Golf club controversy won’t go away
Sunday, March 07, 2010 By Kathleen Barrington Al most nine years after the Cosgrave brothers agreed to purchase Dun Laoghaire Golf Club, the controversy surrounding the sale of the 78-acre site hasn’t gone away.
The Cosgrave Property Group in 2001 proposed to buy the site in the south Dublin suburb in a deal that valued the club at €100 million.
The Cosgraves offered the club a new300-acre site and clubhouse on the Dublin/Wicklow border and a cash sweetener of €20 million.
The deal was sealed when 80 per cent of the club’s members voted in favour at a specially convened meeting in June 2002. But it took a little longer for the Cosgraves to begin developing the Dun Laoghaire site. First, they had to ensure that the old golf club was rezoned for development in the teeth of fierce local opposition.
Former environment minister Martin Cullen directed the council to rezone more land in the area to provide extra housing. It wasn’t until 2008 that Cosgraves finally got planning permission.
But the development is now back in the news as the first phase is currently under construction, while the planning authorities are considering applications for two subsequent phases.
Fine Gael councillor John Bailey told the Insider that Cosgraves and Hooke & MacDonald - estate agents for the developer - which had both donated €2,500 to his 2007 election campaign, had ‘‘no influence’’ over him. ‘‘I am my own person and I do my own thing,” he said.
Bailey was speaking after the Sunday Tribune reported last month that, while he had told voters he had objected to An Bord Pleanála about the subsequent phases of the development, the appeals body confirmed it had received no such correspondence.
Bailey admitted his objection had gone missing, but said this was the only one of his objections ever to have done so, and that he had been against the development all along.
But it isn’t just the politics behind the golf club development that is in focus. Its finances are also in the spotlight.
One former member has continued to ask awkward questions about whether the golf club got market value for the lands.
The price paid by Cosgraves for the Dun Laoghaire lands in 2002 lands represented about €1.28 million an acre. That compares unfavourably with the €2.75 million per acre paid by financier Derek Quinlan for the Grange site in the Stillorgan Road area of south county Dublin, 18 months earlier.
Derek Montgomery, president of the Golf Club and a former member of the relocation committee, did not respond to several requests for comment.
Meanwhile, it has emerged that Dun Laoghaire Golf Club had an operating deficit of almost €608,000 in 2009, according to the accounts presented to members of the golf club at its agm in January. The accounts also show that the club is projected to have an operating deficit of €916,000 in 2010.
Happily for the members, last year’s losses were offset by about €1 million in investment income, while this year’s losses are expected to be offset by investment income of about €962,000.This income derives from the investment of the €20million cash paid over by Cosgraves to the club as part of the original €100 million deal.
However, there is confusion about whether the investment income can be used in this manner given the conditions attaching to the €20 million capital gains tax exemption which Dun Laoghaire golf club obtained prior to selling the lands to Cosgraves. The tax exemption was obtained under section 235 of the 1997 Taxes Consolidation Act provided the club met certain conditions.
Some observers believe those conditions would preclude Dun Laoghaire Golf Club from using income from the sale of lands effectively to subsidise the memberships. According to the minutes of the 2009 agm of the Golf Club, the question of whether the golf club was tax-compliant was raised by one member.
Dan Delaney ‘‘asked whether the club was compliant with the instruction of the Revenue Commissioners with regard to the ring-fencing of the capital sum on the sale of the old land in Dun Laoghaire and the Capital Gains Tax exemption. He queried the use of the interest derived from the capital sum which he believed was still a grey area,” the minutes state.
In reply, Pat Nevin, chairman of the audit committee, said that the board was confident that ‘‘there are no grey areas with regard to the treatment of the investment income.
‘‘The board has worked closely with its taxation advisers, Deloitte & Touche, its solicitors Arthur Cox and the club auditors Veldon Tait, and the board is 100 per cent confident that we are fully compliant with the Revenue’’. But the Revenue Commissioners have given apparently contradictory messages on this question.
In February 2009, the sports section of the Revenue Commissioners in Nenagh advised in writing that ‘‘members of a sporting body should not benefit directly or indirectly from any lump sum payment received by the body or as a result of the interest accruing on the investment of such a lump sum’’.
However, in response to a separate request, the Revenue said (in a letter dated December 3, 2009) that ‘‘it would be quite legitimate for a sports body to use its income, including income on a capital sum as it clearly fulfils the purpose of promoting amateur games or sport’’.
When asked to explain this apparent U-turn, a spokesman for the Revenue Commissioners said: ‘‘The exemption from tax applies to so much of the income of an approved body of persons as is shown to the satisfaction of the Revenue Commissioners to be income which has been or will be applied to the sole purpose of promoting athletic or amateur games or sports. Each case would be judged on its merits in determining if the application of its income is in accordance with this provision.”
Confused? You’re not alone.
Some things, however, are crystal-clear.
Cosgraves appears to have got the Dun Laoghaire land at a good price by 2002 standards; it also got planning permission despite strong local opposition having benefited from Cullen’s changes to the wider plan for the area; Bailey received funds to support his election campaign from the developer whose application he insists he opposed; the club got a spanking new premises; the taxpayer lost out on the €20 million in capital gains tax that would normally have accrued from such a deal because the club got a tax exemption; the funds that would have been paid to the Revenue Commisisoners are being viewed by some as subsidising the subscriptions of the generally well-heeled members of the golf club; and Dun Laoghaire is about to get hundreds of new houses and apartments, at a time when there is already an oversupply.
|
Text-Only