Office of the Comptroller and Auditor General - Press release VFM examination report on The Central Bank

Press Release

The Comptroller and Auditor General, Mr John Purcell, has today published a report on his examination of arrangements for the provision of a multi-storey car park at Beaumont Hospital, Dublin.

Background

In 1998, Beaumont Hospital arranged for the construction of a multi-story car park on the Hospital campus. The arrangement involved

  • procuring construction of the car park at a fixed price through a tendering process
  • separately awarding a concession to a developer to finance and operate the facility.

During the audit of the financial statements of Beaumont Hospital Board for 1999, there were difficulties in establishing the circumstances surrounding the development of the car park. The Comptroller and Auditor General decided to undertake an examination of the provision of the multi-story car park with a view to preparing a special report on the matter. This is the resulting report.

Main Findings

  • The multi-storey car park, which cost ?8.6 million, opened in June 1999 and provided 600 spaces. However, it was built on the site of the existing main ground car park and therefore eliminated 370 ground parking spaces. Thus, the number of additional parking spaces provided was 230.
  • The developer selected to finance and operate the facility took over the construction contract from the Hospital's subsidiary and bore the costs of providing the facility. In return, the developer was granted a lease over the site and the right to charge parking fees to customers. The arrangements provide for the car park to be handed over to the Hospital after 13 years.
  • The legal and financial arrangements put in place to provide the facility were very complex. They provided for the developer and a partnership of investors to avail of substantial existing tax breaks to encourage the construction of multi-storey car parks.
  • From a public finance perspective, the tax-based funding method was more costly than direct provision of the car park by the Hospital. Analysis indicates that public finances were worse off by between ?9 million and ?13 million, in net present value terms, as a result of choosing the tax-financed option.
  • Three proposals to develop and operate the facility were short listed for consideration. Each proposal included a guaranteed income level for the Hospital and a profit share. All three proposals provided a reasonably similar level of income at the lower levels of turnover for the car park, but the company that was awarded the concession offered less income at higher turnover levels. This was not recognised in the financial ranking of the proposals.
  • Before the car park was built, the Hospital received around ?500,000 a year from charges for the use of ground parking spaces. The car park deal was expected to yield a minimum of ?659,000 a year to the Hospital. In practice, the Hospital has not received the expected rental income.
  • Based on the terms of the accepted proposal, the Hospital should have expected to receive income of at least ?1.8 million for the period June 1999 to 31 March 2002. Only ?120,000 was received. A combination of a failure to properly manage parking in the Hospital grounds, a lack of management awareness and the inappropriate application of agreed contract terms contributed to the shortfall of ?1.7 million in receipts.
  • The Department of Health and Children has established a group to examine the lessons to be learned from this project and to prepare guidelines for the proper management of such initiatives in future. The group is also examining the potential for direct provision of parking facilities using loan finance.

Mr Purcell stated today

?Partnerships between the public and private sectors are becoming a popular means of procuring public capital projects. The Beaumont Hospital car park experience is a salutary lesson that such partnerships do not necessarily represent good value to the State. All so-called win/win proposals should always be subject to rigorous evaluation.?

Note for Editors

The Comptroller and Auditor General is an independent constitutional officer with responsibility for the audit of public funds. He reports to Dáil ?reann.

The full text of the report is available on the website of the Office of the Comptroller and Auditor General (go to www.gov.ie/audgen/)

For further information about the report, please contact:

Seamus McCarthy at (01) 603 1035 or at Seamus_McCarthy@audgen.irlgov.ie


The contents of this page were last updated on 26/09/03