The Press: fresh doubt on economic viability of stadium

The city’s flash stadium and soaring debt highlight growing unease at local authority borrowing.

### stuff.co.nz Last updated 10:14 04/03/2012
A new house of pain for Dunedin
City’s spending in the spotlight
By Lois Cairns – The Press
Dunedin city’s finances are in the spotlight as the collapse of the Otago rugby union throws fresh doubt on the economic viability of its swanky stadium – which ratepayers will spend the next 40 years paying for. Dunedin’s overall debt has increased 1700 per cent to $586 million since 2000 and frustrated ratepayers say the debt carried by the council is too high for a city of Dunedin’s size and that unchecked spending, in particular on the controversial stadium, has saddled them with an unfair financial burden. The Dunedin City Council has ordered an independent review of the final cost of the Forsyth Barr Stadium in response to a report which raised serious questions over the amount it spent on the venue. Forensic accountants from PricewaterhouseCoopers are now combing through all the contracts and bills for the stadium to determine exactly how much money has been spent above the $198m budget. Russell Garbutt, the former chairman of Sport Otago, has been an outspoken critic of the council’s decision to fund the stadium, and said it was clear from day one the venture would be a financial disaster.
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Posted by Elizabeth Kerr

10 Comments

Filed under Business, Construction, CST, DCC, DCHL, DVL, DVML, Economics, People, Politics, Project management, Property, Site, Sport, Stadiums

10 responses to “The Press: fresh doubt on economic viability of stadium

  1. Peter

    SST: “Dunedin mayor Dave Cull, who opposed the stadium plan and who stood for the mayoralty on a platform of prudent financial management, said he was comfortable with the council’s financial position but was eager to see debt levels reduced.

    The decision by previous councils to embark on several major capital projects simultaneously, all funded by debt, was imprudent. The issue was not the quantum of debt but the council’s ability to service it, Cull said. Councillors had been told dividends from council-owned companies would cover the interest payments on the stadium loan but the dividends from those companies had proved insufficient.

    The council now had to keep a tight rein on its spending and seek out ways of reducing its costs.”

    So Mayor Dave Cull is “comfortable with the council’s financial position”.

    • Elizabeth

      Peter and Russell – there was no way I would’ve voted for Dave Cull in the last local body elections. I feel I’ve been personally vindicated on this, given his most recent comments and noticeable lack of sincere and believable leadership as mayor. He has to be more than a greased if not hesitant PR machine at such a sorry council and community impass crowded with unmanageable DEBT. Ratepayers and residents ought not to be treated as serfs for tax and repair of all Stadium Councillor excesses – none of whom I voted for either.

  2. Anonymous

    Two things:

    1. If the former Council made imprudent decisions, why are they not being charged?
    2. I signalled the issues with the Plaza development early last year. I think the cost overruns there are significant due to the amount of rework that had to be done and that will be the sticking point with the University. The builder was under enormous pressure to complete before RWC2011 and a LOT of overtime was being worked.
    http://www.odt.co.nz/news/dunedin/200079/university-still-not-billed-plaza-work

  3. Russell Garbutt

    The interesting thing in Dave Cull’s statement that “The issue was not the quantum of debt but the council’s ability to service it”. I’m not sure that I can figure out the difference.

    The second thing was Nick Smith’s reply to debt levels. He said that Dunedin’s debt was not the highest – what he didn’t refer to, and I can only assume that he is being a politician that doesn’t want to acknowledge a fact – is that Dunedin’s debt level PER RATEPAYER is the highest, and by a country mile.

    However, I think that Larry Mitchell has hit the nail on the head. It is our fault for continuing to elect people who are essentially incompetent – the like of Brown, Hudson, Collins, Acklin, Weatherall, Bezett, Noone and co are the people that allowed this mess to happen and they were warned over a very long period of time that what they were doing was idiotic.

  4. Russell Garbutt

    If Government and Local Government are not listening to an independent like Larry Mitchell, then the question is WHY.

    I think the link to these interviews would be good on the site and the link should be sent to all current Stadium Councillors. Larry is right – these coots have to go. The Stadium Councillors are an incredible mix of incompetence and something a lot lot worse.

    • Elizabeth

      ### rnz.co.nz Monday 5 March 2012
      Nine To Noon with Kathryn Ryan
      09:05 Soaring debt of the country’s councils
      The level of councils’ debt quadrupled over the past decade to nearly $8 billion. The figure has alarmed groups like Federated Farmers which says its out of hand and reform of local government is needed. Larry Mitchell, an independent finance and policy consultant in local government; and Michael Reid, manager of governance for Local Government NZ.
      Audio | Download: Ogg Vorbis MP3 | Embed

  5. Hype O'Thermia

    There is also an enormous difference between necessary roads & their maintenance and acceding to developers demands to permit further areas to be opened up then services added to the city’s responsibilities – yes, SOME places need more sections, more housing…. Water reticulation, drainage and sewerage also has to extend to those developments if they are not already within the built-up area’s reticulation. Supply and “disposal” increase even if the pipes are already passing the gateway of what had been an un- or under-used tract of land.
    In the radio interview the statement that recreation facilities are expected facilities should have been challenged. Playing fields, libraries … stadiums! How many of the councils were providing these where there was a real shortage evident? How many like Dunedin had plunged into providing an over-the-top facility where the old one was fine with a bit of a freshen-up? I was disappointed that he [Michael Reid, LGNZ] got away with suggesting that this was OK. He was also keen on long periods of paying interest, did not mention that though this was a government ruling so one generation did not pay for long-lasting facilities, this objective could as well be achieved by investments over a period until enough money had been saved, and for the shiny-things expenditure this is the prudent way. Getting water quality and effluent disposal up to standard is a whole different reason for spending and a long period of tolerating bad water and floaties in the waterways and the sea is not OK: borrowing is correct for necessities that impact on health.

    • Elizabeth

      On the strength of the RNZ interview and his own historical comments of approval about ‘debt-funded’ councils, I think Michael Reid will receive a lot of negative correspondence this week. Trying to be the measured fool at LGNZ does him no credit – I hope he doesn’t last much longer in his position. His lapses and shallow excuses for the lack of ‘prudence’ shown by local government is somewhat self-serving, if not telling of his bureaucratic distance from reality. He probably lives the high life, and votes for National or Labour.

  6. It cracks me up every time I read this “Dunedin mayor Dave Cull, who opposed the stadium plan and who stood for the mayoralty on a platform of prudent financial management, said he was comfortable with the council’s financial position but was eager to see debt levels reduced.”

    Council’s deal in water and shit removal, time they remembered that.

    But wait, the shit side they can’t even get right (very surprised about how quiet that is with the cost and time over runs) Maybe they are just full of it….

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