Dunedin City Council meeting Monday 01/02/2010

Starting at 10am in the Edinburgh Room, Municipal Chambers, the meeting to consider the Pre-Draft Annual Plan held on 21 January resumes. Apologies have been received from Councillors Paul Hudson and Richard Walls.

UPDATED 30.1.10
The agenda and reports are now available on the DCC website.
They were uploaded this morning.

Agenda – Council – 01/02/2010 (PDF, 56.5 kb, new window)

Report – Council – 01/02/2010 (PDF, 54.8 kb, new window)
Water and Waste Services – Proposed Changes to Annual Plan Measures

Report – Council – 01/02/2010 (PDF, 230.0 kb, new window)
Tahuna Wastewater Treatment Plant Stage 2 Upgrade

Report – Council – 01/02/2010 (PDF, 123.2 kb, new window)
2010-2011 Community Housing Rent Increase Proposal

Report – Council – 01/02/2010 (PDF, 205.7 kb, new window)
Library – Rate Funding Reduction Options

Report – Council – 01/02/2010 (PDF, 190.3 kb, new window)
Stadium 2010/11 Draft Annual Plan Update

Report – Council – 01/02/2010 (PDF, 2.7 mb, new window)
Kerbside Recycling – Clarification of Financial Modelling in the Pre-Draft Plan 2010/11

Report – Council – 01/02/2010 (PDF, 108.5 kb, new window)
Dunedin Venues Management Limited Budget 2010/11

Report – Council – 01/02/2010 (PDF, 289.7 kb, new window)
Logan Park Public Toilets and Change Rooms

Report – Council – 01/02/2010 (PDF, 87.0 kb, new window)
2010/11 Pre-Draft Annual Plan Update – Development Contributions

Report – Council – 01/02/2010 (PDF, 594.6 kb, new window)
Otago Settlers Museum, Dunedin Centre, Regent Theatre – Opportunities for Staging

****

Make what you will of the Dunedin Venues Management Limited Budget.
The budget recommendation raises many questions about the way funds are being amassed and siphoned for DVML.

The bold assumptions, the lack of financial transparency and diligence underlying the report demonstrate the poor thinking of senior executive staff and that of at least two senior councillors, heading Finance and Strategy Committee and Dunedin City Holdings Limited (DCHL) respectively.

Starter questions:
Will the Council call the bluff of the report writers?
Will councillors ask the hard questions on Monday?
How is money being prioritised to the stadium in this way, what are the processes?
Has no consideration of spending priorities (legitimate issues and options) been given to the money?
Should the sums be put to alternative use – or other investments with better returns?
How can this ‘report’ skim to the top of annual planning considerations without honest open hard talk?
Why does the Council operate on back room deals of this magnitude?
What shoddy manipulations of power and money are at play?

…oh no, not us, we would never let down the ratepayers…

yeah, right

****

What was that we heard? That a further $900,000 (or so) is sloshing around in the Annual Plan budget – for the stadium, to be spread across two years.

Meet the runaway stadium project, AGAIN.

Post by Elizabeth Kerr

31 Comments

Filed under Economics, Politics, Project management, Stadiums

31 responses to “Dunedin City Council meeting Monday 01/02/2010

  1. Couldn’t think of a better way to put it, myself. What’s Walls’ and Hudson’s ‘excuse’ for not being there? Anyone know? It’s not as if this isn’t a vital time for all councillors to be there – especially those in key positions. The excuses would have to be very convincing.

    • Elizabeth

      ### ODT Online Sat, 30 Jan 2010
      Rates conundrum tests budgeting skill
      By David Loughrey
      Staff at the already stretched Dunedin Public Libraries will face job losses and the library could suffer cuts to its book budgets if a proposed $300,000 budget cut goes ahead. Meanwhile, the company in charge of the Forsyth Barr Stadium is seeking funding of $2.4 million to begin work. The funds sought by Dunedin Venues Management Ltd (DVML), the company set up to run the stadium and other Dunedin venues, are well above the $600,000 set aside for it in the Dunedin City Council’s annual plan.
      Read more

  2. ro

    From Aurora Energy, a “subvention” – how do you think we should translate this wonderful word? An under the table windfall? An underhand one? And from DCHL a special “dividend” – a squeeze?

    And why should the stadium’s funding be described as “required” by staff? How much money the city gives the stadium is something that is entirely up to the incorporated citizens of Dunedin. The stadium staff may require whatever they see fit but that is no reason that they, any more than the library or the art gallery staff, may decide how much the stadium gets. It has had budgeted for its running costs $600,000 this year (which is $600,000 more than it would get if a majority of Dunedin citizens actually had a say). The stadium must cut its cloth to fit this purse.

  3. ro

    I’ve quoted the following from the paper for Monday’s council updating the draft annual plan for the stadium:

    “DISCUSSION
    The monthly cashflow for the Forsyth Barr Stadium for the period of its construction has been reviewed and updated . . . The updates incorporate the following changes:
    – Updated timing of the construction expenditure.
    – Reduction in Trust costs of $850,000.
    – Revised timing of funding of one instalment from the Community Trust.
    – The private sector funding to be received during the construction period was previously forecast at $1.2 million, and is now forecast to be $0.6 million.
    Professional advice now recommends that all private sector funding received after the stadium is transferred into Dunedin Venues Management Limited (DVML) should be received by DVML. In the 2009/10 Community Plan, this revenue was forecast to be received by the Council.
    The changes outlined above should be incorporated into the draft 2010/11 Annual Plan.”

    I note that the private sector funding expected during the construction phase has dropped yet again. And these funds are now to be received by the DVML rather than the Council directly. Revenue from sponsorship etc of $103,000 appears in the DVML report cited above and is budgeted to be included in the running costs of DVML – NOT to be put towards the capital cost of the stadium.

  4. ro

    “Four sources of funding for DVML’s 2010/11 budget have been identified to fund the company start-up costs for DVML. These sources allow the ratepayer contribution to remain at $0.6 million, as provided in the pre-draft annual plan.”

    This is Athol Stephens’ conclusion to the report on DVML. We’ve got to ban the use of “ratepayer”. The stadium and DVML are being funded entirely by sources wholly owned by either the citizens of Dunedin or of Otago. Does any of us care whether our contribution is made from the money levied on us in rates or whether it comes from the profits made (out of us) by the companies and assets we own? Not a whit! Whichever source it comes from, it comes from our resources and it is for us to decide where it goes.

  5. David

    So while all departments have been asked to cut their budget, Dunedin Venues Management are getting a 400% increase in their budget.

    What do they need the 400% increase (nearly $2 million extra) for?

    To promote and manage a stadium that won’t be finished and can’t be used until the next financial year?

  6. This is what is known as the chickens coming home to roost. Tomorrow is just the start.Watch for the continuing fall out. It has been predicted by many for a very long time, but all criticism was derided as ‘negative’. The culpability is enormous, but how many will put their hands up and say they got it wrong? Watch for the weasel excuses and crawling for the high ground. It will be pathetic. With it being election year the groveling will be worth watching.

  7. Phil

    I suspect that they need a considerable amount of money up front now to buy the “opening act” for the stadium. The timing would be about right for booking a major act, as would the size of the booking deposit.

  8. Anonymous

    Wait till you see how much unbudgeted expense there will be to complete the land purchases for SH88 realignment…

    • Elizabeth

      Thanks Anonymous – believe you’re right. How could it be otherwise given the pattern, given the players.

      The grand Dunedin ‘development’ plan (aka property investment game played by, woops, relatively few players in the private sector) is of course always known well ahead of time – thanks to Council itself, its blue-sky intimations and planning processes. Old boy profiteers – a rort of same names (same legal, property, investment, resource management and valuation professionals and consultants, the same-list goes on…) – apply their leverage, make and remake their wealth, impacting the good residents and ratepayers. Such a simple racket.

      Who or what failed to protect Dunedin, from itself.

  9. Phil

    I don’t think you’ll ever know the actual cost of the realignment. Part of the cost could well be borne by DCC roading department. Ditto for water and wastewater upgrades required in the area, costs could well be placed with the relevant department. In the same way that some of the stadium fitout is being transferred from the construction portfolio to the operational portfolio. And some major items, such as the seating, are to be purchased by DCC. So they don’t show up in the contract.

    Probably best to accept that you’ll never know the final figure.

  10. Phil

    Interesting to read the budget breakdown in the stadium report. There’s a 600,000 dollar sum which looks like it may vary from year to year. Perhaps high during the first year, with set up costs. Then reducing thereafter. So, allowing for that variation it looks like the Events Manangement company itself will need 2 million dollars a year to operate. That’s the company, not the stadium. I don’t know if that’s reasonable or not, but at least we now know that annual overhead.

    • Elizabeth

      Yes they’re after $900,000+ for the stadium across the next two years – this stated to me on Friday prior to the reports being uploaded to DCC’s website. We’re not yet up to debate of the DVML and stadium budgets, today’s Council meeting was adjourned after consideration of other items prior to the Infrastructure Services Committee meeting. More to come.

  11. Phil

    must have been full on. Any decision regarding the housing rentals or Tahuna reports ?

    • Elizabeth

      Tahuna Wastewater Treatment Plan Stage 2 Upgrade (see Report dated 27/1/10 pp 6n.1 – 6n.9):
      Cr Noone moved the following Recommendations in the Report:
      1, 2a/b/c/d/e and 3. CARRIED.

      2010/11 Rent Increase Proposal (see Report dated 27/1/10 pp 6u.1 – 6u.3):
      Council accepted there should be an increase in rents, and went for Option B) Variable Rent Increase* as the most equitable option for all tenants, recognising the various types of units occupied.

      *Cr Bezett supported Option B, but noted the standing social housing policy is geared to break-even, would a rents increase fit this policy, or did Council want new policy? Cr Brown saw an issue with fairness and equity (for tenants) in relation to Council’s rent setting criteria. For example, a modern rental unit would be more energy-efficient, meaning it would cost less to live in than say a 20-year-old unit that had been retrofitted – how would rent charges take this into account? Cr Butcher said a special group would be set up to address these types of issues. Cr Cull pointed out that Council’s social housing strategy meant no new units would be built for five years. Mayor Chin noted the proposed rent increase would have no effect on the annual rates increase.

      See ODT: Spending on Tahuna upgrade rejigged

  12. Phil

    Tha’s excellent news about Tahuna. A delay would have been too embarassing to deal with.

    The housing units are pretty compact, less than 50 sqm each. Retrofitting should be relatively easily achieved which will in turn make all the units healthier and inexpensive to heat.

    Why they have never put central heating into some of those larger complexes is beyond me. They are perfectly set up for a sustainable system.

    If only they were brave enough to ban smoking in the units. The council contractor told me once that it costs an addtional 150k every year just to deal with smoking damage in council flats. That’s the cost of one new flat. Every year.

    • Elizabeth

      ### ODT Online
      Council trims rates increase
      By David Bruce on Tue, 2 Feb 2010
      The $45 million Dunedin Centre and Dunedin Town Hall projects have been rejigged and delayed by a year as Dunedin city councillors try to contain the size of this year’s rates increase.
      The more than $30 million Otago Settlers Museum redevelopment narrowly escaped budget cuts yesterday, with a one-year delay that could have compromised government funding beaten by a single vote.
      However, the Regent Theatre’s upgrade time line hinges on $2 million in fundraising being in place by the time the annual plan is approved in June.
      Read more

      ****

      ### ODT Online Tue, 2 Feb 2010
      Library budget unscathed – 1.5% increase
      By David Loughrey
      Dunedin’s public libraries emerged unscathed from proposed budget cuts yesterday, as the issue became a political rallying point in front of a packed public gallery. The council voted to give the libraries the proposed 1.5% ($171,000) increase, taking the rates input to $9.733 million.
      Read more

      ****

      ### ODT Online Tue, 2 Feb 2010
      Councillors defend projected $1b costs
      By Chris Morris
      Dunedin may be facing a $1 billion bill to maintain existing water services over the next 50 years, but no-one should panic. That was the message at yesterday’s Dunedin City Council infrastructure services committee meeting, as councillors considered the 3 Waters strategic direction statement.
      Read more

      Other stories:
      Park work deferral lifts costs
      Development of Regent escapes DCC budget cuts
      Spending on Tahuna upgrade rejigged

      • Elizabeth

        Watched the last moments of today’s stadium-related business go down at Council; came into proceedings just as DVML chief executive David Davies finished at the table. This was immediately prior to Council’s discussion and voting through of recommendations for the DVML Budget 2010/11.

        Not a great moment in Dunedin City’s political or financial ‘fortunes’.

        During this prolonged incident, Cr Dave Cull compared the stadium project to the cuckoo in the [Council’s budget] nest, the bird that starved the other fledglings.

        [me, all I saw was a thirsty $ponge]

        When Cr Syd Brown appeared to pray unto a god (ah, Mr Davies, “who had worked at the coalface” of stadium management), a picture began developing in very poor taste.

        Cr Mickey Guest, took his usual role of impertinence.

        When it suits, of course, Syd does a great line in simpering. He trialed utter self-indulgence, tobogganed a few slippery slopes of applied ‘reason’ and ‘rationality’, and ultimately micro-managed the cuckoo project to bank (with the Mayor taking a back seat). Syd said there was no expertise around the table to run a stadium (a profound disclosure on the state of the Dunedin City Council, truth can be blinding).

        More Syd, in the royal gala performance: “This is start-up capital for a new company. Council has no other option but to fund this request . . . We can under-resource it and take the consequences . . . Failure dooms the ratepayer, becomes a tax . . . ”

        Councillors descended into argy-bargy, calling for points of order – the Mayor woke up at these junctures to keep business cranking (an ignore of standing orders?), lest doom befalls the citizenry.

        Enter Cr Neil Collins: “We’re up a tree feeding cuckoos, I’ll throw a Blackbird in the nest, Dave. The Waipori Fund.”

        A power of famous last lines, I recorded most. ODT could have a field day, it will probably pursue safe column inches – until the next editorial blip on the radar to reiterate the Annual Plan process is a SHAM. Memorable word.

        All recommendations were carried.

        [I left the room to do a head count of citizens to tax]

  13. David

    With plummeting numbers, Canterbury has drastically reduced the price of season tickets.

    When Otago has to do the same to cope with plummeting spectator numbers, who will pay the millions needed each year for the shortfall in stadium running costs?

  14. Phil

    Maybe I read the DVML report incorrectly, but the majority of funding did not read as “start up capital”. There was 600k of the 2.4m which seemed to be used in part to fund the start up of websites and the like. But the remainder was to fund regular annual overheads. I don’t have the report in front of me, but it included the salaries for gate staff, groundskeepers, security, and the various other people who would be needed every time the venue was hired out. I think that there was over a million dollars for that. Why the costs for these people were not being proposed to be recovered from the prepaid venue rental fees, I didn’t quite understand. But the majority of the costs to be serviced by the 2.4 million were not “one off” costs.

    {Report – Council – 01/02/2010 (PDF, 108.5 kb) Dunedin Venues Management Limited Budget 2010/11 -Eds}

  15. Phil

    Probably worth also noting that the funding being sought by DVML is purely for the stadium. The other venues to be controlled by the company already have their own operating staff, security, and the like.

  16. This should be another good feast day for the national media. Apparently, Dunedin’s financial mismanagement was on TV 1 and 3 Breakfast programmes and on National Radio yesterday. Yet these same councillors who vote for the stadium take us ever further into debt. They are like lemmings with their ‘follow the leader’ mentality. (we’ll see more of this over the year, I suspect) Where’s Rodney Hide? Where’s the Auditor General’s Office? Oh sorry…. there’s nothing we can do. There is, but only when political fallout catches up with them.

    • Elizabeth

      ### ODT Online Wed, 3 Feb 2010
      Rates approved for public consultation
      By Chris Morris
      Dunedin city councillors have trimmed 2.1% from forecast rates increases for the next financial year, reducing the expected burden to 5.2%. Councillors concluded their pre-draft annual plan deliberations yesterday by approving the document, containing revised rates forecasts, for public consultation. A final draft would be approved at the next full council meeting on March 1 and then released to the public, with hearings to be held in May.
      Read more

      • Elizabeth

        ### RNZ National Tues, 02 Feb 2010 at 07:47am
        Morning Report with Geoff Robinson & Sean Plunket
        Dunedin council accused of financial mismanagement
        Dunedin residents’ groups are accusing the city council of financial mismanagement.
        Audio Ogg Vorbis MP3 (4:18)

  17. Elizabeth,
    I love your summation of yesterday’s meeting on the DVML funding matter. Neil Collins bringing up the Waipori Fund was classic. As if he even understood the position with this fund, or what on earth it has to do with the subject. Your Mickey Guest did his best to project himself in the most objectionable manner, as usual. He must have taken the page out of Satchi & Satchi’s book which says that “objectionable advertising has impact and reader recall.” He certainly has done and said some pretty objectionable things over the last year or so. Perhaps he thinks it will work favourably for him come October. Note Richard is fortuitously out of town just now. Good old Syd, covers for the mayor all the time. Where would Peter be without him? They are an interesting batch, no doubt. Especially under pressure. And they are certainly in that position now. We can but watch and enjoy the pantomime. Pity it had to mean the city would be bankrupted in the process though.

    • Elizabeth

      ### ODT Online Wed, 10 Feb 2010
      Future of $71.2 million fund raised
      By Chris Morris
      The chairman of the Dunedin City Council’s finance and strategy committee has again raised the prospect of cashing in the $71.2 million Waipori fund. Cr Richard Walls told councillors at this week’s committee meeting possibilities for the fund’s future use should “always exercise our minds”.
      Read more

  18. Michael Guest rarely makes reference to the council papers before him (does he read them?), but makes up political slogans, on the hoof, in the form of clichés. He doesn’t seem to realise more people now can see right through him.
    I understand it was mainly the Greater Dunedin councillors who showed any depth with their questioning of David Davies. You can tell this from the article written by David Loughrey because none of the other pro stadium councillors had much to say and, therefore, worthy to report. It’s good, nevertheless, to get the vacuous comments from Guest and Collins as part of their contribution because it gives a flavour for what happened. I thought the article was well written.
    Bill Acklin had something to say about the necessity for start up capital for business – based on his personal business experience.

    • Elizabeth

      peter, was sorry I had to miss the start of the reconvened council meeting – agree with your comments. Yes! Greater Dunedin was still firing during the parts I heard.

      I’ve kept quite a few councillor comments back that I took down. Regarding what you say about “start up capital” (exactly!) and as Phil points out, councillors appear not to know what it is – or how to account for it properly.

      Calvin – panto is always so uncomfortable.

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