys of Labour and Daithí Doolan of Sinn Féin have threatened to prevent the disposal of the land.

This is all the more surprising because the agreement with Joe O'Reilly (see panel on agreement) commits the council to providing a bank guarantee to O' Reilly and to acquire any other lands not covered by the CPO that the development of the site may require.

However, the challenge to the CPO by the Carlton Group has been complicated by the purported sale to Joe O' Reilly of the portion of the Carlton site owned by Richard Quirke in conjunction with Paul Clinton. This, inevitably, has led to yet further litigation in the form of a challenge by Paul Clinton to Richard Quirke's entitlement to sell part of the site, without the concurrence of his partner.

Joe O'Reilly also bought the other portion of the site, formerly owned by Colm Carroll.

Now five years since the CPO order the site remains derelict, bounded by even greater urban decay in the surrounding streets.

Dublin City Council has refused to comment in detail on the Carlton site as it is currently the subject of litigation and particularly given that the Supreme Court appeal (on the validity of the CPO) is due later this month. Asked why Dublin City Council did not release the site for open tender, spokesman Alan Breen said O'Reilly was chosen because of his success with the Dundrum shopping centre. "He has the necessary experience. But we cannot comment until after the Supreme Court hearing."

Meanwhile Clinton has lodged a compensation claim for €181m against the council.

The Agreement between Joe O'Reilly and the DCC disclosed in February contains the following clauses:

• "2.6: The Council… agrees that in the event that the CPO is fully confirmed it will acquire the outstanding interests, if any, in the site and will convey those interests to the Developer (Joe O'Reilly). The council agrees it will convey those interests to the Developer at the price it was required to pay under the CPO proceedings in respect of those interests. The Council acknowledges that the obtaining of these interests by the Developer is fundamental and critical to the development of the site, because of the composite nature of the development of the site. Any conveyance of these interests is subject to all statutory consents and approvals being first obtained. The Council will use its best endeavours to transfer an unencumbered fee simple title."

• "2.7: The Council further agrees and acknowledges that the Developer will, in order to develop the Site in accordance with this Agreement, require to obtain funding for the Development of the Site and the Council agrees that it will give whatever comforts are required to the Developer's bankers to allow them to fund the development of the site..."