OK, state of play?

I’ll try to lay it out for you, but the crux of the matter, despite the sustained efforts of the StS and councillors opposing the development, Council today decided to continue with the project, voting 10-5. This is more or less the green light (read Peter E’s cautions below and media confusion), although as you learn in life nothing is determined until the first people go through the turnstiles of the first event at the stadium.

Not forgetting the the Otago Regional Council also has a set of criteria that needs to be fulfilled in order for the substantial funding from them is approved. The CST has stated that all of the lines in the sand from both councils has been met -if true a phenomenal feat in this current economic climate.

Government has confirmed it’s been approached and that it is indeed considering making a ‘modest contribution’. This sum is yet to be determined, and who knows what a millionaire deems modest.

The CST has to date met most if not all of the demands that has been placed upon it (although the line in the sand and the hurdles have been shifted and added to), including the following;

A) A guaranteed maximum price had been agreed to, and the trust and the project delivery team was confident it could be delivered.

This is essentially a contract guaranteeing the price, as it suggests. Many people have seen this as the stumbling block, illustrating stadiums world wide which have run over cost (and some quite substantially). But if anyone has undertaken massive construction on this scale, these are achievable, they’re called contracts. There are huge penalties if construction companies fail to meet deadlines and costs. The company that infamously built the new Wembley stadium, Multiplex, incurred massive costs as a result of overruns and delays. This is just the commercial reality of some forms of construction. Yes it could still run over cost, etc, but if the CST has done it’s job that cost will be met by whoever builds it, not the taxpayer/ratepayer.

The Community Trust of Otago has come up $3m short in it’s funding,but that still amounts to somewhere in the $7m figure if I’m correct.

“Overall, the costs to ratepayers was unchanged, with the average household in Dunedin paying $66 a year for the next 20 years.”

So despite the StS’s claims this is still the figure that they are working on. I noticed Nicola Holman at the meeting, and she will have a better understanding of those figures. But if that’s what council is working to, that’s the figure we have to assume construction is being based upon.

Fliss Butcher questioned why a concert promoter wasn’t in amongst the list of companies associated with the development. This still doesn’t bother me. Correct me if I am wrong vBase, the company that runs Lancaster Park in CHCH doesn’t have a contracted concert promoter. vBase (the model for stadium management which ours will be run) is the company charged with actively seeking out promoters to bring acts to the city. This will be the same here, there is more than 1 promoter out there, and there are thousands upon thousands of acts to entice here. Bands in the past have been enticed to CHCH because they can incorporate a RnR stay in Central Otago, at any one of the luxury lodges there. Well considering that Central is a very short flight or drive from Dunedin, this should still be to our advantage.

Look there were so many things discussed today, which I simply wasn’t there for, I’ll have to open this up to Elizabeth, Peter or anyone who saw the whole game unfold.

But I will repeat in no uncertain terms, this is a massive project for a city of this size, and we really need Central Govt to come to the party now, this will help no end.

Full ODT report here, and of course sales of the ODT will be hot tomorrow as a result of their coverage of the day.

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7 Comments

Filed under Economics, Media, Politics

7 responses to “OK, state of play?

  1. Peter Entwisle

    Hi Paul,

    I was there all day today until the stadium resolutions were passed. I then left and obviously you got there shortly after. It’s good you met Elizabeth.

    I’m afraid your optimism has somewhat got the better of you. Today is not a green light for the stadium. It’s basically Mr Harland’s second option: defer until more money is found.

    I’ve got a copy of the resolutions passed, although an amendment was added – but it’s not of great significance.

    Among the conditions to resolution 7 – the one which effectively keeps the project alive while deferring a final decision – is e), effectively that the $15m shortfall in private funding is made up. Another is c) 1) that efforts continue to find the $20m to lower the city’s contribution from $91.4m to $71m. Two councillors voting for the resolution made it clear their continuing support depends on this condition being wholly or nearly wholly met. Another condition f) iii) is that the Community Trust of Otago’s $3m shortfall be addressed.

    Another resolution, number 6, has as para 1) “The Council notes the total net cost of the project is now $198 million and that the increase is primarily due to increased land costs and the lack of offsets from the sale of Carisbrook.”

    The council has acknowledged that the original target price of $188m has been exceeded – as critics have long predicted it would be.

  2. Thanks so much Peter, sorry you are right, it’s not the green light, but to tell the truth it’s not the red light I was expecting today (honestly), so it seemed more green to me.

  3. Peter Entwisle

    The open session of the meeting today started at 10:30 am but almost immediately went into closed session from which it didn’t emerge until 2:45 pm.

    There was a lot of discussion. There was some procedural confusion. Discussion was mostly more muted than on March 17th last year.

    There was some clapping and cheering from the public gallery when the antis spoke. There was some heckling when the pros spoke but not a lot. Mostly just silence.

    It’s a bit late so I won’t attempt to summarise all the ground covered but it’s worthy of note that a number of people who have long supported the project, including the Mayor, made it clear it cannot now proceed without additional outside funding.

    Mr Chin’s report of the phone call he had from Mr. English’s office was explicit: the government expects the city to decide this matter for itself. Not quite Helen Clark’s “Dunedin must make its own luck”, but certainly not making any promises of support. It is clear too that the CST approached the government seeking the $15m that’s needed to cover the private funding gap. Mr Chin, supported by Mr Cairns, separately approached the government apparently aiming more at getting the $20m needed to get the city contribution down from $91.4m to $71m.

    There was a good deal more than this, but as I said, it’s getting late.

  4. Peter Entwisle

    Acknowledged Paul.

    The way TV3 reported it the rest of New Zealand will think it was a green light. I’m sure they’re not deliberately trying to mislead but they aren’t close enough to the action to really see what’s happening. I think that’s what happened last year on March 17th and created the strong impression further afield that council had voted to build the stadium.

    I expect similar confusion will follow now. I wasn’t surprised by Council’s decision – it was what the ODT was expecting too. But I was depressed by the TV3 report because I thought – dang, now we’ll have more expectations raised, only to be slowly disillusioned, again. It all adds to the unhappiness surrounding this controversy.

  5. Elizabeth

    Paul said: “A guaranteed maximum price had been agreed to.”

    As explained at yesterday’s DCC meeting Hawkins Construction Ltd’s GMP tender was based on the Developed Design as at October 2008. The tender is an OFFER that expires at the end of March 2009.

    Not all sewn up yet.

  6. See now why is it that this information is only published at this place.

    Why is the ODT so economical with the reporting of this sort of thing. Sure the people may be sick of hearing it, but they are only hearing the “Concerned of Kaikorai Valley…” version, not the actual nuts and bolts of the thing.

    Still incredible that they did manage an agreement, even if it is about to run out. A little renegotiating needed?

  7. Elizabeth

    A little more about the Hawkins’ tender bid as commented on by CST’s Darren Burden yesterday:

    Cr Andrew Noone asked a question regarding the GMP, about what confidence there is in Hawkins “to ensure local construction receives more than its share of the work?”

    Mr Burden replied, “The GMP is only an offer, no more than that.”

    Hawkins prepared their tender on the basis of the developed design achieved in October 2008. Since then the design for the stadium has progressed in accordance with benchmarks already set.

    “We’ve gone back to Hawkins on the contract terms…finalising the contract terms with Hawkins is still to do.”

    It has been found there are a number of areas that were over specified, for example, public toilet areas on the main concourse, “we felt they could be looked at…we went back to Hawkins”.

    In his elaboration, Mr Burden said Hawkins’ initial offer was received on 19 January 2009 and their offer is open for 60 days, to the end of March.

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