Vice-Chancellor pronounces on stadium

But first he runs down Carisbrook…
He closes by calling those opposing the stadium “vitriolic”.
Mr Skegg, were you bought off too – what a socially irresponsible message to graduates and citizens alike.

### University of Otago Magazine, Issue 23: June 2009 (page 5)
Vice-Chancellor’s Comment
By David Skegg

For nearly three years, Dunedin has been torn apart by controversy about whether to replace Carisbrook with a multi-purpose covered stadium next to the University campus on Anzac Avenue. While some people with long memories feel an atavistic sense of loyalty for Carisbrook, anyone who has used the place recently knows that it has become embarrassingly outdated. Even to retain the present low level of use would have required an upgrade costing ratepayers tens of millions of dollars. The proposed new stadium offers many exciting opportunities, but the Dunedin City Council and the Otago Regional Council first had to decide whether such a community facility was affordable.

That decision has now been taken, and excavations have started to prepare for construction of a stadium that should be ready before the 2011 Rugby World Cup. The stadium will have many uses beyond rugby, or even other sporting events. Consider, for example, the opportunity for large concerts in a fully enclosed venue that will take New Zealand’s fickle weather out of the equation–with over 20,000 young people living nearby. This new campus stadium will be unique in New Zealand and, after Melbourne’s Telstra stadium, the second largest in the southern hemisphere.

The University will be a key partner in this development, constructing its own buildings as part of the stadium complex. The buildings will open on to an urban space to be known as the University Plaza. Our buildings will provide the campus centre for student fitness, health and recreation, as well as educational and research facilities. This plan replaces an earlier proposal for a large multi-purpose building to be squeezed into the existing campus, to provide accommodation urgently needed under our Critical Space Plan.

The new buildings and the public plaza should form a busy and attractive campus hub. The decision to build the stadium, however, carries a greater significance than any enhancements to our Dunedin campus. Successful research universities are virtually always based in, or near to, vibrant cities with strong economic activity. In the face of determined and vitriolic opposition, our political leaders have confirmed their ambition for the future of Dunedin as a vibrant university city.
Link

139 Comments

Filed under Architecture, Economics, Politics, Site, Stadiums

139 responses to “Vice-Chancellor pronounces on stadium

  1. There is nothing like a $400,000 plus salary to dilute the vitriol.

  2. and there’s nothing like envy to fuel the fires of discontent.

  3. Give it back! Don’t be daft. It’s the culture. You get it, then in return it gives you the right to pontificate. It has nothing to do with envy. It has everything to do with power. The power to take. The power to make the small people opaque. The power to be oblivious to the realities of life.

  4. David

    Mr Skegg says the University is a key partner – what absolute rubbish.

    A key partner would be contributing a key amount – not just going halves in a concrete wall.

    If the university is benefiting as much as Mr Skegg says – why are they contributing such a pittance.

    I think Mr Skegg got his terms mixed up – “key partner” should have been “key parasite” – or perhaps more accurately “associate parasite” as the key parasite is clearly the ORFU.

    As the prime user of the stadium, how much are they putting into the stadium? That’s right – less than every single ratepayer.

  5. David

    So Skegg sits there on a $400,000 salary and abuses people struggling to make ends meet because they don’t want to pay for his stadium.

    Disgusting.

  6. Elizabeth, I don’t really believe it is the salaries so much as the insulation of academics from the real world. It is not termed the ivory tower for nothing. It is when they descend from that tower that the fact that they wear no clothes becomes so evident.

    Generally, they are intelligent people, it’s just that through their excellence in their chosen discipline, for some reason their peers promote them to their level of incompetence. I think it is called the “Peterson Principle.” That is when they start to create mayhem. We see it amply demonstrated by the latest actions in lauding the new stadium over the “vitriolic opposition.” It was ever thus.

  7. LG

    It’s not clear to me whether 400k is any compensation for doing such a stressful job, but I’m not sure whether you can really use money to balance stress.

    I’d be interested in knowing whether there is any likelihood of the university renting the stadium itself.

    I also can’t find an exact figure on the how much the university pays the DCC in rates, but it seems that it is probably close to 2%, which suggests that the university will front with a decent bit more money for the stadium over time.

  8. Elizabeth,
    The situation as I understand it is that university property is classified as crown land. Therein lies the distaff side of the city hosting the university. Whilst there is no doubt there are enormous benefits to the city from having the university here, there is also the downside.
    If you look at the amount of inner city prime real estate occupied by the university, all of which receives full services of roading, water, sewerage, rubbish disposal, in fact any and all that applies to other property, free of rates, you would have to wonder just how much it does cost the remaining ratepayers for the pleasure.
    I would never say that the university shouldn’t have these concessions, but it would be a lot more equitable if the costs were shared nationally.
    The university sometimes, I think, forgets just what favours it receives from the city, and rather than take the holier than thou approach should perhaps just be slightly less condescending. Mr Skegg, in his comments re the stadium kind of says it all.

  9. LG

    The university is only exempt from GENERAL rates. Calvin, you’ll be pleased to know that your rates are approximately $50 lower, because the university does in fact pay for its water, drainage and rubbish.

    The ORC’s contribution comes from a targeted rate, which is not exempt, so the university will have to pay that. It’s less clear whether the DCC is lumping it in with the general rate, or having a separate targeted rate.

  10. LG and Elizabeth, I take both your points and bow down to your greater knowledge on the matter. However, the extra $4m the DCC claims it is denied would provide 80% of the $5m dividend shortfall, or put another way would reduce the $66 rate to $13.20. Is that being pedantic? Probably. I wonder what Richard would think?

  11. Oh, and by the way, having just purchased all the Awatea site hasn’t the DCC removed the rate income from this area? I know that they would argue that the venues company would pay the rates, but as it is almost a foregone conclusion that this will be a serious loss making operation that would only be a shuffling of the deck chairs. Just a thought.

  12. LG

    Interestingly, by my calculation, that estimate of 3.6million does not include the university’s halls of residence, which is perhaps another 100+ million of capital value, and perhaps 1million of foregone rates.

    The impact of the university paying general rates on Dunedin’s residential rates is less clear, however. It would depend on whether the council decided to re-jig the residential/non-residential split, otherwise it might see only a decline in non-residential rates. It would also see the university paying rates in Christchurch and Wellington, and would it also mean that schools and Otago poly would pay general rates? The list of questions is long.

    On a different note, after adjusting for inflation
    *The Dunedin stadium is perhaps a third more expensive than the caketin
    *The relative contributions of the councils are quite similar (especially if the caketin’s bank loan is guaranteed by the councils)
    *The greatest difference in how the councils have funded it – the regional and city councils in Wellington provide an interest free ‘loan’ to the stadium, but there are also no principal repayments*.

    I’m sure following general fiscal prudence, Calvin wouldn’t support not paying off principal (if there has to be a loan in the first place), but this would also dramatically decrease the current financial drag on, but would obviously extend the drag out beyond 20 years.

    *The caketin is slowly repaying its commercial loan, and it MAY be that the councils would eventually seek principal repayments after the commercial loan is paid off.

  13. LG

    They are likely to lose rates income on the Awatea site, but would gain it back on Carisbrook (currently rates free).

  14. David

    LG says “*The relative contributions of the councils are quite similar (especially if the caketin’s bank loan is guaranteed by the councils)”

    What!!!!!!

    Wellington’s $15m is “similar” to our $260+m ???

    (108m loan + $100m interest + bridging loans for private funding + $56m depreciation over loan period).

    Remember also that
    -Wellington’s catchment population is 400% larger than ours, and
    -they have the highest average income in the country
    -we have the lowest.

    The contributions are not similar – they’re not even on the same planet.

    Divide the council contributions ($15m and $260m) by the households in the catchment (170,000 and 42,000) and you get average figures of $88 per household for Wellington, and $6190 per household for Dunedin.

  15. LG

    David
    *The word “councils” is a plural, not a typo (so WRC+WCC)
    *Included the commercial bank loan
    *It’s inflation (+20% since 1999) adjusted
    *Council contribution as a percentage of overall cost ($35 million extra in Dunedin for a roof)
    *You’re pretending that the Wellington councils gave the stadium money. They didn’t, they lent them the money, with the councils footing the interest bills. But you compare the DCC’s interest AND principal payments.

    A more interesting question to ask would be why the Dunedin stadium will be owned by an events company, whereas the Wellington stadium is owned by a tax exempt charitable trust.

  16. LG

    PS — You might want to recalculate your figures using the number of households in Wellington City, not Wellington region, or alternatively use the funding from the region as a whole; and decide whether you want to include interest costs, depreciation, and bridging finance in both or none, rather than having them all included in your Dunedin figure, and none in the Wellington figure.

    Yes. There is a difference in population, and potential for corporate lounge buyers. Yes, Wellington City has a high income, but not Porirua and the Hutt cities.

  17. David

    LG – whichever way you count it, Dunedin ratepayer contribution to our stadium is in the thousands of dollars.

    Wellington ratepayer contribution is in the tens of dollars.

    The contributions by respective councils are not “similar”.

  18. KGB

    Have you forgotten LG that the university got a free flood protection scheme too courtesy of the mainly elderly and low income NEV ratepayers.
    All the university had to contribute was a few measly dollars towards a small part of the beautification of the Leith

  19. KGB

    And I hope it still floods

  20. LG

    David, your maths is so far out its absurd.
    If you even divide 15 million dollars by the correct number of households (~68000), you’ll get a number that’s not in the tens. If you then correct your other mistakes, you’ll find that the Dunedin stadium is between 2 and 5 times more expensive. That’s substantial, but nothing like your own figures.

    For what it’s worth, I’m not particularly in favour of the stadium; I’d much rather have a cycleway to Port Chalmers (which would be enormously cheaper and used by more people more regularly). However, it is the astonishingly dodgy maths of some anti-stadiumites that is close to pushing me off the fence.

  21. David

    LG – For all the CST comparisons to Wellington, they’ve always used the figure of 4 times our population.

    However even if you only use your figure of $15m divided by just 68,000 (only 50% more than Dunedin instead of 400% more) that’s still just $220 per house. And remember this amount is a loan – it gets paid pack.

    Using the same method, we can divide the DCC’s $108m by 42,000 households to give $2,571 per household.

    Add interest of a similar amount, and that goes to $5,000 per house.

    Add depreciation funding (which Wellington ratepayers don’t have to fund) and that’s another $1,333 per house over the loan period.

    You don’t have to be a rocket scientist to work it out.

    Wellington $15m (a loan to be paid back)

    Dunedin $260m (with quarter the people)

    Similar?? Not on this planet.

  22. LG

    David, The 15 million is being paid back “after meeting costs, liabilities, and debt reductions and after allowing for the appropriate capital expenditure and transfers to reserves”. You can argue the toss, but I suspect that equates to never. Oh, and who pays the interest? Not the stadium.
    Also, the Wellington City Council has lent them some more money beyond the original 15.

    Westpac stadium books on their website
    http://westpacstadium.co.nz

    Now as for the bigger population, that’s fine. But in that case you’d better include the 35 million dollar loan on the same terms as above by the council that is responsible for the bigger population. Note also, that as with Dunedin City, the residents of Wellington City pay rates to both councils, so pay more than those who live in Greater Wellington, but not in Wellington City.

    So already there’s another 35 million dollar for you to play with, plus interest. And because the payback is in the never-never, they could still be paying interest on those loans after the Dunedin Stadium is paid off.

    I can’t be bothered going through the Wellington accounts further until you pull some sensible numbers together, but if Wellington can avoid paying depreciation, I’m curious as to why Dunedin can’t.

  23. LG

    Sorry. My mistake. That should read 25 million not 35 million. The reason why CST use 4 x the population is because they’re looking at regional funding (city+region), whereas you persist in looking ONLY at city.

    Also, I’m not sure if there is a mistake in the 2008 books, but the council loans suddenly seem to have diminished. The 40 million dollars of loans present in 2007 are suddenly part of the trusts accumulated surplus in 2008…
    I patiently await this occurring with my mortgage.

  24. LG

    Lucky last. With the change to IFRS accounting standards, the loans are now valued at the net future value of repayments (none), so the money switches from the liabilities to assets column. I love accounting.

    Actually the none is a slight lie. For their $40,395,000 in council loans, the expectation is that they might pay $359,000. And that’s not $359,000 this year, but $359,000 ever.

  25. Richard

    LG: “you ask why the Dunedin stadium will be owned by an events company, whereas the Wellington stadium is owned by a tax exempt charitable trust.”

    Here goes!

    It is intended that the stadium property (i.e. the ‘bricks and mortar’) and other properties such as the Dunedin Centre and Edgar Centre/Lion Arena will be owned by DCVL. This is based on the successful V-BASE model used by Christchurch CC.

    Like Christchurch, the DCC has substantial trading investments and it is ‘tax efficient’ etc to have DCVL in the company GROUP. It will be a CCO in its own right though, not part of DCHL.

    Wellington does not have such ‘legacy’ investments.

    The management of the stadium is being vested in a parallel company called Dunedin Venues Management Ltd. It is the first to be made operative, again for reasons I am certain you will understand.

    The CST as the ‘charitable trust’ is, of course, a separate entity for fundraising reasons.

    I trust this is helpful.

    PS: The completion of the PC Cycleway/Walkway remains a council priority and work continues on two fronts relating to ‘roading safety’ and ‘tourism’ issues. Continued progress depends on several factors including other parties (LTNZ, ORC etc) including resolving just where it can go.

  26. Richard

    In response to Calvin:

    As I recall it, the so-called Shand Enquiry recommended that the Crown (read, government) should pay full rates on all Crown properties, not just university and polytechnics etc.

    That would,of course, require government to fund the extra expenditure by government departments, educational institutions, hospitals etc.

    Predictably, the CEO’s of the former were absolutely opposed so the previous government did not act on the recommendation nor, as far as I know, on any other major recommendation.

    If the DCC was able to collect ‘the general rate’ on those properties, the burden on existing ratepayers would reduce accordingly simply because there are more ‘ratepayers’ to share the overall cost of running the city. In application, it would effectively reduce the total of the General Rate which essentially relates to ‘discretionary spending’. That presently includes the Stadium but there is no ‘Stadium Rate’ levied as such, it is simply a calculated percentage of the General Rate.

    The outcome that Calvin seeks would therefore essentially occur but, if it did happen (we can always hope) the reduction of $5m in the company dividends which takes effect in two years would still stand for the beneficial reasons outlined in my post immediately previous to this.

    In response to LG:

    The ORFU have paid rates on Carisbrook and the associated properties. They do receive grants or ‘rates relief’ on the ground itself just as do all other sporting bodies which own their own properties, e.g. golf clubs, bowling clubs etc under the Rating Act.

    The requirements for this are all set out in the Rating Act as amended some five/six years ago. You may recall the debate that erupted in regard to church halls etc. All were ‘swept up’ in the amendments.

    To ensure equity, a balancing formula is applied by council to those which operate on council-owned land.

    Accordingly, the new stadium will be required to pay rates.

  27. David

    LG

    So Wellington has $40m loans, spread among 500,000 people (average $80 per person or $224 per house)

    Dunedin has $260m spread among 120,000 people (average $2166 per person or $6066 per household)

    + $37m spread among 200,000 people. (we only have a very small part spread among the wider region which works out at an additional +$185 per person or +$518 per household)

    Not close to similar. (even our little “add on” regional $37m is over 200% more per house than Wellington)

  28. LG

    Hi Richard,
    Thanks for the reply. That answer actually occurred to me overnight as well. I assume on that basis the cashflow from the group will be used to pay interest, while the rate will be used to pay principal, again for maximum tax efficiency?
    I’m also very pleased to here that things like the cycleway are very much on the agenda, because my concern is that such things might be marginalised.
    Cheers.

  29. LG

    David, congratulations, your calculations are getting a little more accurate, but you’re still persistently excluding Wellington interest costs, but including Dunedin interest costs.

    Next, we need to discuss depreciation. It’s a paper loss, not something the council pays. If a person is stupid enough to buy a new car, it loses a third of its value (say $10,000) in the first year, you don’t lose $10,000 in value AND pay someone $10,000 in depreciation. Over 20 years, the stadium is (by accountants’ decree) defined as losing $56 million dollars. By the magic of accounting, this money is applied to the council companies, probably resulting in them paying $18.5 million in less tax (56 x 33%). So instead of adding to the cost, this is actually decreasing it.
    Paying for the loan interest via CCTO companies also means that the interest can be offset against profit, releasing another $33 million.
    It is essentially the same mechanism that allows builders to drive Commodore SS utes, or real estate agents BMWs. There are substantial cost savings to treating it as a business expense not a personal expense.

  30. LG

    Richard — please don’t respond to my earlier question. I see now that the loan is entirely funded through the CCTOs, and that the ratepayer contribution makes up for the lost dividend. Clever and evil accounting.

    I did mean to say that in the city website rates database Carisbrook is listed as non-rateable, although I’m not particularly concerned about that one way or the other.

  31. David

    LG – unlike businesses or private individuals, local bodies are required BY LAW to fund depreciation.

    It works in a completely different way to builders buying flash utes (again NOT similar – more like opposite, instead of CLAIMING depreciation back, it has to be PAID).

  32. David

    LG – Over a 20 year loan, interest costs are roughtly similar to the capital.

    Unlike Dunedin, Wellington councils only loaned money – they didn’t give it outright, and as Westpac Stadium’s annual report states, the capital of $40m has to be paid back.

    So while Dunedin ratepayers are up for $260m+, Wellington ratepayers are only up for interest on $40m.

    If you think that’s similar, lets swap.

    You can give me $260, and I’ll give you you $40 (but you have to pay it back).

  33. LG

    David, feel free to show me an authoritative source that depreciation must be funded. This document suggests not

    Click to access KnowHow_Guide__-_LGA_2002.pdf


    If you can show me solid evidence otherwise, I’m happy to concede. In the mean time, I note that you have yet to account for the tax deductable nature of the interest.

    And finally, while it’s semantics, I think between depreciation and capex, the wellington council loans are not likely to have any capital repaid in the next 20 years, or probably ever.

  34. David

    LG – from Department of Internal Affairs – quote

    23. Why do councils have to fund depreciation?

    Funding of depreciation was introduced in 1996 changes to local government legislation as part of a package of measures designed to improve how local authorities manage and account for infrastructure. Along with asset management plans, depreciation ensures local authorities keep track of their assets’ condition and maintain them to deliver on service levels agreed with the community.

    Recognising depreciation acknowledges an asset’s use and that funding is needed for its future use.

    This is like people who set aside money for future replacement of major appliances. They are likely to be in a better financial position at the end of the year than people who don’t.

    It is also good business practice to operate reserves for the replacement of major assets.

    And while you might disagree that Westpac Stadium never has to pay back Wellington councils, they themselves say clearly in their annual report that they have to.

    With all due respect, I’d believe their word over yours on their own finances.

  35. LG

    David — I quoted the exact phrase from the report above “after meeting costs, liabilities, and debt reductions and after allowing for the appropriate capital expenditure and transfers to reserves”. This condition is certainly not going to be met until they’ve paid off the bank loan, and I suspect at that time they will indulge in “appropriate capital expenditure”. With all due respect, I think that’s a clause you could drive an oil tanker through.

    Councils are not REQUIRED to fund depreciation, they are required to include “the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life” (see the Act below). For core services such as water, this does effectively require depreciation to be funded (see my previous link), but it isn’t set in stone.

    Local Government Act 2002 No 84 (as at 01 November 2008)
    S100 Balanced budget requirement
    (1) A local authority must ensure that each year’s projected operating revenues are set at a level sufficient to meet that year’s projected operating expenses.
    (2) Despite subsection (1), a local authority may set projected operating revenues at a different level from that required by that subsection if the local authority resolves that it is financially prudent to do so, having regard to—
    (a) the estimated expenses of achieving and maintaining the predicted levels of service provision set out in the long-term council community plan, including the estimated expenses associated with maintaining the service capacity and integrity of assets throughout their useful life;

  36. LG

    Some actual examples of councils NOT funding depreciation.
    http://district-plan.westland.govt.nz/LTCCP/policies/fundingdepreciation.html (community halls not funded)
    http://www.wairoadc.govt.nz/documents/Council%20Policies/Funding%20Policy.pdf (community halls also not funded)

    {LG sometimes urls cause a post to go to moderation, sorry about that. EK}

  37. David

    LG – We’ve been told by Richard Walls that depreciation for the Stadium has to be funded at $2.8m per year

    i.e. $56m for the loan period and onwards at the same rate after that.

    Do you have some information that this has changed?

  38. I am always impressed by the VC’s press releases (and emails to Uni staff): thoughtful, diplomatic, unhurried; floated down a while after the dust has settled. Rather like the portrayal of Elizabeth and family returning from Balmoral to face the people after Diana died in that movie The Queen.

  39. It is going ahead and we accept that. But for sake of accuracy and interesting discussion I’d just like to make a few quick points … in the hope that these things are done better next time.

    • myself and many others who go to games don’t think that the old run-down parts of Carisbrook are embarrassing. Old worn-out things are not embarrassing, in fact, we need them to have a feeling of diversity and authenticity in a city. I still think this is incredibly obvious … am I missing something? Most of our town’s tourism promotions hinge on this stuff about the architectural and cultural legacy of our forebears. Anyway what IS embarrassing is poorly-administered bodies who present our national games, and empty stands and terraces for these games.

    • why do people keep comparing the local situation to large stadium projects in Melbourne, Vancouver, Berlin and the like? There’s like this dumb, binary assumption that we can either build the Allianz Arena or else do nothing and fall back into the swamp (which is just like the way the DCC and Farry’s chaps presented the ‘options’ for the site). Dunedin is a small town, attendances are dwindling in most places in rugby. I still think the template is right next door: at the revamped Uni Oval.

    • Aren’t we (ratepayers) the key partner? And shouldn’t the thing be named for us?

  40. Richard

    David:
    “We’ve been told by Richard Walls that depreciation for the Stadium HAS TO BE FUNDED at $2.8m per year i.e. $56m for the loan period and onwards at the same rate after that. Do you have some information that this has changed?”

    Well, LG might not but I certainly do!

    This what I ACTUALLY posted on 8 April:
    “Depreciation @ $2.83m is on a straight line basis, this is, of course, an operating expense. The city will not be funding any of this through rates.”

  41. David

    Alex – for $200m we just get paying rights. If we want naming rights we have to pay more than that.

    You say there’s no comparison between places like Melbourne and Dunedin.

    We got an average of 3700 people per game (or 18,000 for the whole season) in Dunedin at last years NPC – Melbourne gets 80,000 for a club game of Aussie rules at the MCG

    Where’s the difference in that? (we’d get to those single day numbers too, if we totalled four and a half YEARS of NPC)

  42. David

    So Richard – why is depreciation missing from forecast operating expenses?

    There’s no allocated money in operating expenses to fund $2.83m depreciation per year.

    So if there’s no stadium revenue to cover it, and no rates to cover it, where is $2.83m per year coming from?

  43. KGB

    ORC’s Leith Lindsay Flood Protection Scheme is way behind contractually (thanks to Opus International) and has not been fully detailed or resolved through the university area. Not a cheap undertaking; the university has sought to combine flood protection with landscaping amenity. Very wise given the importance of the heritage precinct and the open ‘public’ space and walkways on both sides of the Leith.

    The $66 a year for the stadium looks kind of sick compared to what the people of NEV will be paying for the Leith-Lindsay flood protection scheme.On top of their extra hundreds of dollars a year plus that they have to pay towards that scheme, Farry still manages to suck another few dollars out of them.

  44. LG

    So if there’s no stadium revenue to cover it, and no rates to cover it, where is $2.83m per year coming from?

    Unless I’m reading DHCL’s statements wrong, my initial assumption was correct, and depreciation is a paper loss, as opposed to funded.

    Click to access Annual-Report-08.pdf

    You know, as an interesting aside, I did a few other calculations this evening. This mythical $66 is supposed to net the council $5 million to compensate for dividends not received from DHCL. Because DHCL pays tax, this would mean that DHCL needs to make a pre-tax profit of $7.46 million to pay the council that dividend. If instead of giving a dividend they apply this $7.46 million dollars to a 20 year loan, it would repay an $85 million dollar loan, mysteriously the same size as the DCC’s original contribution.
    Incidentally, if the depreciation is a paper cost and offset against tax, this would leave an annual shortfall of only $1.2 million dollars a year to pay off a $109 million dollar loan. I don’t suppose that $1.2 million is the projected profit from the stadium? (I can’t be bothered searching for the answer to this).

    This means that the mysterious ability of the council to pay for the stadium so cheaply is not from the council hiding costs and taking money off ratepayers on the sly. The mysterious ability comes from central government suffering a reduced tax take.

  45. David

    LG – We had the depreciation discussion some time ago, and the outcome was that councils are required by law to fund depreciation on their assets.

    Interesting that DCHL profit dropped 62% from $22m to $8, but they still managed to pay out 2 and a half times their profit to council (and went $60m further into debt, to over $300m debt).

    How long can they continue to carry on paying $12m a year to the council MORE than their profit?

    With so many Otago timber companies falling over recently, I wouldn’t be surprised if the current year’s result drops further. (although our electricity line prices have just been hiked further – which is effectively yet another rate increase via Aurora)

  46. David

    LG $7.46m per year at an average 7.5% interest (the usual rate that has been used for long term calculations) would pay off a $78m loan.

    However the DCC loan will be at least $30m more than that – currently $108m and rising, meaning there is $101m interest to pay.

    Plus buying Carisbrook at $7m, plus roading, plus and private sector shortfall, plus operating costs if rugby spectators don’t have a spectacular increase.

    Plus depreciation $56 for the first 20 years (you’ll find a similar amount of depreciation funding in Westpac Stadium’s annual accounts).

  47. LG

    David the outcome was that councils are required by law to fund depreciation on their assets
    Wrong. I showed you the exact clause in the legislation, which doesn’t say that. I showed you two examples of councils choosing not to fund depreciation on certain assets. The council can choose to fund depreciation on the stadium, but they’re not required to.

    The change in profit is not “interesting”; it says in the notes that it’s almost entirely changes in accounting policy. In 2006 and 2007 there were tax REFUNDS, it’s not back to normal.
    The change in debt is also dull. It increased, but at a lesser rate than assets.

    Frankly, I think this conversation is over. It’s been useful for me, as I now have a much better understanding of the stadium funding mechanism, and I know how and where various financial scaremongers are miscalculating, but I don’t think anything I write will make much difference to you.

  48. David

    LG – That is disingenuous – those councils were not funding depreciation because they were not going to replace the assets (community halls).

    Dunedin will be funding depreciation on the stadium because it is a critical asset – were are told it is so critical that the city will actually die if we don’t get it.

    And if we don’t have to fund depreciation, why did we (according to Athol Stephens) have to spend $35m per year on it on it, or 24% of our total operating expenses?

    Back to your original point –

    Even ignoring the half million people in the Wellington region, a $40m loan is not a “similar” contribution to $260m – that’s blindingly obvious.

    Despite that, you’ve possibly explained how we gain an additional $2.5m throught the tax gain.

    I’ve been asking Richard for weeks how we pay the $10m in annual loan payments – and all he’s ever said is that we can pay it with $5m in rates.

    However that still leaves a few million missing, and of course the questions of where the depreciation funding will come from. (I’m not sure why you went on about depreciation – we’ve already been told exactly how much it is to cost for the stadium – just not HOW it will be funded)

  49. Richard

    David:

    “I’ve been asking Richard for weeks how we pay the $10m in annual loan payments – and all he’s ever said is that WE CAN PAY ITwith $5m in rates.”

    Answer:
    I have not said that at all. Again that is your spin, your refusal to accept anything but your own facts.

    David:
    “However that still leaves a few million missing, and of course the questions of where the depreciation funding will come from.”

    Answer:
    It has been explained and explained, on here and elsewhere and by people who have some qualifications to do so. You just do not understand David, accounting let alone much else, e.g. cash flows etc. As LG says, nothing anyone says to you makes any difference to you which is precisely why I stopped responding to you some weeks ago.

    Just as LG intends to do.

  50. Richard

    Elizabeth:
    “Quite a few people have tuned in for this exchange. The result might be that they’re no clearer on the financials.”

    Response:
    Sorry, Elizabeth. I know many who “tuned in” when there was a reasonable exchange of view on the project. They long ago, “tuned out”. No prizes for guessing why!

  51. David

    Richard – I’ve asked and asked, and you’ve never answered.

    You’ve stated there is $10m per year in capital and interest payments for the loan.

    $5m is coming from rates – you’ve NEVER explained how the other $5m is being paid.

    You’ve said $2.8m depreciation finding will be paid from operations.

    But is is MISSING from the forecasts – you’ve NEVER explained this.

    Nor what happens if private funding doesn’t come through.

  52. LG

    David Plus depreciation $56 for the first 20 years (you’ll find a similar amount of depreciation funding in Westpac Stadium’s annual accounts)

    I should stop, but you noticing this makes me want to point out the $9.4 million dollars of depreciation in the ORFU accounts, which would be enough to pay off all their debts and some, if the money actually existed.

    You still don’t understand depreciation. Someone decides to use a bedroom in their home as an office. Due to the miracles of tax law, you can then claim depreciation on the ‘office’. You don’t pay this depreciation to anyone, it’s just an entry in a book that means you pay less tax. You might separately decide to put some money aside to replace the roof, but that amount of money need bear no relation to the amount of depreciation that you’re claiming.

    Thus, in the stadium case, there is $2.83 million p.a. in depreciation. This means DHCL will pay less tax. Like the businessman and the home office, I anticipate that they won’t put the money they’re claiming as depreciation aside. It is just a convenient paper cost.

    However, because there will need to be some capital expenditure on the stadium in the future, the DCC is putting $6.4 million in ACTUAL money aside, as FUNDED depreciation (but this is a one-off payment). Athol Stephens is quoted here as saying that this money will be invested, and may be worth ~$20 million by the time it is needed. This money is included in the $109 million dollar loan.
    http://www.odt.co.nz/news/dunedin/61941/stadium-council-borrows-109m

    So there you go, the funded depreciation is included in the $109 million, and the accounting depreciation actually helps pay off the loan.

  53. David

    LG – I’m fully aware private companies claim depreciation – but as I’m sure you realise, it is different for local bodies, who are legally obliged to set aside funds for maintenance and replacement.

    The reason for this is so we don’t end up in a situation where the community has to suddenly fork out a vast sums of money for a new facility (i.e. to AVOID exactly what is happening with the new stadium)

    So we’re funding the depreciation of a $200m stadium with $6m, which will hopefully increase to $20m over the years, which will be enough to cover the replacement of the then $750m stadium in 20 years?

    The last major sports facilities – new stands at Carisbrook – have apparently become so derelict they are an embarrasment to the city after just ten years – I wonder how long the new one will last.

    It’s a shame you are wrong about Wellington.

    If Dunedin ratepayers were putting in a similar amount of money and risk as Wellington we’d probably have a majority of people supporting the stadium.

  54. LG

    Actually, I don’t realise it. You merely refuse to read the legislation, its interpretation, and the proposed plan for the stadium :)

    I never said that Dunedin ratepayers were paying the same as Wellington. I said the relative contributions by councils as a proportion of the total cost were similar. Dunedin is obviously paying more per capita because we have a smaller population.

    Anyway, I’m done here. I’m pleased that I have managed to convince you of a few things, but every time you turn out to be wrong, you cook up some new rubbish. The best arguments against the stadium are in the possibility for differences from forecasts and cost over-runs, not deluded armchair accounting.

  55. LG

    At 9:45 am you’re still complaining that there is $56 million dollars in depreciation to be paid on top of the $109 million dollar loan and interest.

    At 10:46 am, sixty-one minutes later you’re complaining that the $6.4 million dollars that’s actually being paid, which is included in the $109 million dollar loan is not enough.

  56. LG

    Thanks Elizabeth. I’d expected a higher minded response from you.

    And I’m not saying that I won’t be back ever, I’m just ceasing discussing this topic with David. If you’d prefer I leave permanently, that can be arranged as well.

  57. LG

    There is nothing like a long goodbye, but if nothing else has come from this, even David appears to accept that the ratepayers $5 million could provide $7.5 million dollars of debt service through less tax paid, leaving only $2.5 million to be accounted for.

  58. Peter

    LG thanks for providing some much needed balance to the discussion.

  59. Richard

    Yes, thanks too LG.

    For David: CCO’s are not “local bodies”. They are companies.

    For Elizabeth: yes, I agree and LG’s contribution has, in particular, been most helpful. It was getting “lonely” battling on financials!

    As for the ‘hits’, well I am surprised that you have not figured out just where they were coming from … in particular on a couple of Friday nights when David and Calvin were ‘sitting’ on their PC’s’ revving things up!

    Finally, a black mark to three of you for your lack of common courtesy to the OU Vice Chancellor. Whether you agree with his opinion on the stadium and the stand the University has taken is one thing. To refer to him as ‘Mr’ is quite another! Professor David Skegg is highly qualified in his field as well as being ‘CEO’ of our University.

  60. Richard

    Cont’d….

    By slagging off the way you have, brings you and this site down to the banal level of the STS lot.

    I am certain you did not intend that. At least, I certainly hope not!

  61. David

    LG – you’re missing the point again. The point being a $6m one off payment does not come close to funding depreciation on a $200m stadium over it’s life.

    If it’s not funded – we end up in the exact same position we are in now – having to find vast sums of money and going into massive debt to simply provide the same assets we already have.

    Anyway, you are still wrong about Wellington.

    The combined Wellington councils gave a $40m loan of $122m – just 33% of the project.

    Dunedin and Otago ratepayers are giving $109 + $37m = $146m of $198m = 73% (or is this last month’s figure – has it gone up a few more million). In addition we take the risk for operating and cost overruns, and underwriting private sector funding, which may or may not be fully paid.

    Dunedin 73% + risk vs Wellington 30%. (to be paid back as it’s only a loan)

  62. Richard,
    Professor David Skegg is certainly highly qualified in his field. But, does that necessarily make him a good administrator? I don’t know, but his piece supporting the stadium stating that opponents were vitriolic sets himself up for retorts.

    LG,
    DCHL’s debt of $300m has in fact blown out to $399m. This is shown in the half yearly accounts to 31/12/08. It was largely due to borrowing of an additional $90m. “for anticipated DCC requirements.” Don’t ever let Richard fool you into believing that the activities of DCHL and its coterie of CCOs are separate in some way from the DCC. Just ask yourself who are the shareholders of all entities. Richard, as you may know is a magician of some renown. I think he thinks that by using the same subterfuges he can fool all the people. When in fact it is he himself who is deluded. Of course, he would loudly remonstrate that this was not so.

  63. LG;
    Oops!
    My mistake. I said DCHL had increased its borrowings by $90m., in fact it was $95m. There, does that make you feel any better?

  64. Richard

    As a ‘magician’, Calvin, I have always known “where anything is coming from”.

  65. Elizabeth;
    You state the principles of the stadium are WRONG. What principles?

  66. Some thoughts:

    Finally a foil to David’s accounting, interesting reading.

    Alex, we’re not all comparing to big overseas construction projects, in fact the Vancouver example I refer to is a very small stadium, but it’s an interesting case study to look at (from the ground up and all).

    Cycyle ways to Port Chalmers – debatable if it really would be used by that many more people – really? I agree it’s a good project, but in terms of making Dunedin a more attractive place to host entertainment events, exceedingly marginal. And hardly an opportunity cost of the stadium, there have been so many of those opportunity costs, I would have loved to see people’s xmas wish list before this stadium project – somewhat less ambitious I would have thought.

    Back to Alex, you can only play on sentimentality for so long, even I am prepared to see Archibal Leech’s genius legacy laid to rest with his many remaining football stadiums in the UK. They were once shining stars, but that was 100-50 years ago. Any team in the UK looking at even modest developments such as Reading’s Madeski Stadium look on with envy, such little things as upkeep bills greatly reduced on new buildings, through to the ability to host genuine multi-purpose events.

    But how disgusting to even be discussing the remuneration of the VC, it’s none of our business. But if we are, lets look at what the university is. It’s a place of higher learning, competing locally and internationally for the hearts and minds of your best and brightest. If there was any serious consideration of remuneration packages in Tertiary Education, it would be evidently clear that NZ’s packages are astoundingly small, from that of junior academics through to the senior administrators. And then when we do want to have a dig at the stadium, we have a dig at the size of their salaries. No the VC does not look down on the ‘poor’ of this city, only those opposed to the development can suggest such things – and to borrow a phrase – disgusting.

  67. David

    Paul says “disgusting”

    my thoughts exactly – someone on $400,000 salary year having a go at people who don’t want the stadium because they’re struggling to make ends meet as it is.

    And Paul – do you really think $6m is enough to fund depreciation on the $200m stadium – apparently you can’t even buy last century’s worn out run-down stadium for that.

  68. David, unless you have a mandate to speak for each and every one of these so called ‘strugglers’ then I could respectfully ask you to consider what you say.

    I can’t see anywhere where he is beating on the poor buggers, that is just some sick interpretation of the article.

    If you can read into that, that he’s having a go at the poor people (whom aren’t universally against the stadium despite what you think) then this is not our problem – nor his and whatever he makes.

  69. Actually this whole framing of the argument as a rich vs poor thing is bloody infuriating.

    I know people from all demographics with all manner of opinions on the stadium, there simply isn’t a ‘us’ v ‘them’ argument.

    Just as I know some very well to do people who are opposed to the city spending any money on anything (now there’s a surprise – they vote ACT), I know of so called ‘strugglers’ who have recently been employed on site, and now think it’s the greatest thing since sliced bread.

    And as none of use have a mandate to speak of the others (oh apart from the demographically elected councillors, who were YES elected with the stadium in mind), all we have is our opinion.

    But once again, his salary is totally and completely irrelevant.

  70. LG

    The point being a $6m one off payment does not come close to funding depreciation on a $200m stadium over it’s life.

    Actually, I think the point is well under control. Not very long ago, you were complaining that the city was paying an EXTRA $56m dollars. Now that you’ve discovered that’s not true and that there is a sum of $6m included in the figures, you consider $6m not to be enough. That’s pretty extraordinary.

    I can’t comment on whether $6m will be enough, I’m merely pleased the city isn’t paying an extra $56m. If the $6m grows to $20m as suggested in 20 years, that’s a little less than half of $2.8m p.a./$56m that the accountants would have us believe. Which is probably fine. Book value accounting depreciation (the $2.8m figure) is not calculated in a particularly scientific way. The stadium will depreciate at the same rate (2% p.a. SL) regardless of whether the council builds a stadium, buys a 100 year old boat-shed or a poorly maintained villa in NEV. (NB: Up until 2005, wooden buildings were depreciated faster than permanent materials).

  71. Richard;
    You say: “As a magician you have always known where anything is coming from.”

    But the problem is, do you know where it is going?

  72. Hey don’t get me wrong, I’m an avid cyclist, I’ve biked more km than most, famously cycling through the snow on my racing bike to get to Hamner before I died (I didn’t dare think of stopping for a break – and no it wasn’t forecast).

    But like so many things that have been thrown up as opportunity costs post stadium decision, I can’t rightly remember these things even being on the agenda (or at least in the public vernacular) long before the stadium came along. And just because the city is spending this many tens of millions on a stadium, doesn’t necessarily mean that this money would have other wise been spent on these pet projects (as has been suggested time and time again).

    But what is it, some 750,000 people are expected to work and play in the Stadium Precinct once the university side of it is completed. If there are 750,000 people using that cycle-way annually I’ll happily stand corrected on that one.

    I love the rail trail and can’t wait for the day it’s usable by our whole family (no I’m not lugging my youngest up there in a bike trailer), but then stadiums have proven to be an economic boost too.

  73. Yes, and that “determined and vitriolic opposition” hasn’t only come from the downtrodden (and no I would hardly place myself above these people, how could I?), it has come from many different quarters of the community, as has support.

    But what you call the StS and their determined and vitriolic opposition, evoking terrorism, global warming, economic catastrophe just to name some of the nicer possible outcomes, the Village Green Preservation Society. Then how’s about the threats of Violence, the abusive emails, the hate mail, not exactly the Country Women’s Institute now is it. Yes there has been determined and vitriolic opposition, and if that offends some, so be it, because it’s out there for generations to come to look upon and wonder “what the..?”

    To turn it into a class issue is preposterous in the least. Mind you so many have tried about every angle, from a Moral Campaign through to a Good vs Evil battle, it’s hardly surprising that people are turning those words into a class thing. Funny, some of the most vocal opposition has actually come from some very esteemed and privileged positions – where do they fit into this class war.

    It’s just yet another tactic to pigeon hole this debate into something simple, and it isn’t. BTW, next time I’m down at the site, I’ll ask my old mate Chris who’s been out of work for 9 months now, how’s the new job, and what does he think of the $66 cost to him?

  74. David

    LG says “That’s pretty extraordinary”

    So why are you counting interest on the $6m (to make it $20m), but not on the $56m?

    Surely you should either add interest ot both, or add none to both.

    My point is that $6m in unlikely to fund depreciation of a $200m stadium.

    You say “That’s pretty extraordinary.”

    Then go on to make the exact same point……

    “I can’t comment on whether $6m will be enough,”

  75. 750k (or whatever the actual figure is) that’s in one of the reports commissioned by the University and released to the public.

    Yes these are repeat users, as would the good folk on their Raleigh 20s to and fro from Port Chalmers every day.

    How much is a single one off test worth to this city, several millions, and how long were we guaranteed anything above say NZ vs Outer Mongolia if we kept putting lipstick on a pig – certainly not a test that would bring in millions each time. For those who somehow dream that spending further tens of millions of dollars on a single use outdoor stadium, which will then require further tens of millions of dollars again and again in the future, is a successful model for stadium and entertainment operations, please, there are dozens upon dozens of these such stadia in the UK, they desperately need your help to keep afloat.

  76. David

    Paul says “But what is it, some 750,000 people are expected to work and play in the Stadium Precinct ”

    And 1460 people live in my house, if I count them every day and add the total over a year. – hell, why not a lifetime, average 82 years.

    119,720 people live in my house – that’s as much as all of Dunedin.

    Three quarters of a million Paul ?? yeah right.

    Spectator numbers at NPC in Dunedin season numbered 18,500 – not for a single game – total for ALL games.

    That means if will only take 138 years of NPC at current rates to get to your total.

  77. David

    A test brings in a similar amount to a cruise ship visit.

    Except there are a HUNDRED TIMES more cruise ship visits than test matches. 55 Cruise ship visits per year compared to one test every 2-3 years.

    But we don’t even have a terminal for cruise ship passengers – we make them get off in an industrial container port.

    .

  78. I agree, the international terminal for cruise ships is pitiful and seriously needs consideration, but if one was to propose a nice spot for the tourists to land off a rich ship, yeah good luck getting that one to fly past the ‘great unwashed’.

    And you have almost answered my question “why build a stadium” for me. To get more entertainment dollars into the city than just the 1 test a year allocation, get concerts and events into the city.

  79. David

    Paul – give me a good logical financial argument for the stadium, and I’ll back it.

    Unfortunately no one has come up with one yet .

  80. David

    Paul, while concerts might be fun for the city, the financial benefit will generally not be great.

    Similarly, the millions spent in Dunedin for a test, is similar to the amount that would be spent in the local area without a test – it might just be spread over a few more days.

    As virtually all spectators are locals, they don’t bring extra money to the city. They just use money they would have spent in the region anyway.

    There is a benefit from the small percentage of people who come from up north for a test (but the last test almost sold out with locals only)

    But to judge the financial benefit to the city of a new stadium, you need to first take off all spending from locals.

    Then just take spending from those who travel from outside the region, and take away those who would have come to Carisbrook anyway.

    The few that are left are where the financial benefit of a new stadium lies.

    In other words there won’t be much difference for 95% of major events (Super 14 and NPC).

    And if we already get 28,000 – 42,000 for tests at Carisbrook, then getting 30,000 at the new stadium will have little financial advantage to the city over what we currently get.

    If the new stadium is popular with locals, we may sell out tests with local tickets – the benefit of outside money coming to the city would be LESS than we currently get.

  81. LG

    David — the reason I counted the interest on the $6m is because it exists in a tangible sense. The council are paying that money into an account. The $56m doesn’t exist. It isn’t paid to anyone. It isn’t in an account somewhere. It is a notional number sitting on a piece of paper representing a theoretical loss of value. It does have implications for financial statements, but the money doesn’t exist. If it did, then the ORFU would have that $9m, easily enough to repay their debt and gift Carisbrook to the city.

    Having said that, I don’t believe for a minute that there is a good logical financial argument for building the stadium. And I suspect that it will end up costing more than anticipated. It would seem prudent for the council to have a contingency plan for the unexpected. On the other hand, I don’t think misunderstood accounting and invented additional costs are required to make a sound argument for opposing the stadium.

  82. LG

    Hi Elizabeth. I apologise for my earlier comment. I’m not sure whether you intended it as an insult or if I misread it.

    I’m interested in your comments on the VC (far more so than accounting!). I think there is some rather vitriolic opposition, but they are (hopefully) a small minority. I’m curious as to what benefits the university sees. I hope it is not the current VC’s equivalent of the paving and proposed bridge on campus; and that it is not simply a cynical “well, we’re not paying much for it”. The university’s financial head seems hawkish, so I assume would have noticed if the DCC was committing financial sins or suicide.

  83. David

    LG – I’ve probably found out more from your messages than many weeks asking Richard about the same aspects.

    However there are still many unanswered questions.

    Like how to we pay $10m per year in loan repayments with $5m in rates and $2.5m in tax savings?

    Depreciation – $6m vs $56m. I take your point, but I think you miss mine. (I do understand depreciation – I have to buy expensive equipment for my business, and I claim depreciation on it. I’ve never been talking about that. I’ve been talking about funding depreciation as I do and as councils are required to do – putting aside money so that there are funds available for replacements when expensive assets come to the end of their useful life)

    Anyway, $6m will not fund much depreciation. If, after 20 years it has grown to $20m, that will only fund 10% of a new stadium at 2009 prices (by which time it will be 2029).

    If the council is to fund depreciation in the same way they do with their other assets, they will need to be putting aside something much more like the book figure they are using – $56m over 20 years.

    The other unanswered questions are things like
    – Who takes risk for cost blowouts?
    – What happens if the contractor goes bust?
    – Who pays if the “private funding” fails?
    – Who pays if interest rates shift from record lows at some time in the next two decades?
    – Who pays if rugby spectators stay at current levels instead projected spectacular increases?

  84. Richard

    Calvin: Of course!

  85. Elizabeth;
    From what you have disclosed in the Dunedin City District Plan it suggests that perhaps we the rate payers are in the process of funding a stadium for the university.

    No wonder that central government were so willing to put in just $15m. An excellent deal, one in which the university has only to make concessions for a few pesky rugby matches in order to perpetuate the fraud.

    It’s a win win situation for the ORFU and the university with the lumpen rate payers, as usual, the fall guys.

  86. Well, it has been a long, interesting debate, all engendered by one loose remark by Professor Skegg. He must be well pleased.

    David and LG have pretty much exhausted the arguments on the handling of the fiscal capital involved with the stadium project. We are now all acquainted with the intricacies of the required financial finangling to produce the outcome desired. This is the alchemy of accountants, not something which relates very much to the real world. I once heard a definition of accountants as being somewhat similar to the great “Motmot bird which forever flies backwards looking at last years set of figures.” I wonder if in time it looks back at the stadium project, and if so, how its projections have unfolded.

    There has however, been little talk of the social capital involved in the debate. By this I mean the social effects on the citizens from the stadium. There is of course the financial impact, which has all manners of effect, from the trivial – to the top earners – to dire to the lower incomes. Then there is the stealing of wealth from citizens yet to be born, by what Richard Walls euphemistically terms “generational debt”. This is the great theft exacerbated by the tyranny of interest.

    Then there is the seemingly ignored question which should have been addressed right at the start. “Is it for the public good?” At that stage there should have been a full public debate. Would it have resolved the matter differently? I don’t know. But I do know that by council riding rough shod over all dissent, and taking the concept forward in the manner that they have, has alienated a huge segment of the population. It is not just about money, but rather about justice. It is the principle. Should council – and by extension – the rate payers, be expected to cover for specific private activities which for whatever reasons get into problems surrounding the viability of those activities? Should those problems not first be addressed in house by those organisations? Should it not be the responsibility of that organisation to put their own house in order. Why is it that the citizens are assumed to be in favour of coming to the rescue of what is clearly a failed enterprise? What right have a few prominent city leaders and office holders to make those assumptions? Worse, what right have those few to use the citizens’ treasure to solve those specific group’s problems?

    These are some of the questions which have not, but should have been considered. Had they been, would we be where we are today? I don’t know. I do know that this stadium has created an enormous amount of discontent and unease in this city, and for what purpose? That is the question.

  87. Richard

    Calvin: “Then there is the stealing of wealth from citizens yet to be born, by what Richard Walls euphemistically terms “generational debt”. This is the great theft exacerbated by the tyranny of interest.”

    Calvin, you delight in dressing up your pontifcations with elements of minimal fact and – as this – misquotation to suit.

    The term is “inter-generational equity”.

    Three or four years ago when you were going on about debt, I happened to mention it to you in an email exchange. You had never heard of it, so I explained what it meant.

    For other readers (and putting it simply), it is a term used to describe a loan taken out by (say) a council on an asset which will serve several generations of users, i.e. capital assets such as infrastructure.

    In essence it spreads the cost over users, current and present, rather than having the current generation stump up the total cost.

    Which is why councils borrow, of course, and I accept Calvin that you have your opinions on that.

    Fine, but please stop misrepresenting the facts.

    And change the record! It’s getting boring!

  88. Richard; you are right about the boring bit. I get bored out of my tiny mind by the endless stupidity of the actions of, and the single minded determination of the managers of this city to bankrupt it.

    As for misrepresenting the facts. I had never heard of “inter-generational debt” before you explained it? Huh? Explain to me please the intricate difference between equity and debt.

    As I understand it, you buy something at a fixed price, you then pay for it with debt spread over many years, exchanging that debt for equity, and paying twice as much or more in the process to own it. I understand that, and accept it as a means of spreading the cost over the life of strategic infrastructure. What I don’t understand, is how you can do the same for toys for the few at the expense of the many. Sheer irresponsible indulgence is how I would describe it.

  89. Richard

    The term is “intergenerational EQUITY” and I did not “invent it”.

    Nor – as your response so clearly indicates – do you obviously understand it.

  90. Richard and Elizabeth; Debt/Equity, please explain, because as I understand it the two terms, in certain circumstances, can be the two sides of the same equation. Richard, I never suggested that you had invented the term. The very idea would never have occurred to me.

    Take an asset, any asset. If it is purchased with debt, at the beginning it is all debt, no equity. Part way through the term it is part debt part equity. At the end of the term it is all equity, no debt. Simple?

    Now Richard, please tell me why I don’t understand it. Better still, tell me your interpretation because I will be intrigued to hear.

  91. Elizabeth; “Intergenerational debt” is a self explanatory term, as you say fashionable with many councils. Put quite simply, it is used to describe debt entered into by councils, the repayment of which is so substantial that it will take more than one generation to discharge it. Richard loves to talk of it and rightly so. As I have said, I have no problem with the concept when it comes to infrastructure having a life of generations, providing a valued service to those generations. Water and sewerage comes to mind. But when it comes to using the same principle to load the unborn with debt for short term fashion statements such as the stadium, then I rebel. It is not right, and it is not fair.

  92. Richard

    I do not “love” to talk of it, it is just one of the terms that comes into the mix. And I have never used it in relation to the stadium.

    Calvin, you certainly implied that I “invented” it or something when you said: “by what Richard Walls euphemistically terms “generational debt”.” Wrong on both counts. You weave so many ‘fantasies’ these days and, like David, post so many blogs on different sites, that you lose track of what you say.

    Your nickname around town of “Doctor Debt” is well-earned.

    Cheers!

  93. Doctor debt? Jeez, Richard, I haven’t even submitted my thesis yet. But I am pleased nonetheless. If nothing else, it suggests some are listening. If, as you imply, it is derisory, then so be it.

    The fact that “you” have never used the term in relation to the stadium doesn’t mean the process doesn’t apply.

  94. Elizabeth; thanks for your concern, but I don’t have any problem with anything Richard says. Well, why would you? Let’s face it, there is not much to take exception to. In fact there is not much, full stop.

  95. Richard

    Why be so ‘breathless’ about it. Nothing secret about that.

    As I have posted before – I think in response to LG – all sporting organisations etc such as golf and bowls clubs, church halls etc qualify for ‘grants’ in this way. There is a balancing factor for those on council-owned land to ensure equity.

    Before changes to the Rating Act about five years ago, the process was all rather ad hoc.

  96. Richard

    Intergenerational EQUITY as befitting its term relates to spreading the cost to successive generations of users. It particularly applies to drainage etc as I think you have observed.

    Lon (or debt) funding is the mechanism by which it is achieved, the only one that is available to council.

    In this situation, it is the management of debt – the management – which becones important.

    I have not heard the term used in relation to the stadium. The loan only applies for 20/22 year term. Arguable.

    As for “rucking up Calvin”. Well you never blow the whistle on him or David when they infringe and they do that that fairly often. Indeed sometimes Elizabeth, you back up some of their absolute nonsense. I apologise though for the spelling, it should have read ‘Doctor Debth”.

    Cheers!

  97. LG

    http://www.dunedin.govt.nz/services/rates-information/rates
    Valuation number 27460-18500
    Property address 50 Burns Street Dunedin
    Certificate(s) of title (guide only) 16A/140, 403/22
    Ratepayer name(s) Otago Rugby Football Union

    Current Rates Current rating year 2010
    Rating period 1 Jul 2009 to 30 Jun 2010
    Rateability Non Rate
    Rating differential Area 3 – Non-Residential
    Land use Multi-Use: Recreational

  98. Mike

    First time here, but a few questions.
    In the GMP contract, most of the figures were missing, and no real information on the scope amendments, so can someone point me to those.

    Can someone clarify if there is a running track to support track and field events?

    Are there any figures around for hiring the stadium?

    Also in regards to the borrowing, which institution is doing the lending?

    Is there an exact seat count somewhere? I have seen very different numbers quoted, and I would like some clarification.

  99. Peter

    You can get some of those answers – seating capacity, projected revenue from:
    http://www.dunedin.govt.nz/your-council/minutes-and-agendas/
    Use stadium as the keyword. Information is contained within stakeholder reports and attachments.

    My understanding is Dunedin City Treasury Ltd, a Council holding company, raises the funds from various sources rather than obtaining a loan from a particular institution but there are others who post here who should know that information.

    There is no permanent running track in the design although a temporary one could be overlaid f0r an event dependent on cost etc

  100. David

    Richard says “The term is “inter-generational equity”.

    “For other readers (and putting it simply), it is a term used to describe a loan taken out by (say) a council on an asset which will serve several generations of users, i.e. capital assets such as infrastructure.”

    But as the stadium will cost many times more than it will ever make, it can hardly be considered an asset – more like a liability.

    So we have inter-generational debt to fund an inter-generational liability.

    Can I coin a new phrase?

    “inter-generational white elephant” or
    “inter-generational financial concrete boots”

    The last new stands, corporate boxes etc at Carisbrook only lasted half a generation.

    They didn’t even last the term of the loan.

  101. Hi Mike,

    thanks for stopping by. First can I suggest this isn’t the correct forum for your answers.

    “In the GMP contract, most of the figures were missing, and no real information on the scope amendments, so can someone point me to those.”

    Not sure which figures missing you are alluding to, but as for amendments and scope, I would suggest the peer reviews and subsequent material covered these.

    “Can someone clarify if there is a running track to support track and field events?”

    I would suggest no, and further I hope not. The trend (and rightly so) in modern stadia is to put the people as close as possible to the action, and an impediment to this in the past has been the inclusion of running tracks. Look at QEII in CHCH, fantastic facility, and I remember going to football (soccer) matches there in the late 70’s early 80’s to games with crowds of 7000+ (for the local league). The only problem is that you were a good 20m+ away from the action.

    Indoor arena in the Northern hemisphere, where indoor track meeting are exceedingly popular (as they have been here in the past) have temporary tracks laid across the turf or other surfaces. The turns are tighter but the athletes accept this and records are adjusted and recorded accordingly.

    “Are there any figures around for hiring the stadium?” I’m not sure about this, I would hazard a guess no, because this is still 3 years away from opening, and why would they even consider releasing sensitive competitive material like that in advance. Remember NZ is a market for the entertainment dollar, and I would assume that all facilities keep these things close to the bone, let alone vary from event to event.

    “Also in regards to the borrowing, which institution is doing the lending?”

    From my understanding the DCC and ORC are the major parties undertaking said loans, and this is then going to be transferred to the authority which will oversee the construction of the facility (makes sense they pay the bills after all). But I am willing to be corrected on this one.

    “Is there an exact seat count somewhere? I have seen very different numbers quoted, and I would like some clarification.”

    The final figure isn’t exactly tied down, but if you ask the CST the figure has been around the 30,000 for as long as I can remember. But then if you want exact seat numbers, this varies from event to event (possible cause of confusion) as the venue is multi-purpose and thus multi-configurational, seats can be removed and added according to events and needs. Capacity and seating are two different things. However do not believe the downright disingenuous claims of the StS’s cohorts which have claimed the capacity is now 19,000 and declining. They are the only ones who have come up with the extreme figures on this issue.

    This place is more about discussion of the issues and expression of opinion, the facts are pretty much out there for all to see, from the DCC and CST. Here we are about discussing free and frank opinion no matter how much each side agree or disagree. The only thing I don’t want from this site is for folk to be openly disingenuous with information (for example the person who claimed South Dunedin would float away with global warming and the stadium shouldn’t go ahead because of it, the relation to the truth was so tenuous as to be laughably insane).

    Cheers for coming by.

  102. Ah, but what’s the point in even looking for the official figures if they are going to be put in the twilight zone of the StS.

    The official cost to ratepayers is $66 per annum. Until my rates bill next year comes in any different from that, I’m gonna stick with the $66. However there are some claiming hundreds if not thousands a year, whether or not their methodology has been found to be flawed, this is what they are running with – so why bother even trying to find the ‘facts’.

    Just as the capacity. It’s very easy, the capacity is and has always been around 30,000 people, give or take a few, and of course this varies from event to event. But to have Dr Hamlin stand up at the inaugural StS meeting and tell us as a stated FACT that the capacity was 20,000 (I think he even said 19,000) and declining, when that is so not even on the same planet as the truth, why bother.

    Sure it’s a great place to put questions, but when someone comes up with a definitive answer, and it’s not to the liking of the StS, it of course is shot down in a sustained attack, from anyone mobilised within the StS. Take for instance the insane claim that the area will flood due to global warming resulting in MSL rising. Nice sensationalist claim, shame that claim doesn’t even figure into the worst case scenario imagined by NIWA (you know the official people charged with obtaining the truth about science). It was very easy for me to confirm from Andrew Tait (lead scientist on one of the global warming modelling projects), not even their worst case example saw anywhere near the alarmist figures put up against the stadium. Didn’t stop an esteemed Professor (of not climate science) running in public with the alarming (but false) claims. I categorically dismissed that claim, but oh no, it wasn’t good enough for some – South Dunedin was going to float away.

    Sure come here ask questions. Don’t expect us to have the definitive answer, if neither side has the definitive set of facts. But don’t then use speculation, rumour, scare-mongering and dodgy accounting to perpetuate the myths that are floating about out there.

    I mean, it’s not a bloody glass roof – but even just last weekend, I heard someone in a cafe say the same rubbish I’ve heard over and over again, that the glass roof is dangerous, heavy and will be a shocker to clean. Really what the hell is one to do with that.

    And yes even in Public (our) money situations, yes there is commercially sensitive material. Who would tender for a contract if everyone else knew each others business, that’s just daft and against any known, sane business practices. It wouldn’t result in the best prices and the most competitive bids. But again that’s not good enough for some, and suddenly secrecy is the basis for conspiracy theories. Yes original designs have changed, but that’s not cost cutting with inferior materials and building practices which will result in the building failing (as has been suggested time and time again).

    No by all means come along to this forum and ask all you like, just don’t expect to get the definitive answer, and by all means expect to get the conspiracy theory thrown in to boot.

    (this message was bought to you by the now cash flush ORFU – as some would have you believe. Remember I am a paid employee of the CST, as no one would do this for fee – according to the nay sayers).

  103. David

    I think you’ll find the figure of 18,000 permanent seats actually comes from the Carisbrook Stadium Trust.

    There are a further 9000 temporary seats, about 4000 of which will be stored on site and the other 5000 will have to be hired when neccessary, to give a total of just under 27,000 seats for large events, with the ability for around 3700 standing patrons.

    Total seated and standing is 30,550. (although other parts of the CST website claim there will be around five thousand more than their own detailed totals for each stand – perhaps they are old figures).

    Carisbrook has held up to 42,000 – about 40% more than the maximum for the new stadium – although if NPC rugby crowd are anything like last year (average 3700 spectators per game) then even the smaller new stadium will be nearly 90% empty for half it’s rugby games.

  104. David, so why did Dr Hamlin play such a silly game with the capacity and seating. You should have heard the gasps of shock and horror from the collective concerned masses at the first StS meeting. It confirmed their worse fears – just it was only part of the truth, and the part of the truth that was aimed to shock, no enlighten. they went away from that meeting thinking that the stadium would have a capacity of about 20,000, further entrenching their fears about the project (among other insane claims that night – Twickenham is rugby only stadium). They didn’t come away from the meeting thinking, “ok so it’s a mixture of permanent and temporary seating and some terrace”, they left thinking it has capacity of 19k for $200m.

    Now I’m a little confused, are we to keep a 42,000 stadium, indeed throw more lipstick on it when it will be empty for 99% of the time, because remember it’s a terrible multi-purpose stadium. What was the last big event there outside of Rugby, Joe Cocker???

    BTW I and many many people are happy that there is a ‘terrace’ element to the stadium. There is nothing worse than sitting at a rugby or football match.

  105. David

    Paul – I’ve got no idea what Dr Hamlin said – I’ve never really followed what StS have been saying – it’s pretty obvious without them that the numbers we’ve been fed never stacked up from the start.

    Pauls says “Now I’m a little confused, are we to keep a 42,000 stadium, indeed throw more lipstick on it when it will be empty for 99% of the time…”

    It was a privately owned stadium. Why do “we” (ratepayers) have to do anything?

    What other private groups do ratepayers give personal loans to, then buy their property at millions over market valuation to bail them out when they are technically insolvent?

    At least with Carisbrook the city was getting 95% of the benefit we will get with the new stadium – Carisbrook got Super 14, NPC and tests.

    So we spend $200m, but we only get a 5% improvement in return on what we were already getting.

    If plummeting rugby spectators continue the same trend as the last decade, the new stadium will get even LESS spectators than Carisbrook – especially since ticket prices are going to be raised, and a lot of people will have to buy much more expensive seated tickets instead of terrace tickets.

    And what do we expect if not enough people go – better entertainment product from rugby?

    Not likely. They now have a record of abusing communities (like Christchurch the other week) if not enough people go to their underwhelming games.

    Their solution to too many games? Put on more games.

    Their solution to not enough good players? Take the ABs out of the NPC.

    Their solution to dwindling numbers? Fill the cheap terrace spaces with seats and put the prices way up – only to take them out again when this did the opposite of what they wanted.

    Their solution to smaller crowds? Abuse the patrons for not going.

    We’re building a new stadium, spending $200m, and relying on the mismanaged mess of rugby for it to be successful.

    That’s like putting Bernie Madoff in charge of DCC finances.

  106. Paul; I am always impressed with your prescient discourses on all things pertaining to the stadium. You have the answer for everything, and an absolute phobia about anything STS. I am impressed that you have been to three conferences in Boston – or was it that you told us three times about the same one?

    I honestly think that you must have the most gazed at navel on the planet.

  107. Richard

    “You Richard are in the position to be fair and reasonable to beleaguered ratepayers through your chairship of Finance and Strategy. Are you fair and reasonable to beleaguered ratepayers? Hell no. Instead, you have sanctioned, along with other pro stadium councillors, a hideous debt funded future for Dunedin people and their families – and for a period, acknowledged in the Draft LTCCP (and I presume in the approved LTCCP), the council will be operating beyond its prudential limits. Yeah. Good work, Richard.”

    Well, two responses.

    Firstly, you confuse my role as Chair of Finance and Strategy with that of my role as a councillor. I appreciate that my predecessor did not separate those roles and am rather surprised that you think that is the norm.

    As Chair, I do not think anyone can accuse me of being anythiung other than fair in allowing full and free debate on the stadium or anything else. I have certainly had the support of all councillors in my approach and, in particular, in retrieving the role we should play in the development of policies and strategic issues, something that the committee was sidelined from doing for 5 years!

    As a councillor, I have fulfilled my policy undertaking to the electors of Hills which was set out in a statement delivered to all householders prior to the election in 2007.

    Secondly, you ignore the fact that council sets its own prudential limits to guide itself. It is quite competent to amend that and any other policy for any reason and at any time.

    I m not here to justify anything but … you raised it!

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