A misunderstanding between Dublin City University (DCU) and the Department of Higher Education has seen €4.4million of taxpayers’ cash wasted.

The university has written off the €4.38million in professional fees associated with the development of a new student accommodation block, with nothing to show for it.

Members of the Dáil’s Public Accounts Committee (PAC) described the revelations as ‘absolutely scandalous’ and said the write-off ‘called into question the whole project appraisal process’.

The committee heard DCU redesigned a proposed 1,235-bed student accommodation block after the Department of Higher Education refused to provide funding for the project. The project was due to be co-funded by the university and the department, which provided funding for only 400 beds.

The project remained unviable when it was redesigned for 400 beds, and was abandoned altogether when it emerged students would have to pay €11,500 for a room for the academic year, compared to a target of €6,500.

It is understood that DCU’s development team wrongly believed the Department of Higher Education would agree to co-fund the project after its completion, to subsidise rents.

A Government source claimed the department chose to redirect funding to a different student accommodation development at Trinity College.

The chairman of the PAC, John Brady, commented that the inability to reduce rents through subsidies was ‘the straw that broke the camel’s back, in relation to the engagement between DCU and the department’.

The Sinn Féin TD told the committee: ‘The information I have is that DCU were led up the garden path by the department and the co-funding [arrangements] of this particular project.

‘The department came back and said, “You need to scale back – this needs to be 400 [beds]”. That pushed up the costs.’

Co-funding from the department would have seen rents for the accommodation subsided to an affordable rate, estimated to be around €6,500 per student, for the academic year. However, after the building was redesigned, any potential cost savings were said to have been eaten up by construction inflationary costs, and non-subsided rents increased to an estimated €11,500.

DCU then walked away from the project and wrote off €4.4million worth of professional fees – for designers, surveyors and architects – in its most recent financial statements.

Dublin City University (DCU) ultimately took the decision to shelve the project

Labour TD Eoghan Kenny said: ‘Ultimately, this project is dead in the water. I cannot see how this project will ever proceed.

‘It is the taxpayer, once again, having to take up the charge for ultimately what is a failure from the department and the college itself, while many young adults are trying to avail of student accommodation in Dublin.’

The university first gained planning permission at the site in 2019 and has since been seeking funding solutions to deliver the project, including from the European Investment Bank and Housing Finance Agency.

Construction was impacted by the Covid pandemic and inflation caused by the outbreak of war in Ukraine. Grant funding was eventually provided by the Government to finance 405 beds in 2023.

As inflation continued, however, the university has not been able to find a provider that can deliver the complete project at its current agreed budget.

In October last year, DCU decided to shelve the project.

According to the National Student Accommodation Strategy, published this year, there is a deficit of 15,000 student beds. This increases with the introduction of new university placements, and sees students scramble annually for secure accommodation in or near their respective campuses.

The Oireachtas has previously heard of students sleeping in cars or couch-surfing as a result.

In its annual financial accounts, DCU detailed that loan funding, drawn down from the Ireland Strategic Investment Fund, was secured against its delivery of existing student accommodation for the project. The university has previously constructed purpose-built student housing on all three of its campuses in Dublin: on its main campus in Glasnevin, at the St Patrick’s School of Teaching Campus, and at its All Hallows campus.

DCU stated that on a ‘prudent basis’, it was writing off €4.38million – which includes VAT – spent on approved plans associated with its new on-campus student accommodation project.

‘Due to construction inflation, the project is awaiting a funding solution that can deliver affordable accommodation for students,’ the university’s statement reads.

It detailed that the write-off ‘may be reversible’ should the project proceed to delivery and that DCU has planning permissions in place for the development until 2029. However, Fianna Fáil TD Séamus McGrath told the PAC yesterday he cannot see the project going ahead.

‘This calls into question the whole project appraisal process,’ he said. ‘To go so far down the road without anyone calling for a halt, and to spend €4.38million, only to be stopped at that point… Any suggestion that some of that could be recovered is trying to get a soft landing here.’

DCU’s financial statement details that all spending associated with professional fees had been authorised ahead of time.

A DCU spokeswoman said the university continues to work with all stakeholders, including the Department of Further and Higher Education, to identify and secure a funding solution.

Mr Brady said: ‘There seem to be huge failures here, on a national level, which have led to a student accommodation crisis and we’re left with a writing off of €4.38million. It is absolutely scandalous, given every year the accommodation crisis that faces students.’ A spokesman for the Department of Higher Education said that costs of a proposed tender ‘raised value-for-money concerns and, consequently, a decision was taken not to progress the project’.