University of Limerick Purchases Site Without Formal Valuation Assessment
A critical report has been issued by the Comptroller and Auditor General (C&AG) on the University of Limerick procedures surrounding property purchases made in 2019 and 2023, highlighting significant issues with the acquisition processes for two key sites.
Lack of Formal Valuation for Honan’s Quay By University Of Limerick
One major finding of the report is that no formal valuation was conducted before the University of Limerick purchased the Honan’s Quay site in Limerick city centre. The C&AG’s investigation revealed that the university bypassed its Finance and Asset Management Committee (FHRAMC), which is responsible for evaluating and reporting on major capital acquisitions. Instead, an external property advisor provided an “ad hoc” valuation.
The report criticised the lack of a formal valuation, noting that it should have been a major concern for the university’s Governing Authority, especially given the proposed additional expenditure of €5 million on the site. The C&AG stated that under the Public Spending Code, at least one formal valuation is required before finalising a property acquisition. The absence of such a valuation was deemed a serious oversight.
The C&AG’s findings further indicated that apart from the external advisor’s advice, no comprehensive assessment was made regarding the site’s condition, development potential, planning issues, legal concerns, or funding for a larger development.
The University Of Limerick purchased the site without a coherent funding plan, and five years later, it has yet to determine the medium to long-term use of the Honan’s Quay site.
Rising Costs and Lack of Due Diligence By University Of Limerick
The report detailed how the cost of acquiring the Honan’s Quay site escalated from an initial estimate of €3 million to over €8 million within seven months.
The university’s offers increased progressively, influenced by speculative property development options and anticipated investment yields. Despite the initial formal offer of €6.5 million, the final amount accepted was €8 million, plus €343,000 to cover the vendor’s VAT liabilities.
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The C&AG found no evidence of an unbiased assessment that would have evaluated the proposal and associated risks before committing significant public funds. There was also no evidence of a neutral review concerning Honan’s Quay acquisition proposal presented to the Governing Authority.
Issues with the Rhebogue Purchase
The report also scrutinised the purchase of 20 student houses at Rhebogue, Limerick, which cost over €12 million—nearly double the price of similar properties in the area. Although the university had developed a formal policy and procedures for property acquisition by this time, the report found non-compliance with due diligence, particularly around planning.
An architect’s report had advised seeking clarification on planning, yet the presentation to the Governing Authority falsely stated that the development was “planning approved.” The report concluded that a warning from Limerick City and County Council about potential unauthorised development was a direct result of inadequate due diligence by the university.
Criticisms of Valuation Methods
The C&AG criticised the valuation method used for the Rhebogue properties, which was based on potential rental yield rather than a comprehensive market valuation. The report highlighted that similar properties were trading at significantly lower prices, making the university’s approach problematic.
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The report also pointed out that the university failed to properly assess the stamp duty implications for the Rhebogue acquisition. The purchase exposed the university to a 10% stamp duty rate, leading to a payment of just over €1 million to the Revenue Commissioners earlier this year.
University Of Limerick Response
The University of Limerick has acknowledged the report’s findings and expressed a commitment to implementing the recommendations. Acting President Professor Shane Kilcommins stated that the university would incorporate the recommendations into its recovery plan and work towards restoring trust among staff, students, and stakeholders.
Kilcommins described the report as disappointing but welcomed it as a step towards uncovering the truth and achieving accountability. He emphasised that rebuilding trust and rectifying the issues identified will be a gradual process.
