The construction of more than 1,000 apartments on the site of the former O’Devaney Gardens flat complex in Dublin has been dogged by delays for 19 years since Dublin City Council first started talking about moving tenants out of the then-1950s social housing blocks. Building of this important project is finally underway but at a cost.

In the mid-2000s, hopes rose that the sprawling site near Dublin’s Phoenix Park would be redeveloped by a private developer, only for this deal to fall apart with the financial crash. Nothing much happened as more years rolled by, other than the council gradually began moving people out of the flats before demolishing them entirely in 2018. 

In November 2019, councillors voted in favour of a contentious deal with a property company called Bartra for the redevelopment of the 14-acre vacant site off the North Circular Road. 

Just what would be built there, however, required planning permission, which took more time to secure. In 2021, An Bord Pleanála granted planning permission for a €400 million scheme to be built by Bartra, a development company backed by Richard Barrett. 

But still, the project didn’t start. Until this year, little-known but significant changes occurred in how the scheme is being financed. This radically improved the terms on offer to Bartra, allowing works to finally begin. But just what happened, and what is happening now?

Changing the economics of the deal

In December 2019, Bartra and Dublin City Council (DCC) entered a development agreement to redevelop the site following a competitive tendering process. 

At the time, DCC had a guarantee from Bartra that it had the resources to finance the construction of the project once it received planning permission, which it duly did in September 2021. But work still didn’t start. Instead, months of renegotiation began between DCC and Bartra. 

This eventually led to a modification notice to the contract for the delivery of an integrated mixed-tenure residential development at O’Devaney Gardens on the European Union’s Tenders Electronic Daily (TED) website. 

This was published two days after last Christmas on December 27, 2022. A few weeks later, this modification was approved, fundamentally changing the economics of the deal in a manner that might be the envy of other developers stuck with more onerous contracts. 

The modification notice provided for an increase in the number of social homes from 192 in the initial contract to 283, and from 169 to 233 affordable units. From a previously agreed maximum price of €177.9 million, the modification notice increased the total contract value to €216.5 million – so the contract was of higher value but this was in line with the corresponding increase in the number of social and affordable apartments. There was, however, much more substantial change in the way Bartra was to be paid for them, as we will detail below.

Now a much better deal had been agreed instead of DCC calling in a guarantee from Bartra, forcing it to build at potentially loss-making prices agreed before Russia invaded Ukraine and sent building material prices surging. DCC was arguably right to recut its deal with Bartra to get the project moving, rather than risk more delay or litigation.

But the detailed circumstances in which the deal was changed to ensure the project went ahead are not widely known.

The Currency asked DCC why it made a modification to its initial agreement with Bartra rather than insisting the private property investor honour the original deal it had signed. The local authority gave a detailed explanation justifying the modified deal.

The council began its statement by noting how Covid-19 had caused a series of lockdowns from March 2020 until October 2021. “The impacts of Covid-19 deeply impacted the Irish economy causing it to enter a recession,” DCC said. 

It also said that on February 24, 2022, Russia invaded Ukraine, causing a refugee crisis and pushing energy prices to record levels while disrupting supply chains. “These events led to, amongst other things, large increases in the costs of construction materials,” DCC said. 

DCC cited various indices from the Central Statistics Office showing increases in the price of materials such as timber and reinforced steel, which rose by 60 per cent in 12 months. 

Underpinning financial model becomes unviable

“As a result of these impacts, the financial model underpinning the original Development Agreement became unviable such that Bartra were not able to deliver the Project in line with the original Development Agreement which was signed in 2019 following a tender process that commenced in 2017,” DCC said.

In 2022, DCC and Bartra spent six months negotiating what measures needed to be taken for O’Devaney Gardens to be built. DCC was under pressure to start building on O’Devaney Gardens, a high-profile site that is a testament to the council and the State’s inability to build homes for its people in a country that is one of the richest in the world. DCC didn’t say this exactly in its statement, but it did give a sense of the pressures it was under to do a deal. 

“This is in the context of the urgent need for the delivery of residential units as Ireland is experiencing a housing crisis where there is a lack of housing stock and house prices and rents continue to increase,” it said. It added that its decision to give Bartra a better deal that wasn’t on the table originally was legal:

“Under EU law, a public contract such as the Development Agreement can be modified during its term without a new procurement procedure if it falls within one or more of a number of ‘safe harbours’ or ‘derogations’ within Regulation 72 of the European Union (Award of Public Authority Contracts) Regulations 2016.

“The modification notice was permitted by Regulation 72(1)(c) of the Regulations on the basis that the need for the modifications have been brought about by circumstances which DCC and the Developer could not have foreseen at the time of tender and that the modification did not alter the overall nature of the contract which was the delivery of a mixed-tenure residential development.” 

DCC said it dispatched this modification notice on December 22, 2022 and this was published in the Official Journal of the European Union on December 27. “The publication of the modification notice in the OJEU notified the market of the modifications and why they have been made. This process ensured transparency and afforded third parties an opportunity to bring a challenge if they so wished,” it said. 

DCC claims nature of agreement not changed

Asked who approved this recutting of the deal, DCC said: “The modification was approved by the Project Board of the DCC Housing Land Initiative (HLI).” 

Did any party seek to try and take over the contract from Bartra after the funding model of O’Devaney Gardens was changed? “No. DCC is not aware of any challenge(s) to the modification notice to date and the modifications did not alter the overall nature of the original Development Agreement.”

The modification of DCC’s agreement with Bartra in the Official Journal of the European Union and on TED does not change the nature of what was to be developed, but it does change its funding. Instead of providing finance upfront for the entire construction project at a time when interest rates are at a 20-year high, the private developer is now receiving the bulk of the funds needed for the construction of social and affordable homes on a month-to-month basis from DCC. Section VII 2.1 from the TED filing states:

“Dublin City Council and Bartra have identified that a change to the funding model for the Development Agreement is required in order to permit the Project to proceed. In the Development Agreement, it is anticipated that Bartra is paid for ‘Social’ and ‘Affordable’ units when they are completed. In order to change the funding model, this would require modifications to the Development Agreement as follows:

(a) Bartra would deliver 283 ‘Social’ and 233 ‘Affordable’ residential units in line with planning permission– this is a greater number than provided for in the Development Agreement, however, it represents the same percentage of total units for each typology;

(b) The ‘Social’ residential units would be funded on a stage and monthly basis, with each stage being funded 80 per cent by Dublin City Council subject to a fixed price for all ‘Social’ residential units. On completion of the ‘Social’ residential units, Dublin City Council will pay the remaining 20 per cent for the fixed price applicable to the relevant units and will acquire those units;

(c) The development costs of the ‘Affordable’ residential units would be funded by Dublin City Council on a monthly basis. When the ‘Affordable’ residential units are sold by Bartra to a nominee of Dublin City Council, Bartra will repay Dublin City Council the funding provided by Dublin City Council in respect of each unit along with an element for interest and Dublin City Council’s monitoring costs;

(d) The costs of an enabling works contract for the site will be incorporated into the funding model for the ‘Social’ and ‘Affordable’ residential units as set out at (b) and (c) above. Dublin City Council will contribute to the costs of enabling works attributable to the ‘Social’ residential units at 80 per cent and the ‘Affordable’ residential units at 100 per cent. Bartra will repay the costs of the enabling works contract relating to ‘Affordable’ residential units to Dublin City Council, on the sale of each unit to a nominee of Dublin City Council;

(e) Dublin City Council will operate retention on the funding relating to ‘Social’ and ‘Affordable’ residential units, which will be on a back-to-back basis with the retention provisions in the construction contracts between Bartra and its construction contractors. This is to provide protection for Dublin City Council in relation to any defects in the units;

(f) Bartra will provide Dublin City Council with additional project security in respect of the performance of its obligations.”

More social and affordable houses than originally planned

The Currency put a series of questions to DCC about the above. 

1. The Currency:  Does DCC accept that the addition of this section made the O’Devaney Gardens (ODG) project fundamentally different from a financing perspective than the contract it originally won in 2019?

DCC: Whilst the modification does change the funding model for Affordable and Social units, the need for the modifications was brought about by circumstances that a diligent contracting authority such as DCC could not have foreseen and the modifications did not alter the overall nature of the contract. The modification was made in accordance with the Regulations and in circumstances where the delivery of residential units is urgently required in the midst of a national housing crisis. It is also worth noting that the modification ensures that DCC will obtain a greater number of Social and Affordable residential units than originally provided for under the Development Agreement.

2. The Currency:  Given the scale of the changes, why didn’t DCC re-tender the project?

DCC: A termination of the original Development Agreement would have meant that DCC would have to commence, amongst other things, a new public procurement process. This is in circumstances where it is in a live contract with the incumbent developer that has obtained planning permission for the site. Any termination had the potential to expose DCC to liabilities under the existing Development Agreement and a new process would have entailed significant additional costs and delays to the ODG project. Such an approach could have delayed the project and the delivery of much-needed homes by up to 10 years.  

3. The Currency: The previous agreement was voted through by Dublin City Councillors. Was this modification also voted through by councillors?

DCC: The modification was approved by the Project Board of the DCC Housing Land Initiative (HLI). The modified Development Agreement remains in line with the approval previously provided by Dublin City Councillors and as such there was no need for a modification or amendment of that approval.

4. The Currency:  What additional project security did Bartra provide as mentioned in point F above?

DCC: The funding mechanism provides for strict payment provisions and the Developer agreed to provide a floating charge over bank accounts in favour of DCC. Oversight of the project is ensured by DCC through the creation of DCC’s “Technical Monitoring Team” which was appointed by DCC for the purpose of providing technical monitoring services on the project. 

DCC is operating retention on the funding relating to Social and Affordable residential units. This is to provide protection for DCC in relation to any defects in the units. 

5. The Currency:  DCC’s website states that in 2019, “Bartra Property Residential Holdings has been selected as the most economically advantageous tender based on the specified award criteria for the competition.” But on the TED website, DCC says its contract is with “Bartra ODG Limited.” Why is this a different company?

DCC: Bartra Property Residential Holdings was selected in the original tender, however, it created an SPV known as Bartra ODG Limited for the purpose of entering the Development Agreement. This was permitted by the terms of the public procurement process.  

6. The Currency:  In the original 2019 contract, Bartra states that there was a guarantor to the project. The guarantor is not named in the publicly available documents but in the context, is it a company within the Bartra group or owned by one of the promoters of Bartra? What was the name of the company that provided this guarantee to DCC? 

DCC: The “Guarantor” is Bartra Capital Limited.

7. The Currency:  Is the guarantee still in place with DCC as it is not referred to in the modifications?

 DCC: The guarantee was not modified and remains in place. 

8. The Currency:  As set out above, DCC is now prepared to fund much of the project on a monthly as well as on a completion basis. How much does DCC project that this will cost?

DCC: See response to question 10 below.

9. The Currency:  Bartra has raised significant capital from Chinese investors under the Immigrant Investor Programme which is now discontinued. Can DCC confirm if there is money from this programme invested, or to be invested in ODG?

DCC: Bartra’s funding for ODG is a matter for Bartra.

10. The Currency:  ODG is a badly needed development in the housing crisis. Will DCC consider offering this modified funding arrangement for Bartra to other firms? 

DCC: DCC is committed to delivering much-needed housing in accordance with the objectives of the Dublin City Development Plan 2022-2028 whilst maintaining compliance with public procurement regulations.

11. The Currency:  Is there any other comment DCC would like to make on the project?

DCC: The contract value is specified in the modification notice. DCC is not funding the private element of the ODG project and any development costs paid by DCC is to be repaid by the Developer.

The ODG project shall deliver 283 Social and 233 Affordable residential units in line with planning permission. This is a greater number than provided for in the original Development Agreement.

When the Affordable residential units are sold by Bartra to a nominee of DCC, Bartra will repay DCC the funding provided by DCC in respect of each unit along with an element for interest and DCC’s monitoring costs.

More questions to Dublin City Council 

The Currency submitted further questions to Dublin City Council following receipt of this first set of responses.

1. The Currency: Can DCC confirm that Bartra Capital Limited is a Hong Kong-based entity? 

DCC: Confirmed.

2. The Currency:  Did DCC explain to its councillors that it was signing a guarantee with a Hong Kong entity in 2019? 

DCC: DCC elected representatives discussed this with Council Officials in a meeting on October 20, 2020.

3. The Currency: When DCC accepted this guarantee in 2019 from Bartra Capital Ltd, how did it satisfy itself that this company had sufficient assets and that as a local council based in Ireland, it would be able to enforce a guarantee against a Hong Kong entity, should it be required to? 

DCC: The NTMA participated on and advised the assessment panel during the procurement procedure. They carried out any financial analysis and advised DCC accordingly.

4. The Currency:  When DCC modified its contract with Barta in or about December 2022, did it ask Bartra Capital Ltd for a revised statement of assets or did it rely on the old figures from 2019?

DCC: DCC sought revised financial confirmations and confirmed that the guarantor was in equal or better financial health.

5. The Currency:  Bartra Capital Ltd provided a guarantee to DCC in relation to ODG in 2019. Why didn’t DCC call in this guarantee and insist the project was built on the agreed terms? Was that not the point of it?

DCC: The original development agreement was executed in December 2019 and the planning permission was granted on 16 May 2022.  There were well-documented delays to the commencement of the project attributable to both planning (ABP inserted a condition which the developer judicially reviewed) and Covid-19 (commenced early 2020).

To call in the guarantee would involve an order known as an order for specific performance. Specific performance is a discretionary equitable remedy available to the courts to oblige the developer to perform their duties under the Development Agreement. Specific performance is usually seen as an alternative to monetary relief, when monetary relief is deemed to be inadequate in the circumstances. Furthermore, specific performance will generally not be awarded by a court where the claimant already has an adequate remedy under the law at their disposal, ie damages.

The development of homes on these lands is of greater priority to DCC. Ultimately we opted for a route that delivered these much-needed homes for the city rather than litigation and the associated lengthy delays.   

6. The Currency: Did DCC have any concern that the guarantee might be hard to enforce so it decided to instead modify the deal?

DCC: As outlined above, DCC’s priority is for delivery of homes on these lands.

All options were reviewed by DCC when considering the position under the Development Agreement. A detailed risk assessment of all options was undertaken between June and November 2022 with reviews, inputs and advices provided by Mitchell McDermott Cost Consultants, Mazars and ByrneWallace Legal. This included enforcing the guarantee and the costs involved if the guarantor chose to oppose any enforcement.

The outcome of this assessment was put to the Project Board at a meeting in November 2022 and ultimately, the key objective of delivering homes during a housing crisis was the decisive factor in proceeding to modify the Development Agreement.

7. The Currency: DCC states: “Bartra’s funding for ODG is a matter for Bartra.” Effectively, this says as far as DCC is concerned, Bartra’s funding could come from anywhere. Surely, it has to be confident of the source of funding of its business partner in ODG? Does DCC wish to add to this comment?

DCC: DCC confirmed that a retail bank is providing development funding to Bartra, however, DCC is not a party to or privy to the funding arrangements

8. The Currency:  DCC states in its response: “DCC is not funding the private element of the ODG project and any development costs paid by DCC is to be repaid by the developer.” Has DCC agreed or is it in discussions to take on some of the “private element” from Bartra for cost rental? Is the statement above currently correct, but potentially subject to change in the future?

DCC: DCC did explore the option of providing cost rental homes from some of the “private element” but are currently not pursuing this further.

Who is Bartra?

The Currency submitted questions to Bartra asking it to comment on various aspects of O’Devaney Gardens, including its financing and its modified contract with DCC. Bartra declined to do so, referring questions to DCC.

Founded in 2015 by Richard Barrett, Bartra has built or is building €2 billion worth of projects in Ireland. It employs 35 people across healthcare, social and affordable housing, private housing and a small amount of commercial property. Its healthcare division owns three nursing homes with a capacity of over 600 residents. 

It has said it has plans to build more than 3,000 homes primarily in the social and affordable sector. It also owns Niche Living, a sub-brand which has built a co-living building in Dún Laoghaire, and it has plans for another one in Ballsbridge. Most of its projects are low-profile, but a few have been the subject of long-running planning battles, notably on a 0.28 hectare site at Bulloch Harbour in Dalkey which has been objected to by some local residents including the broadcaster Pat Kenny. 

The money behind Bartra comes from Barrett, but it has also raised hundreds of millions from China under the Irish Government’s Investor Incentive Programme (IIP). James Hartson, co-founder of Bartra Wealth Advisors, described his success raising money overseas over a six-year period in a recent podcast. “In that time, we’ve raised over half a billion euro for deployment in the Irish economy,” he said.

Not all of this money was necessarily under the IIP programme but certainly a lot was. On its website, Bartra Wealth Advisors says it has “helped hundreds of families immigrate to Ireland, while maintaining an application approval rate of 100 per cent and a 100 per cent renewal rate.” Never having an application rejected is a very high success rate.

The government shut down the IIP scheme in February, with a deadline of May to submit any outstanding applications. The Oireachtas Public Accounts Committee heard that the scheme was closed because applications had been “going through the roof” and were “really quite unmanageable”. Closing the scheme, the then minister for justice Simon Harris said: “Since its inception, the Programme has brought significant investment to Ireland and has been operated by my department to the highest professional standards.”

“However, it is important that we keep all programmes under review including any implications for wider public policy, such as the continuing appropriateness and suitability of this programme for cultural, social and economic use,” Harris added.

“We have also taken on board a number of reports and findings from international bodies such as the EU Commission, Council of Europe and OECD on similar investment programmes.” In total, the IIP raised €1.25 billion from overseas investors. 

Further reading

“Heaven after 19 years of torture”: What one Dublin social homes project tells us about the housing crisis

Who will run the much-needed public-public partnership for social housing?