Tag Archives: Debt

Mangawhai, Kaipara —we hear ya!

Received from our northern friends (html email partially rebuilt here).
Wednesday, 29 January 2014 4:10 p.m.

MRRA 1aGetting the Validation Bill ready for Parliament

● The new Mangawhai Ratepayers and Residents Association (MRRA) website can be viewed here.
● “When Government Goes Bad” – see the MRRA video on YouTube.

The KAIPARA VALIDATION BILLMRRA 3

KAIPARA’S PROBLEMSMRRA 4Parliament “solves” the problems of Kaipara with the Validation Bill

LATEST NEWS
OAG report: Summary
OAG report: Full Report* (click the sections on the left)
*Link to download report (PDF, 2.6 MB; 423 pages) is broken at OAG website.

A MESSAGE FROM THE MRRA
3 February 2014
The day that JUSTICE finally comes to Kaipara

Come to the Court Case in Whangarei 3-7 February
The High Court is located at 105-109 Bank Street Whangarei
The hearing commences at 10 AM.
You have paid for this, so come and watch it play out. Those who came last time were glued to their seats for the whole day. Watching our justice system in action when the matter is one you are involved in is a riveting experience.
[Six days at court] might be needed but we won’t know until Feb 3rd. The hearing should play out as follows: Administrative stuff first, then MRRA puts its case (possibly all of Monday and some of Tuesday), then KDC puts its case Tuesday and all of Wednesday. Then MRRA replies, which will take part of Friday. The judge will then sum up and indicate what he is going to do, and perhaps reserve his decision which he would then hand down in writing some time later.
The Judge has instructed that a second courtroom be made available with closed-circuit TV to accommodate the large number expected to attend this hearing.
In an earlier decision the Judge said that this judicial review raises important legal questions of wide public interest.
It may be one of the most important cases in connection with Local Government that has ever gone to trial in New Zealand. The issues at stake are of fundamental significance to everyone who lives in this country. This is not a tiff over rates. This is a test of what power elected and appointed officials really have to take money from ratepayers and taxpayers and use it in any way they choose. The Government and the Kaipara District Council (KDC) both say that councils must have the power to take any amount of money they want, for any purpose whatsoever, and the ratepayer has no say at all in the process.
If you think that’s OK, then we have not reached you. If you think it is not OK but nothing can be done about it, please be assured that something can be done — and it is in the High Court where that will happen. Eventually, the people will call a halt to the madness.

COUNCIL INCOMPETENCE 29.01.14
Frank Newman comments here on the Dunedin City Council’s fancy $230 million covered stadium that “will forever be a black hole that eats ratepayer money”.
There will be no easy fix for Dunedin’s ratepayers. Their elected representatives of the day were reckless and ratepayers will be punished for a very long time because they (as a society) elected a reckless bunch of people to make decisions on their behalf.
I do not know of the Dunedin Councillors complied with the law and consulted with ratepayers but Kaipara ratepayers find themselves in a very similar situation.
The debt for EcoCare is completely unmanageable for a small council such as the KDC but the Commissioners and the Banks have so far delayed the inevitable day of judgement by mesmerising ratepayers with promises of only three percent rate increases over the next ten years.
How can that happen, you might ask, when there is such a massive debt to pay? The answer is that it can’t. But to levy high rates now and charge extra capital payments per household right across the district would result in a massive rate strike and civil disobedience and the collapse of the KDC.
To prevent that, the Commissioners and the Banks have made promises of minimal rate rises that cannot be substantiated and are so dishonest that they border on the criminal. They are nothing more than a confidence trick and the reality is that, sooner or later, ratepayers across the district will be billed for the principal of the debt. Generations of Kaipara ratepayers will pay for the EcoCare folly just as generations of Dunedin ratepayers will pay for their Stadium folly.
The only difference is that the MRRA has challenged the validity of the Kaipara debt in the High Court and is asking that Court for a ruling that ratepayers are not responsible for an illegal debt that was secretly entered into by the Councillors.
Never before have ratepayers made such a challenge and no doubt many ratepayers across the country will be awaiting the outcome.
If Councils can operate outside the law with utter impunity, with all the watchdogs sound asleep, and the ratepayers have to pay all the bills, then we have been conned into being the peasants at the bottom of a 21st Century feudal system.
That is not a good place to be but unless we get behind the MRRA and support its action, then that is where we will end up.

[ends]

****

LAST WORD from What if? Dunedin…
Will DCC’s stadium review be enough? Answer: NO
We’re staying busy —can’t blog it.

Related Posts and Comments:
3.12.13 LGNZ: OAG report on Kaipara
12.11.13 Northland council amalgamation
29.6.13 Audit NZ and OAG clean bill of health —Suspicious!
21.4.13 Councils “in stchook” —finance & policy analyst Larry.N.Mitchell
19.3.12 Local government reform
21.2.12 Kaipara this time

Posted by Elizabeth Kerr

9 Comments

Filed under Business, Democracy, Economics, Geography, Inspiration, Media, Name, New Zealand, People, Politics, Project management, What stadium

DCC Annual Report 2012/2013

The annual report is now available at the DCC website and below.
It is provided by sections in .PDF format.

Standard & Poor’s
Standard & Poor’s Financial Services LLC, provides independent financial information, analytical services, and credit ratings to the world’s financial markets. For more information go to Standard & Poor’s.

S&P Full Analysis Dunedin City Council (PDF, 321 KB)

Annual Report Documents
Annual Report 2012/13 Full version (PDF, 1.2 MB)
Organisational and Financial Management Report, Significant Activities Report and Council NZIFRS Financial Statements

Annual Report 2012/13 Section 1 (PDF, 399.4 KB)
Organisational and Financial Management Report

Annual Report 2012/13 Section 2 (PDF, 448.8 KB)
Significant Activities Report

Annual Report 2012/13 Section 3 (PDF, 361.1 KB)
Council NZIFRS & Financial Statements

Annual Report 2012/13 Appendix (PDF, 172.6 KB)
Community Outcome Monitoring, Supplementary Information

Annual Report 2012/13 Summary (PDF, 531.8 KB)
Dunedin City Council Annual Report Summary

OPEN MEETING ABOUT DCC FINANCES
When: Wednesday 27 November 5:30pm-7:00pm
Where: Meeting Room One, Municipal Chambers
ALL WELCOME – hosted by DCC Finance Committee

Related Posts:
23.11.13 DCC: Finance Committee [public forum] 27 November
17.11.13 DCC Finance Committee: Public meeting 27 November [INVITE]

Posted by Elizabeth Kerr

36 Comments

Filed under Business, DCC, Economics, Politics, Project management, Stadiums, What stadium

Northland council amalgamation

### radionz.co.nz Tuesday 12 November  -  12:20 pm NZT
(Updated 38 minutes ago)
RNZ News
Single council for Northland proposed
The Local Government Commission has recommended a single unitary council for the whole of Northland.
The commission at Waitangi on Tuesday revealed its draft proposal for reorganising local government in the region. It proposes one council and one mayor for Northland and a second tier of community boards.
A new nine-member council, to be based in Whangarei, would replace Far North District Council, Whangarei District Council, Kaipara District Council and Northland Regional Council.
The commission also proposes a special council committee to represent Northland’s large Maori population.
RNZ Link

Northland RC boundary map (400) 1

Related Posts and Comments:
29.6.13 Audit NZ and OAG clean bill of health —Suspicious!
21.4.13 Councils “in stchook” —finance & policy analyst Larry.N.Mitchell
19.3.12 Local government reform
21.2.12 Kaipara this time

Posted by Elizabet Kerr

2 Comments

Filed under Business, Democracy, Economics, Geography, Media, New Zealand, People, Politics, Project management, Stupidity

DVML works media/DCC to spend more ratepayer money

Dunedin Venues Management Ltd (DVML) has been testing the stadium sound system since February, and has discovered it is only working at 20% of what is needed.

Queries about the sound system were only some of a barrage of questions from Dunedin city councillors before they adopted the annual reports of DVML and Dunedin Venues Ltd this week.

### ODT Online Sat, 12 Oct 2013
Stadium PA fix up to $800,000
By Debbie Porteous
Permanently fixing problems with Forsyth Barr Stadium’s public address system would cost between $500,000 and $800,000.
DVML chief executive Darren Burden said the cost did not include permanently fixing sound issues with the wider auditorium, such as those experienced at concerts. They would continue to be addressed by temporary measures installed by promoters.
He said DVML had been working with acoustic engineers and sound system experts, including the company that installed the system. There were problems with the transmission of sound from microphones on the pitch to the sound box that delivered sound to speakers around the stadium.
The solutions, which ranged in price depending on what standard of sound delivery was wanted, involved improving the sound transmission from the field and installing more speakers around the stadium.
The cost of fixing it had to be dealt with internally by DVML.
Read more

****

Darren Burden, DVML [odt.co.nz]Head in the Sand Award?
Cr Richard Thomson said he appreciated Mr Burden (pictured) might wonder why he bothered when faced with such a barrage of questions from councillors. ”But it is really important for the city that this delivers as much revenue as possible.” (via ODT)

Comment at ODT Online:

Who is accountable?
Submitted by russandbev on Sat, 12/10/2013 – 9:06am.

Just another example of the difference between reality and hype. Ratepayers have been assured since the building of this rugby stadium that the PA system was state of the art. Indeed, the hype from the Carisbrook Stadium Trust before the build indicated that it was even better than that. Now ratepayers are told that it will cost the best part of a million to get right for the most basic of requirements, and that the costs of running the stadium will rise. Who is being held accountable? Not those responsible for this ongoing shambles, but only the ratepayers.

Related Posts and Comments:
7.10.13 DCC councillors, no idea of annual cost of owning and operating…
4.10.13 DVML . . . | ‘Make the stadium work’ losses continue
20.8.13 DVML foists invoices on DCC
20.6.13 Stadium: DVML, DVL miserable losers! #grandtheftdebt
30.12.12 To DVML Board, from Ian Tayor [sic]
11.12.12 Stadium: DCC runs amok with $750K annual subsidy to DVML
2.11.12 Stadium financials: Calvin Oaten on DVML, DVL and DCHL
2.11.12 Stadium financials: JimmyJones v Peter Hutchison (DVML)…
19.10.12 LGOIMA request: Breakdown of DVML recruitment costs [emails]
19.10.12 Weak boys, Cull and Burden on rugby stadium
11.10.12 Darren Burden plays LGOIMA game like Davies #DVML #PsychoAnswer

For more, enter the terms *dvml*, *darren burden* or *stadium* in the search box at right.

Posted by Elizabeth Kerr

5 Comments

Filed under Architecture, Business, Concerts, Construction, CST, DCC, DCHL, Design, Disinformation, DVL, DVML, Economics, Events, Media, Name, New Zealand, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, Stupidity, What stadium

DCC councillors, no idea annual cost of owning, operating FB Stadium

Updated 2013/10/08 at 10:47 am.

DCC departing councillors [ODT Files 8.10.13] 1Platitudes — and much more, including seriously remiss untruths about the ‘value’ of councillor contributions — flew at yesterday’s city council meeting. Dunedin City Council members farewelled five long-serving councillors at their final meeting: Neil Collins, Syd Brown,
Bill Acklin, Fliss Butcher and Colin Weatherall.

Councillors said Cr Brown was a fair-minded and trusted member, a consistently hard worker who made a ”very substantial” contribution, especially on financial issues and as a strong advocate for Mosgiel, in his 15 years on council. ”He is a wise old owl. When he speaks, I listen and know we all do,” Cr Collins said.

Read more at ODT Online.

——————

Comment received.

JimmyJones
Submitted on 2013/10/07 at 6:31 pm

The average DCC councillor still has no idea of the annual cost of owning and operating the FB Stadium. They have been misled by the way the annual reports are arranged and they get confused because there are two stadium companies with similar names, as well as an interest cost to the DCC for the loan to buy the shares to buy the stadium.

Jim Harland, Paul Orders and their staff have been asked many times to disclose the total financial impact of the stadium. Mr Orders eventually promised to do this at an annual plan public meeting, but it hasn’t happened.

The annual reports of the stadium companies (DVL & DVML) to be approved today by our hapless councillors, have enough info to calculate a good estimate of the total cost.

These figures are from the annual reports page 6 (DVL) and page 9 (DVML). Remember that in these reports the term “subvention payment” means “subsidy” and has the effect of disguising the size of the companies’ losses. The city’s renters and ratepayers end up paying for both the disclosed losses and the subsidies so we need to add them together to get the total impact.

Total Stadium Impact:
Item:___Disclosed Loss_____Subsidy_______Total Loss
DVL:______$4.8 million______$7.3 million_______$12.1 million
DVML:_____$1.0 million______$0.6 million_______$1.5 million
Cost of interest on debt for DVL shares:________$5.1 million
Cost of rates subsidy for DVML (approx):_______$2.0 million
Total Ratepayer Impact (approx):_______$20.7 million

The DCC held stadium debt is $78 million and I have chosen the interest rate to be 6.5%. There might be some other costs that I haven’t thought of. The actual interest rates paid by DVL seems unrealistically low to me at 5.87%. Most DCC projects are charged 7.00%, so DVL’s low interest rate could amount to a secret subsidy of $1.6 million.

Anyway, $20.7 million per year is a lot of money and citizens and councillors need to know what is going on. We have heard DCC mayors and councillors promise financial transparency, but it seems that some of them have wanted to keep this figure quiet.

[ends]

Posted by Elizabeth Kerr

*Image: odt.co.nz – departing city councillors who brought you the stadium, one way or the other . . .

19 Comments

Filed under Business, DCC, DVL, DVML, Economics, Project management, Property, Site, Sport, Stadiums, What stadium

Audit NZ and OAG clean bill of health —Suspicious!

Received from Martin Legge
Saturday, 29 June 2013 9:53 a.m.

Learn how the Kaipara council was repeatedly given a clean bill of health by Audit NZ despite the massive debt and obvious governance problems.

Compares with how OAG assured me they were closely monitoring the TTCF investigation into how it was that ORFU and Racing were able to fleece $7 million from the South Auckland community. The truth is, DIA lost that file and therefore didn’t investigate and instead deliberately covered the loss up. OAG appear OK with this and issued DIA with a clean bill of health.

Our trust and faith in the work of these well resourced “highly educated desk jockeys” is misplaced!!!

### NZ Herald Online Saturday, 29 Jun 2013 8:48 AM
Fresh probe begins into debt-ridden council
By Andrew Laxon
The commissioners of debt-ridden Kaipara District Council have begun a new inquiry into its past financial decisions, including the advice it received from former chief executive Jack McKerchar. The tiny Northland council is struggling under an $80 million debt, a long-running rates strike and court action by its own ratepayers over more than $17 million of illegally set rates dating back to 2006. Its former councillors stepped down last year in response to a damning report, making way for Government-appointed commissioners.

Three inquiries are under way into what went wrong. They consist of

● An Auditor-General’s investigation into how the cost of a sewerage scheme at Mangawhai blew out from $11 million in 1999 to $62 million, creating most of the council’s debt.
● An independent inquiry into how the Audit Office failed to notice the excessive debt and repeatedly gave the council a clean bill of health.
● The commissioners’ investigation into other financial transactions they have discovered since taking over last September and see as questionable.

Northland MP Mike Sabin told Parliament ratepayers had been woefully let down by the council’s “mismanagement, incompetence, carelessness and dysfunctional governance”. Mr Sabin, who is sponsoring a local bill to retrospectively validate the illegal rates, said the bill was necessary to keep the council functioning but it would not allow anyone responsible for poor decisions to duck the consequences.
The separate inquiry into the Audit Office’s actions, undertaken by Auditing and Assurance Standards Board chairman Neil Cherry, was not finished.
Read more

Related Posts and Comments:
21.4.13 Councils “in stchook” —finance & policy analyst Larry.N.Mitchell
31.3.13 DIA and OAG stuff up bigtime #pokierorts
21.2.13 DIA, SFO investigation #pokierorts
3.11.12 Stadium: DCC caught in headlights
29.10.12 DCC consolidated debt substantially more than $616m
21.2.12 Kaipara this time

Posted by Elizabeth Kerr

7 Comments

Filed under Business, DCC, Economics, Geography, Media, Name, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, Stupidity, What stadium

Stadium: DVML, DVL miserable losers! #grandtheftdebt

### ch9.co.nz June 20, 2013 – 6:18pm
DVML forecasts small profit
The company that runs Forsyth Barr Stadium has forecast a small surplus for the first time in 2015. DVML has been running at a loss, but forecasts that will change to a $10,000 surplus. But the company that owns the stadium, DVL, has forecast its loss will be about $1 million more than expected, at more than $5 million. DCC chief executive Paul Orders said both were just projections, and the DVL loss was due to tax changes. The forecasts will be considered by the council on Monday.
Ch39 Link [no video available]

SURPRISE
Reports for the Council meeting to be held on Monday 24 June 2013 at 1pm not yet available at the DCC website.

Posted by Elizabeth Kerr

9 Comments

Filed under Business, Concerts, DCC, DCHL, DVL, DVML, Economics, Events, Hot air, Media, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, Stupidity, What stadium

Councils “in stchook” —finance & policy analyst Larry.N.Mitchell

Received Sun, 21 Apr 2013 14:45:37 +1200
Topic ring a bell? We are using DCC and Kaipara as the salutary case studies.

Larry.N.Mitchell
Finance & Policy Analyst (Local Government)

PO Box 404 103, Puhoi 0951, Auckland, New Zealand
Phone: 09 422 0598 Mobile: 027 479 2328
Email: larry@kauriglen.co.nz

Read here or scroll to end of post to download this paper.


Councils “in stchook”
… their debt is way too high … it matters … so do proper disclosures

Dealing as I do, with matters of New Zealand Council finances, the one area that produces most comment, sometimes heated debate, is Council debt. Public discussion of Council debt is muddled, an often fractious difference of opinion generating more heat than light.

For example, the most recent (March 2013) Office of the Auditor General’s report of their findings from New Zealand Local Government audits concludes that Councils have their debt levels “within a reasonable range”. Recent New Zealand Local Government Association press releases concur.

Compare these reassuring findings to those of the 2013 NZ LG League Table where the lowest ranked 15% (10 in number) of New Zealand Councils are revealed as exhibiting unfavourable financial sustainability and community affordability issues. Both contradictory positions can’t be right. Unfortunately, the debate over Council debt is complicated by unsatisfactory public reporting-disclosures.

Discussions of Council debt are often compounded by current Council practices. These amount to opaque, imprecise Council debt accounting and “smoke and mirrors” disclosures. It is tempting to suggest that these are deliberate attempts to suppress discussion of Council debt on a “don’t scare the horses” basis.

This is particularly evident for use of the term by Councils of “Internal Borrowing”, a meaningless label, better described as “Robbing Peter”, covering as it does Council treasury management dealings involving a clear misuse (some might say misappropriation) of asset replacement funds.

Add to these sleights of hand a motivation for the more highly indebted Councils to keep their heads down when their debt totals soar, along with a tendency toward misinformation.
Continue reading

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Filed under Business, DCC, Name, People, Politics, Project management, Property

Stupid bid for two-way highway ditched for now #DCC

The way Dunedin City Council has conducted itself through the spatial plan exercise, including the (rigorously un-critiqued) central city framework, plans for (curiously gentrifying) amenity improvements in the warehouse district, the (nasty, cheap-looking) South Dunedin mainstreet programme and the proposed (hyper expensive $71+ million) South Dunedin cycling network to name but a few ‘vanity’ schemes, you would think the local authority has money to burn, or some virulent disease of the skull chamber. Probably, both.

The mayor, councillors and council staff might be thick as planks but that’s only the beginning of it. There is no money, no council surplus, for ‘own-legacy’ presents of the Cull years (hopefully, to end in October).

There is, now, a well-exceeded $660 million council debt and not far over 50,000 rate accounts to meet that debt at the same time Council continues spending on ill-conceived luxuries, questionable amenities, fripperies and non-necessities. Imperative infrastructure works that we shall refer to as “core council business”, are languishing for want of budget.

Things, thanks to DCC, are terrifically ‘hit or miss’ in the Dunedin district – rural and metropolitan.

All this “imbalance” occurs on a city council platform that refuses to be transparent and fully accountable to the Dunedin community. Council processes and financial (mis)management are a longstanding impenetrable ‘blind’.

Give us strength…
The contentions are not historic heritage and its redemption. Rather, the proponents of the council spend in the warehouse district have subordinated a 40-50 year community (spatial) plan to an accelerated 3-5 year rats nest of conflicted interests chiming in on microcosmic private property speculation – a blip on the radar, despite all manner of talking up by the suits, jean-wearers and council domeheads, and a mayor after another term of office.

Proposed two-way Crawford St, Dunedin 1Proposed two-way Crawford St, Dunedin

Proposed Warehouse Precinct, Dunedin 1Proposed Warehouse Precinct

### ODT Online Fri, 8 Mar 2013
Council parks two-way roading plan for city
By Debbie Porteous
A key component of Dunedin’s Warehouse Precinct Revitalisation Plan – making Crawford and Cumberland Sts two-way – has been shelved because of its controversial nature and a lack of funding. But city council staff say it is not vital anyway, as momentum behind the reuse of buildings in the city’s historic warehouse precinct continues to grow without the roads being altered.
Road Transport Association lower South Island representative Alan Cooper was pleased to hear the proposal was off the table, even if only temporarily.

”It was a stupid idea anyway. They’d be better putting that money into doing up the buildings.”

The council will reword its plan to instead look at ”options” for reducing the negative impacts of Crawford and Cumberland Sts, which are one-way arterial routes on either side of the warehouse district.
Read more

Posted by Elizabeth Kerr

24 Comments

Filed under Business, DCC, Design, Disinformation, Economics, Geography, Heritage, Media, People, Politics, Project management, Property, Site, Sport, Stadiums, Stupidity, Town planning, Urban design, What stadium

DCC debt —Cr Vandervis

Email received.

From: Lee Vandervis
To: Elizabeth Kerr
Sent: Wednesday, December 05, 2012 10:12 PM
Subject: DScene opinion.

I thought my DScene Debt Update was not bad for a 400 word limit, but despite coming within the limit [382 words], the Editor cut the Mayoral criticism out of my opinion, and more importantly my solutions to worsening debt, without noting abridgement! {See comment. -Eds}

Dunedin Debt Denial

At last week’s DCC Finance, Strategy and Development meeting where the last quarter’s financial results were presented, Cr MacTavish asked “Are we doing things differently?”

The DCC net debt chart [attached] shows the past ten years of the same massive debt spending, with future projections hoping for small annual reductions.

These future debt reductions are currently vain hopes.

Despite the earnest efforts of our new CEO to reduce ridiculously high DCC operational costs, unplanned extra debt keeps arriving.

DCHL’s planned annual funding profit of $23 million turned out to be a $5 million loss, DVL lost $4 million, DVML lost $3 million, the Milburn Wood Processing Plant suffered a $3 million write-down, the Chinese Garden continues to lose half a million annually, Toitu Settlers losses will dwarf this, another half million at least has been lost due to the Anzac Avenue site access dispute, the expected $5 million ‘saving’ from Town Hall cutbacks has evaporated, the budgeted Carisbrook sale ‘profit’ of $4 million still hasn’t eventuated, and $3 million of unearned dividend has been spent from the Waipori Fund.

Then there are some less obvious reservoirs of mounting debt.

Development Contributions income has stalled for another year, our lines company Aurora has apparently failed to keep up lines maintenance of a rumoured $40 million in recent years, and our unseen drainage system maintenance/renewals backlog may dwarf the Aurora maintenance bill.

In short, we have bought a new Stadium and much else without being able to pay for it.

Standard and Poor’s threaten an interest-increasing downgrade especially if the Jacks Point/Luggate debacle blows up, and the fuse has already been lit.

To answer Cr MacTavish’s question, we are not yet doing things differently.

The direction of this Council remains unsustainable. Soothing talk by our Mayor Cull of ‘no drop in service levels’, ‘no slash and burn staff cuts’, ‘no witch hunt’ of directors, ‘no heads will roll’, means that the same heads will continue to inflate Dunedin’s debt disaster.

We must do things differently and cut service levels, staff numbers, consultant use, habitual tenders, outside directorships and bring our DCC owned companies’ governance back in-house where we can know what they are doing. [cut out by DScene Editor without noting abridgement]

In a rapidly changing world, it is only by doing things differently that Dunedin can reach its wonderful and sustainable potential.

[ends]

DScene 5.12.12 Debt-laden council needs to change tack #bookmark

Posted by Elizabeth Kerr

2 Comments

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DScene: Dunedin needs “decisive leadership”

Register to read DScene online at
http://fairfaxmedia.newspaperdirect.com/

### DScene 28 Nov 2012
Editorial
DCC needs to shape up (page 7)
By Mike Houlahan
Land transactions under investigation, illegal road building, a debt mountain, monumental building projects, possible credit downgrades. No, not some obscure Balkan country or African military dictatorship, but our home town. There is a vociferous body of opinion that Dunedin is going to hell in a hand cart and events of recent weeks have done nothing to persuade them otherwise.

Delta’s land transactions coming under Audit Office investigation, and a damning court verdict – which has seen Dunedin City Council cop a six-figure court costs order over the State Highway 88 realignment – follow an auditor’s report trying to establish the final cost of building the Forsyth Barr Stadium, and a controversial bailout of the Otago Rugby Union.

A “we will fight them on the beaches” opinion piece from Mayor Dave Cull last week sounded desperate. The announcement soon after from Standard and Poor’s Ratings Services that it had revised its outlook of Dunedin City Council from stable to negative made it look desperate, too. A negative outlook means a one-in-three chance of a credit downgrade in the next two years – unwelcome news for a city well in hock before it borrowed millions more to build the stadium.

The agency does offer a ray of hope – if the DCC’s budgets strengthen, as forecast, its rating could revert to stable. But having just stated doubts the DCC could achieve the financial targets in its long-term plan, Standard and Poor’s are going to take a lot of convincing all is well.

In response, Cull – sounding like a rugby captain before a test – said Dunedin “was up to the challenge of continued financial belt-tightening.” Sadly, in this comparison Dunedin is probably Scotland rather than the All Blacks. Quiet reassurance is no longer enough. If ratepayers are to have faith in the DCC as chamberlains of their assets, they will want to see decisive leadership.
#bookmark

Posted by Elizabeth Kerr

11 Comments

Filed under Business, DCC, DCHL, Economics, Media, Name, ORFU, People, Politics, Project management, Property, Sport, Stadiums, Town planning

Cull COVERS UP COUNCIL #massage

National Radio says Dunedin City Council’s debt has increased to $620 million.

@@@@ Actually, the debt is likely to be much higher than this.

Mayor’s shambolic response to botched SH88 realignment:

Asked if heads would roll over the council’s handling of the saga, Mr Cull replied “No”. “I think things in hindsight could have been handled better … Given the circumstances before the World Cup, there was a lot of pressure to get things done in a hurry. A few things slipped, it’s fair to say. At the time, council did not make the best decisions, but they probably made it in good faith, so that is the way it is.” ODT Link

### ch9.co.nz November 22, 2012 – 7:00pm
Nightly interview: Mayor Dave Cull
Dunedin Mayor Dave Cull has warned city council cost-cutting will continue next year, as the local authority looks to again cut into the rates increase. He suggested in an opinion piece in the Otago Daily Times debt and economic development were the headline issues. He is here to tell us why.
Video

### ODT Online Wed, 21 Nov 2012
Opinion
Debt reduction, economic development focus
Dunedin Mayor Dave Cull lays out what he sees as the challenges facing the city council next year. This year has been a time of challenge and achievement for the Dunedin City Council. Costs and rate rises were substantially contained despite significantly reduced cash-flows. Information flow and public transparency have been enhanced, council confirmed a visionary spatial plan and council company governance has been substantially overhauled and improved.
Read more

STANDARD & POOR’S Rating Services
Dunedin City Council
http://www.standardandpoors.com/prot/ratings/entity-ratings/en/us/?entityID=272160&sectorCode=GOVS

S&P Statement:
Outlook On New Zealand’s Dunedin City Council Revised To Negative; Ratings Affirmed At ‘AA/A-1+’
Publication date: 20-Nov-2012 23:07:36 EST
http://www.standardandpoors.com/prot/ratings/articles/en/us/?articleType=HTML&assetID=1245343655677

MELBOURNE (Standard & Poor’s) Nov. 21, 2012–Standard & Poor’s Ratings Services’ said today that it has revised its outlook on New Zealand’s Dunedin City Council (Dunedin) to negative, from stable. At the same time, the ‘AA/A-1+’ issuer credit ratings on Dunedin were affirmed. The outlook on Dunedin City Treasury Ltd. was also revised to negative, and the issuer credit ratings were affirmed at ‘AA/A-1+’.

“The negative outlook reflects our view that there is a one-in-three chance of a downgrade in the coming two years,” said credit analyst Anthony Walker. “This is based on our view that Dunedin may not achieve its financial targets outlined in its Long-Term Plan, with its after-capital account deficits not improving as quickly as forecast. If this scenario were to materialize, we consider that Dunedin would have limited budgetary flexibility to improve its financial position without deferring asset renewals, which may lead to future infrastructure backlogs.”

Further downward pressure could be placed on the ratings depending on the Auditor General’s investigation into the management of Dunedin’s council-controlled trading organization (CCTO)–Delta Utility Services–which may weaken our assessment of Dunedin’s management of CCTOs; or if there was a change in policy direction such as the introduction of a hard rates cap, or a revised capital-expenditure program without an offsetting increase in revenue which would result in Dunedin’s after-capital account deficits not improving as forecast.

“The ratings could be revised to stable if the council’s budgetary performance strengthens as it forecasts, specifically if the council achieves after-capital account deficits of about 2% of consolidated operating revenues in 2014 and beyond, while maintaining its current budgetary flexibility, and a stable political setting,” said Mr. Walker.

Dunedin City Council’s (Dunedin) individual credit profile reflects the predictable and supportive institutional framework available to local and regional councils within New Zealand, plus our very positive view of Dunedin’s financial management, and the council’s modest contingent liabilities. In our view, these strengths are partially offset by Dunedin’s high debt burden relative to international peers, and low debt-servicing ratio.

Comments received.

Martin Legge
Submitted on 2012/11/22 at 7:46 pm
The reality is most Government Regulatory Agencies are now filled with academics (usually law graduates) who love writing endless reports but lack the capacity, desire or hard edge to conduct interviews where the hard searching questions now being demanded of the “What if” mob will ever be asked.
The OAG have obviously held a cordial chat with the Mayor over this and I bet boundaries of the investigation have been set. AOG didn’t listen to Bev Butler, but the Mayor of Dunedin – he’s a man of importance so let’s get down there!!!!

Anonymous
Submitted on 2012/11/22 at 9:10 pm
The thing with the Delta transactions is that there is a fairly clear trail of what was purchased, where it was held and where the original money came from. The investigation should have Newtons Coachways and Delta Investments Ltd in its scope. If it doesn’t then it is toothless.

Related Posts and Comments:
18.11.12 DCC Annual Report to 30 June 2012 – borrowing and interpretation
12.11.12 Delta purchases | Vandervis OAG complaint accepted

Posted by Elizabeth Kerr

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Afternoons with Jim Mora: The Panel today [DCC interest rate swaps]

### radionz.co.nz Monday 5 November 2012
Afternoons with Jim Mora
http://www.radionz.co.nz/national/programmes/afternoons

The flirtations of our local bodies with money mechanisms on money markets that may be getting ratepayers into schtuck.

16:35 The Panel with Garry Moore and Finlay MacDonald (Part 2)
Topics – Every schoolboy used to know that, at the height of the empire, almost a quarter of the atlas was coloured pink, showing the extent of British rule. An Otago University academic says Dunedin ratepayers should be very concerned about losses on interest and currency swap schemes that appear in the council’s annual report. Millionaire Kim Dotcom would be putting his money where other investors wouldn’t if he goes ahead with plans to relaunch Pacific Fibre, according to Prime Minister John Key. (24′42″)
Audio | Download: Ogg Vorbis MP3 | Embed

16:50 Jim Mora, Dr Robert Hamlin and guests discuss Auckland City Council and Dunedin City Council activities with respect to interest rate swaps (IRS). Together, the councils may have squandered up to $200 million of ratepayer funds. Is a royal commission of inquiry required? In Dunedin City Treasury’s case, interest swap rates and financial derivatives may be being used to ‘assist’ stadium financing, and much more. In the city council annual report the IRS activity goes unexplained, being recorded as (multi-million dollar) losses (see page 146).

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The (NZ) Banking Ombudsman suggests some customers & their advisers don’t understand the product. [IRS and Derivatives]

http://en.wikipedia.org/wiki/Interest_rate_swap

****

### stuff.co.nz Last updated 05:00 04/11/2012
Business
Banks ‘plundering society’ globally
By Rob Stock
Claims banks missold interest-rate swaps to businesses and local authorities have been making headlines around the world. Interest rate swaps are a derivative financial tool used by sophisticated businesses with skilled treasury functions to limit interest rate risk. But it is becoming clear that in places such as Britain, Italy and America, interest-rate swaps were sold by banks to organisations that did not understand the risks they were taking. In case after case, interest rate swaps often sold in 2007 and 2008 as “protection” against interest rates rising sharply have served mainly to protect bank profits by locking businesses and local bodies into high levels of interest ahead of those rates falling.
Read more

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This article is from the May/June 2012 issue of Dollars & Sense magazine.

The Swap Crisis
We have your city. Pay up, or else!
Interest rate swap deals have allowed the big banks to hold local governments and agencies hostage for tens of millions of dollars.
By Darwin BondGraham
In 2002 a little-known but powerful state agency in California and Wall Street titans Morgan Stanley, Citigroup, and Ambac consummated one of the biggest deals to date involving a type of financial derivative called an “interest rate swap.” A year later the executive director of the Bay Area’s Metropolitan Transportation Commission, Steve Heminger, proudly described these historic deals to a visiting contingent of Atlanta policymakers as a model to be emulated. Swaps were opening up a brave new world in public finance by extending the MTC’s purchasing power by $200 million, making a previously impossible bridge construction schedule achievable in a shorter timeframe. The deal would also protect the MTC from future volatile swings in variable interest rates. To top it off, the banks would make a neat little profit too. Everybody was winning.
Then in 2008 it all came crashing down. The financial system’s near collapse, the federal government’s unprecedented bailouts, and global economic stagnation mean that the derivative products once touted as prudent hedges against uncertainty have instead become toxic assets, draining billions from the public sector.
Read more

Posted by Elizabeth Kerr

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Stadium: DCC caught in headlights

Blindsided?

The Otago Daily Times (1.11.12) states:
“Dunedin city councillors are pointing fingers after some were blindsided by a $3.2 million loss by the company running Forsyth Barr Stadium. Some councillors spoken to by the Otago Daily Times yesterday admitted they were unaware they had accepted reports detailing the loss at Monday’s council meeting. Other councillors were aware of the reports, but were still yet to read them properly.” ODT Link

Blissfully unaware, or deliberately avoiding and shielding knowledge of the fact, thereby keeping the public and media at arm’s length from the true state of council finances relating to the stadium project?

That is a question for all elected representatives at Dunedin City Council, the council’s chief executive, the executive management team (EMT), and the governance manager.

Sadly, the annual reports don’t tell the full story of the ‘stadium effect’ – that is, the figures that Dunedin renters and ratepayers will be facing, and unable to pay, when the whole system is called to ‘correct’.

Fire away, Dunedin public.

It’s as if the newspaper editor has suffered a blunt contusion. Sees the problem then runs away to John Wilson Ocean Drive (closed from August 2006), and ends weakly, out of steam, with the hope that those in power “will turn their full attention to making our new stadium a profitable investment of which the city can be proud”, and would they please read the annual report[s].

### ODT Online Sat, 3 Nov 2012
Editorial: Council must keep eye on the ball
Just as it seemed the Dunedin City Council was determined to focus on a different attitude towards debt, revelations that a worse-than-expected $3.2 million loss by the company running the Forsyth Barr Stadium was not even discussed at this week’s full council meeting have put it back in the firing line and raised questions about its priorities. The loss – nearly $1 million greater than forecast – was recorded in Dunedin Venues Management Ltd’s (DVML) 2011-12 annual report, which was released a day later to this newspaper. But it had flown under the radar at the council meeting, with no mention of the reports on DVML or Dunedin Venues Ltd (DVL), which owns the stadium, on the meeting’s public agenda, and no indication those reports had been circulated publicly and to media – as required under the Local Government Official Information and Meetings Act – ahead of the meeting. The reasons for that are unclear and convoluted.
Read more

From our Northland cuzzies, some clues for rabbit hunting…

Image: NZ Herald

### New Zealand Herald 5:30 AM Saturday Nov 3, 2012
Inside Kaipara’s ratepayers revolt
By Andrew Laxon
Many residents of a small coastal town are refusing to pay for a $58 million debt that has crippled their local council and left them with the bill.
The Mangawhai Ratepayers and Residents Association chairman Bruce Rogan has at least 500 local residents refusing to pay an estimated $1 million in rates this year because the Kaipara District Council secretly ran up an unsustainable $58 million debt building a sewerage treatment scheme for about 2000 people who own homes here.
Read more

Dare we say, Dunedin, the amount currently owed by each city ratepayer well exceeds that owed by the good ratepayers of Mangawhai, on the Kaipara.
So, what now?

Posted by Elizabeth Kerr

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Stadium financials: Calvin Oaten on DVML, DVL and DCHL

### ODT Online Fri, 2 Nov 2012
Opinion
DCHL covering DVL and DVML losses
By Calvin Oaten
Stadium finances dismay, says the headline (ODT, 31.10.12). The story states Dunedin Venues Management Ltd (DVML) as posting a loss of $3.214 million. Mayor Dave Cull says “it is not sustainable”.

But let’s look at the combined performance of DVML and Dunedin Venues Ltd (DVL) and we see a fuller picture. Let’s face it, these two entities are joined at the hip and are no more than an arrangement of convenience, for the dispersion of liabilities attached to the stadium. DVML’s loss at $3.214 million is arrived at after receiving revenue of $6.093 million, offset by expenses of $6.395 million.

It then pays DVL $3.667 million rental for the use of the stadium. This is offset by receiving a (subvention) payment of $782,000 from Aurora. Net loss $3.214 million. But we then need to add the carried forward loss of $3.256 million from the previous period to disclose the consolidated loss at $6.470 million.

Turning now to DVL, we find the declared position is: Revenue $3.672 million, expenses $16.051 million for a loss of $12.379 million. This is offset by a (subvention) payment from Aurora of $7.292 million leaving a loss of $5.087 million.

This is offset by a tax credit of what could be $775,000 for a net loss of $4.312 million To this is added interest rate swap losses (a totally incomprehensible concept) of $8.579 million for a total consolidated loss of $12.891 million.

So combining the two scenarios we have a total consolidated loss attributable to the stadium of $19.361 million. This, Mr Cull, is really what is not sustainable.

Interestingly, nowhere in either set of accounts can one find any evidence of income derived from the much vaunted private funding. Why? Is it because as the PwC report says, it can only be treated as operational revenue, and therefore goes direct to the events promoters such as the ORFU?

Looks like it. They in turn simply pay – or not – a rental to DVML for the use of the stadium by event. This is what is expressed in DVML’s revenue statement. All this raises the question: what happens if DCHL is unable to produce those subvention payments?

It has already served notice that since July 1, 2012, it will no longer borrow to provide payments of $23.2 million to the DCC which consisted of, $10.450 million dividend, $5.25 million capital repayment of stadium debt, and subvention payments to DVL and DVML. As can be seen this amounts to $17.25 million offsetting the already considerable losses incurred.

There is no doubt but that the stadium will figure very largely in the city’s future funding difficulties, which are so manifest.
ODT Link

Posted by Elizabeth Kerr

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Stadium financials: JimmyJones v Peter Hutchison (DVML) on accounting method

### ODT Online Wed, 31 Oct 2012
Stadium finances dismay
By Chris Morris
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium’s finances are “not sustainable”, after confirmation the company running the venue lost nearly $1 million more than expected in its first year of operation. The result was contained in Dunedin Venues Management Ltd’s 2011-12 annual report, released to the Otago Daily Times yesterday, which showed the company lost $3.2 million in its first year. [...]A copy of Dunedin Venues Ltd’s annual report was also released yesterday, and showed the company that owned the stadium – and received rent from DVML – recorded a $4.312 million loss for the same period.
Mr Hutchison cautioned against adding the two losses together, as they overlapped, and because DVL’s results were largely accounting losses – not cash – and expected. “It [DVL] is behaving exactly as it should do.”
Read more

More ‘fallout’ stories at the Otago Daily Times:
● Wed, 31 Oct 2012 – Report about stadium loss slips under radar
● Thu, 1 Nov 2012 – Councillors blindsided by DVML results
● Thu, 1 Nov 2012 – Stadium loss rates fears
● Fri, 2 Nov 2012 – Stadium rate ‘tax on being busy’

The following comments appear at ODT Online, in reply:

DVL loss not as expected
Submitted by JimmyJones on Thu, 01/11/2012 – 2:56pm.

DVL and DVML director Peter Hutchison says that the size of DVML’s $4.3 million loss was as expected. This statement does not match with the official forecast in DVL’s Statement of Intent which predicted that the year’s result for 2012 would be $6.5 million (before the ratepayer subsidy). This latest result is a loss of $11.6 million (before ratepayer subsidy) – so this is much worse than expected.
The loss of $11.6 million is much bigger than the official $4.3 million loss because this doesn’t include the $7.3 million DCC subsidy. It is wrong to exclude the DCC subsidy when considering the overall effect on the finances of the DCC and the ratepayers. Both DVL and DVML are paid a subsidy that doesn’t show-up in their net profit/loss figures.

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Stadium losses add up
Submitted by JimmyJones on Thu, 01/11/2012 – 11:47pm.

Mr Hutchison, the director of the stadium owning company DVL, says that the losses of DVL and DVML can’t be added together because they overlap. This is misleading and seems to go against the basic principles of accounting. Each of the companies is a separate entity and they have separately audited accounts. To say that the losses overlap is to claim that one or both full year results are wrongly stated. As a director, Peter Hutchison did however vote that these accounts were true and correct; Their auditor has agreed with this. There is no overlap, and they can be added together.

Adding the two losses gives $3.2m + $4.3m = $7.5 million. The real loss is, however, a lot more than $7.5 million because this figure does not include a number of disclosed and undisclosed subsidies, paid either directly or indirectly by Dunedin’s renters and ratepayers. The DCC has so far actively avoided providing the total of all the ongoing losses and costs of their stadium.

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Big, real, ugly, stadium loss
Submitted by JimmyJones on Thu, 01/11/2012 – 11:57pm.

Mr Hutchison says that “DVL’s results were largely accounting losses – not cash – and expected”. In saying this he is implying that the year’s loss is mostly not a real loss. Our accounting system has evolved over a few thousand years to provide the most “real” measure of profit/loss. This is about the best we can do, and that means that both cash and non-cash items are included. If Mr Hutchison thinks he has a better way, he should write a book about it, but in the mean time he needs to stick to the standard NZIFRS method. His statement is in fact wrong, because most of DVL’s expenses are actually cash expenses and because the loss is a real, authentic, auditor certified loss. DVL’s finances are a sensitive area for the DCC, and Mr Hutchison should not be seen to be promoting any particular viewpoint.

Posted by Elizabeth Kerr

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Weak boys, Cull and Burden on rugby stadium

One year on from the All Blacks winning the World Cup at Eden Park, what is the state of rugby at the so-called “Stadium of Four Million”? APNZ reporters Patrick McKendry, Daniel Richardson and Matthew Backhouse investigate.

### nzherald.co.nz 4:16 PM Friday Oct 19, 2012
Sport
Rugby: What is the state of our game?
By Matthew Backhouse, Patrick McKendry, Daniel Richardson
Andrew Maddock will be at EcoLight Stadium in Pukekohe early today for Counties-Manukau’s biggest game of the season, an ITM Cup semifinal against Southland. The Counties Rugby Union chief executive will be at work about 8am for a game which kicks off at 2.05pm and which he expects will attract only 4000-5000 spectators. “It’s a little bit hard to know as it’s Labour Weekend,” he says. “That for us is a reasonable crowd because we’re a pretty small community.” When that match kicks off the All Blacks will be preparing for tonight’s Bledisloe Cup match against the Wallabies in Brisbane which will attract a full house of more than 50,000 to Suncorp Stadium and a worldwide audience of millions. Such is the divide in New Zealand rugby, a ravine growing by the year despite, or perhaps because of, the All Blacks’ success in the World Cup, which on Tuesday will be exactly 12 months ago.

Mr Cull says there was a great atmosphere during the tournament, but whether that justified the expenditure was another matter.

One year on from the Rugby World Cup, the tournament’s costly and sometimes controversial stadium projects have left a legacy of ongoing debt and questions over their future.[...]For NZRU chief executive Steve Tew, the World Cup’s legacy is a positive one, despite doubts remaining over Eden Park which had a massive overhaul before the tournament and now mostly sits empty apart from when the All Blacks play there.

“We’ve got a sound platform to build on going forward. Of course there are significant challenges ahead financially, but when I look to the future events that we’ve got coming up, the events calender is looking pretty robust.” -Darren Burden, DVML

Dunedin’s Forsyth Barr Stadium is struggling to attract the big events it needs to remain financially viable, while Auckland’s revamped Eden Park has been dragged into a review of the city’s stadiums as it looks to shake off $55 million in debt. Critics say the tournament failed to deliver on its promised financial returns and are questioning the long-terms gains of the $555m spent nationally on upgrading stadiums. – APNZ
Read more

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Darren Burden plays LGOIMA game like Davies #DVML #PsychoAnswer

DVML’s attempts to deceive ratepayers continues under Burden’s control. Mayor Dull is fully complicit.

### ODT Wed, 10 Oct 2012
Letters to the editor (page 8)
Concern over attendance of rugby games
Recent national news stories regarding widespread concern over the NZRU’s ITM Cup competition, which report that the number of spectators are down in significant numbers, along with reduced ratings on Sky TV for their coverage of these matches, lead to some financial concerns for Dunedin ratepayers.
Can Darren Burden, chief executive of DVML who runs and manages the stadium used for these professional rugby matches, confirm that:
1. The average attendance at these matches at the Forsyth Barr Stadium is in the region of 5000.
2. The average ticket price for these 5000 attendees is approximately $20.
3. The gross income from ticket sales is, therefore, approximately $100,000.
4. The NZRU returns approximately 10% of gate sales revenue to the venue operator.
5. The income to DVML from gate sales is, therefore, approximately $10,000.
6. The cost of opening the stadium for a professional rugby match is approximately $100,000.
7. These matches held at the stadium therefore lose approximately $90,000 each time they are held.
If Mr Burden disputes these figures, can he supply in detail his version of the above statements, as well as an accurate profit/loss statement for the ITM matches held at the stadium?

Russell Garbutt
Wakari

[Dunedin Venues chief executive Darren Burden replies: "The ITM Cup provides variety and entertainment to our event schedule and has value to the stadium beyond just financial. The cost of opening the stadium varies depending on the size of the event. However, it is nowhere near $100,000 for an ITM cup match, as suggested. The information requested by Mr Garbutt is complex. I invite him to contact Dunedin Venues directly and we'll happily review his request for information."]

Posted by Elizabeth Kerr

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The End of The Golden Weather?

Received from Calvin Oaten

Are we coming to the end of the ‘Golden Weather’? I say this, not in the meteorological sense, but rather in the sense that perhaps our society and its economic construct might be on the verge of a catastrophic change. Why? Well it seems that many signposts are pointing to an approaching collapse of the present model of the economy as constructed. This requires constant growth in order to sustain an ever increasing social budget. That in turn requires full or near full employment, a buoyant consumer market and a consequent ever increasing supply of energy and raw materials. None of these are finite, neither in New Zealand nor the Planet. The current model has, in order to foster this growth, taken upon itself to ‘jazz up’ consumption by cultivating a culture of instant gratification, fueled by intensive marketing, planned obsolescence, and last but not least, very easy credit.

This easy credit has been promoted heavily by governments, local bodies, banks, retailers and all manner of financial institutions. This has brought about a dynamic shift in society’s attitude to debt. It has encouraged folk to spend beyond their immediate ability, to the point where their indebtedness is assuming dangerous proportions. This is manifested by ‘economic bubbles’ forming, none more so than our own housing market. The people in the industry, real estate companies, banks, financial institutions all rev up the market by convincing people that property is a great investment which will always hold its value. But we only have to look at Ireland, the UK, the USA, and lately Australia to see the lie of this claim. Property can always go down just as it can go up. Take a look at Japan. Its property bubble burst in 1989 and has never recovered. Off by as much as 70-80%.

The result of all this is a hugely indebted developed world, including NZ. What caused this to happen? It seems to date back to around 1971, when then President Nixon was experiencing difficulty in financing the Vietnam war. At that time printing of money was constricted with the dollar being pegged to what is known as the gold standard. This meant that the amount of currency in circulation was limited by how much gold was held by the federal government. By leaving the gold standard the federal treasury was free to set its own parameters and to print accordingly. That resulted in a vast increase in all paper currencies around the world with a burst of inflation throughout the 1970s and 1980s.

Historically, all monies eventually revert to the mean, and this has always been to a standard unit of value, GOLD. Throughout history, even before Roman times this has always prevailed. Trust in paper currencies sooner or later fail and there is a collapse.

We’ve seen it in modern times with Germany (in the 1920-30s), Argentina (several times), Greece, and very recently Iceland. The USA federal government has just breached its self-imposed debt ceiling of $16 trillion. If anyone wonders what $1 trillion represents, look at it as a time equivalent. Let’s say one was to repay $1 trillion at the rate of $1 per second. Working 24/7, 360 days per year it would take “32,000 YEARS”. So multiply that by 16 and it is easy to see that this debt will never be repaid. Worse, it is growing as we speak.

Those with the power are unbalancing the fairness factor.

This reckless attitude has permeated into the human psyche and we see evidence of it here in little old Dunedin. Our society has degenerated into a selfish me world. Those with the power are unbalancing the fairness factor.

Take remuneration for example, fewer and fewer people are taking a greater share of the economic cake, and are quite blatant about it. Wealth is flaunted while many are moving into poverty. Financial rewards are all out of line with production balance.

It is noticeable that many of the highest remunerated are drawing their rewards from the public’s purse, without so much as a blush. Here in Dunedin we have a local MP tabling a bill in Parliament seeking a minimum wage of $15 per hour. This, on a 40-hour week equates to $600 per week. It would be up from $13.50 per hour or $540 per week. This is being vigorously opposed by many. But on the other hand we see public servants and others receiving enormously higher rewards. We have seen several instances in the last few weeks.

The retiring CEO of the Otago Museum with a salary of $310,00 per annum (pa) or $5,961 per week (pw). The DVML CEO receives $250,000 pa or $4,807 pw. The council owned company Delta, where the CEO is paid $380,000 to $390,000 pa or $7,500 pw. 41 additional staff paid over $100,000 pa or $1923 pw. Our own DCC CEO is rewarded with between $340,000 and $360,000 pa or $6,730 pw. The Vice-chancellor of our University of Otago receiving over $500,000 pa or $10,000 pw. Our DCHL group of companies last year paid its 7 directors $725,444 for what would optimistically involve about four weeks equivalent work each. This is repeated up and down the country and if anyone thinks this is sustainable they have to be in “cloud cuckoo land”.

On our local public scene we have seen the city’s debt burgeon from $212.486 million as at 30 June 2005 to $602.008 million at 31 December 2011. We now know that this has considerably changed for the worse, since. The stadium is a financial disaster, in serious damage control, the Otago Settlers Museum is over $40 million, the Town Hall/Conference Centre is over $50 million, and we are looking at somewhere near $100 million for the Tahuna upgrade. No-one in office seems to either understand, or simply passes it off as someone else’s problem.

We elect these people to conserve and look after our treasure, and what happens? It just goes from bad to worse, with all manner of rascals leaching off us in different ways. If only someone in office had the intestinal fortitude to stand up and say, “enough, this has got to stop”. But sadly, it gets back to that culture I mentioned. “I’m OK Jack”, never mind anyone else.

Is all this sustainable? Ask yourself. We don’t know when the situation will break, but it is certain that it will. The whole developed world is awash with debt and frantically creating more by the day, in a desperate move to save the situation. But it is pretty simple, how can more debt solve a chronic debt malady? It is pretty much synonymous with supplying a chronic alcoholic with more whisky. We are in for very interesting times.

Posted by Elizabeth Kerr

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Cull’s state of denial…

See previous post:
24.9.12 DCC against imposition of local government reforms

Comment received.

Calvin Oaten
Submitted on 2012/09/25 at 7:43 pm

Dave Cull and Paul Orders submitting on the proposed local government reforms to a select committee hearing is entertaining to say the least.
Dave says “the DCC should be left to tackle debt levels and rates rises without new controls imposed by the Government”. Is he ‘avin a laugh’? It is just that which brought about the Government’s interest in this problem in the first place. He says rates and debt were two issues already at the top of his council’s agenda, and the Government’s proposed changes risked “unintended negative consequences”. He’s ‘avin a laugh again’. The man’s sense of humour knows no bounds. The proposed limit on rates rises would erode council’s previously “unfettered” ability to raise revenue through rates, he says. It’s almost like he is in a ‘drug rehabilitation programme’ and is in denial about his addiction. Classic response, don’t admit any problem, just leave me alone and I will sort it.
Sorry Dave, but you and your equally drug driven cohorts are in serious denial and the citizens are paying a very big price. He worries that to restrict them now would upset the ‘drug peddlers’ (banks) and cause the price to rise. That, of course would increase the pain and he just couldn’t stand that. It would seriously affect his sense of wellbeing and confidence in his own ability. The man is desperately in need of being loved by all.
Lee Vandervis, as our only hope, I hope you can mediate around that table and get some traction. I am not holding my breath.

Posted by Elizabeth Kerr

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This is all painfully familiar…

blog.svconline.com

The trials of the Phoenix Coyotes, the least popular hockey team in the NHL, offer a lesson in public debt and defeat.

### theatlantic.com Sep 7 2012, 2:37 PM ET
Business
If You Build It, They Might Not Come: The Risky Economics of Sports Stadiums
By Pat Garofalo and Travis Waldron
In June, the city council of Glendale, Arizona, decided to spend $324 million on the Phoenix Coyotes, an ice hockey team that plays in Glendale’s Jobing.com Arena. The team has been owned by the league itself since its former owner, Jerry Moyes, declared bankruptcy in 2009. For each of the past two seasons, Glendale has paid $25 million to the league to manage the Coyotes, even as the city faced millions of dollars in budget deficits. Now, Greg Jamison, who is also part of the organization that owns the NHL’s San Jose Sharks, is making a bid for the team, and would therefore be the beneficiary of the subsidies.

“Take whatever number the sports promoter says and move the decimal one place to the left. Divide it by ten. That’s a pretty good estimate of the actual economic impact.”

To put the deal in perspective, Glendale’s budget gap for 2012 is about $35 million. As the city voted to give a future Coyotes owner hundreds of millions of taxpayer dollars, it laid off 49 public workers, and even considered putting its city hall and police station up as collateral to obtain a loan, according to the Arizona Republic. (The latter plan was ultimately scrapped.) Overall, Glendale is not only on the hook for $15 million per year over two decades to a potential Coyotes owner, but also a $12 million annual debt payment for construction of its arena. In return, according to the Republic, the city receives a measly “$2.2 million in annual rent payments, ticket surcharges, sales taxes and other fees.” Even if the Coyotes were to dominate the league like no other in recent memory and return to the Stanley Cup Finals year after year, the city would still lose $9 million annually.

“It’s kind of a perverse argument that taxpayers should subsidize this because businesses depend on this deal that isn’t viable.”

This is an altogether too common problem in professional sports. Across the country, franchises are able to extract taxpayer funding to build and maintain private facilities, promising huge returns for the public in the form of economic development.
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[Link supplied]

Posted by Elizabeth Kerr

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Sunday Star Times: Stadium story: any sliced bread in the murk?

Major debate and valid questions remain about how the stadium was funded and built and whether the council made the right decision to throw in so much public money (originally $91m, but later $148m) as explained in the sidebars to this story.

### stuff.co.nz Last updated 05:00 03/06/2012
Dunedin’s House of Blame
By Steve Kilgallon – Sunday Star Times
The prospect of yet more glittering new stadiums being constructed by ambitious city fathers – as being debated right now in Christchurch and Auckland – is met with scorn by some in Dunedin, where the saga of the Forsyth Barr Stadium has left a city divided and its ratepayers facing vast debts.

“five years of internecine warfare in Dunedin, three High Court actions, claims of conflicts of interest, a divided council, a pile of debt and an even bigger pile of documents”

A covered stadium was a grand concept for a city of just 125,000. At various times, it was imagined that it might host international soccer, rugby league and even swimming; that penguins would frolic in a (converted) adjoining quarry, and not just that the biggest names in rock music would visit, but, perhaps, the Dalai Lama and British royalty. With significant “private finance” support, the cost to the taxpayer would be capped at a mere $91 million and the stadium delivered to the dollar at a total cost of just $188m. Now it’s been built, there remains debate on quite how much it actually cost. Its creator says it came on time, on budget. Some critics argue double that. Dunedin council engaged consultants PricewaterhouseCoopers to give them a figure, and explain any blowout.
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UPDATE: Steve Kilgallon’s story reposted at Stuff Sport
Stadium plans met with scorn [05:00 03/06/2012]
http://www.stuff.co.nz/sport/7038067/Stadium-builds-under-fire

In full here, the sidebar appearing in Sunday Star Times print edition:

ON THE MONEY

Council wasn’t meant to bear all the weight of the stadium: a much spruiked “private sector finance” contribution was kicking in $45m.

The latest PricewaterhouseCoopers report says just $700,000 of a promised $45m had been found by last November (two months after opening day), and reported how various updates to the council scaled back the timing of that funding from 100 per cent received before completion to just three per cent. Peter Chin says when he left office in 2010, it was “on track”; however his successor, Dave Cull, dismisses the private sector finance (PSF) as “risky”.

It’s argued, perhaps validly, the PSF was really just advance operating revenue: it wasn’t philanthropic donations but long-term seat sales, sponsorships and lounges. If used to fund the build cost, it begs the question: what would offset operating costs once it was open?
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Filed under Architecture, Business, Concerts, Construction, CST, DCC, DCHL, Design, DVML, Economics, Events, Geography, Hot air, Media, Name, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, STS, Urban design

Ratepayers pay for ORFU black-tie dinner at stadium

In March, a letter to the editor (ODT, 24.3.12) by Cr Lee Vandervis raised questions to which ORFU’s Wayne Graham gave a nothing reply. Indeed, we’d all been wondering what ORFU’s extra debt of $80,000 to DCC stood for, to be written off in the bailout package. We had heard an ORFU party at the stadium was part responsible (comment). It was not long before an official information request went to Dunedin Venues Management Ltd (DVML) from one of our readers. Related comments on the thread start here.

****

This is totally inappropriate spending of public money. -Bev Butler

### D Scene 2.5.12 (page 3)
Stadium booze tab picked up by ratepayers
By Wilma McCorkindale
An Otago Rugby Football Union (ORFU) party and booze bill in excess of $25,000 is among debts written off in a bailout of the cash-strapped organisation by Dunedin Venues Management (DVML) and the Dunedin City Council (DCC), according to stadium opponent Bev Butler [...] she obtained copies of the offending invoices through an official information request. “[I was] shocked to learn that [an] ORFU party was part of the ORFU bailout. On August 5 last year the ORFU held a Black Tie dinner at the stadium. The expenses, including thousands of dollars on booze was put on hock.” Butler said among the paperwork obtained was a response from DVML showing the ORFU owed DVML $73,164 excluding GST or $84,140 including GST. “This was for the black tie dinner on August 5, 2011. All the figures are blacked out but I do know from DVML that the Black Tie dinner was $25,352 (incl GST).”
{continues} #bookmark

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May 2, 2012 at 3:31 pm
UPDATE- See this thread for news and reaction to the defamation action taken against the Mayor of Dunedin by two members of the ORFU Board, acting on their own account. We think the ‘dinner tab’ story puts the defamation action in a handsome light. God only knows what the action does to the ORFU bailout deal, supposedly to be wrapped up by 16 May.

Posted by Elizabeth Kerr

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DCC refuses to release DVML six-monthly report until “most suitable time and forum” is found

This is the kind of City Council we have.

This is the kind of company the City Council owns.

This is the kind of stadium the City Council has, running at a crippling loss.

These are the kind of losers running this city, deciding your ratepaying destiny care of the selfish pricks that administer Professional Rugby.

30.3.12 ODT: Stadium report release date deferred again
A report on the financial position of the Dunedin company running Forsyth Barr Stadium is being held for another month, with little explanation yesterday of why. It means the public will have to wait longer for possible insight about whether the stadium will pay for itself, or end up an annual drain on city finances.

WHAT KIND OF MOOD ARE WE IN
There’s never a good time for trying to fool the public.
Not around the LTP and Annual Plan process.

Posted by Elizabeth Kerr

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Message To ORFU Creditors, if you want to see your money

Comment received.

Anonymous
Submitted on 2012/03/15 at 10:58 pm
My advice to creditors was, and is, file a statutory notice for all undisputed invoices. File it now. The ORFU has 15 days to pay in full, or face a compulsory winding-up order. Defined in Companies Act, no exceptions.

Posted by Elizabeth Kerr

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