SUNK Stadium: TOO MUCH ratepayer money going west STOP

Garrick Tremain – 11 May 2012

The point is $224 million is not the TRUE COST. It is FAR HIGHER. Dunedin City Council must stop all OBFUSCATION. Open the books to a full independent forensic audit of the council and related entities NOW.

Meantime, close the stadium to stem the losses.

### ODT Online Fri, 11 May 2012
Budget blowout pushes stadium cost to $224m
By Chris Morris
The final cost of the Forsyth Barr Stadium has risen to $224 million, after independent auditors uncovered a budget blow-out of more than $8 million, it has been confirmed. The findings showed the stadium’s capital cost had risen by $8.4 million, from $198 million to $206.4 million. Interest accrued during the stadium’s entire construction period, as loans began to be drawn down, also hadn’t been included in costs.

The $8.4 million overspend meant costs exceeded budgets by 4.2%.

The PWC review did not seek to apportion blame, but findings had been passed to council chief executive Paul Orders, who told reporters he would study them “coolly and calmly”.
Read more

Posted by Elizabeth Kerr


Filed under Architecture, Business, Construction, CST, DCC, DCHL, DVL, DVML, Economics, Events, Hot air, Media, ORC, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, STS, Town planning, Urban design

79 responses to “SUNK Stadium: TOO MUCH ratepayer money going west STOP

  1. Anonymous

    “…and then fire someone.”

  2. ormk

    How about commissioning a statue of some figures in stocks? I know some of the names that should be there….have to ask a sculptor but 3-5 would seem to be the greatest workable number. Materials to match Bruce and installed in the upper octagon? Shouldn’t cost more than a couple of weeks worth of stadium losses and would serve as a long term reminder of a great folly.

  3. ormk

    Installed underneath Bruce of course! Once the mess in the cupboards is cleaned out we need to move on. :-)

  4. Phil

    Once again the ODT have come to the party. It’s not the FINAL COST OF THE FORSYTH BARR STADIUM, it’s the final CONSTRUCTION CONTRACT cost. Nearly. No costs included for land rezoning, resource consents or building consents, land purchases, road realignments (it could be argued that some roads were planned to be realigned in the future, but the timing of the stadium meant that the cost for the realignment were not planned), renewal and upgrading of existing reticulated services in the area taken from Water and Waste budgets, or any client purchased items such as seating. The pitch lighting I’m not sure about as there was talk that this was to be leased from Delta the same way that the Carisbrook lighting was. However, as pitch lighting is required in order for the stadium to function, this should also be considered a capital expense.

    The “additional” cost for the kitchen fitout is only additional because Malcolm specifically removed that cost (amongst other costs removed) from the initial budget in order to get Council approval to proceed.

  5. Anonymous

    Is it $224.4M or $2244M? The following link could be a warning sign of something much worse – could the compounding interest, fees and fines on this city’s debt ultimately cost its ratepayers $2,244M?

    Sometimes buried truths find ways to break through barriers…

    • Elizabeth

      If we’re talking the GMP contract / cost of construction (see Phil’s comment) then ODT needs some tutoring. It’s not just the link that’s wrong, Anonymous (or, right…).

      The overspending would have to be covered by a new loan, Mr Orders said, adding to the council’s overall debt position.

      ### ODT Online Sat, 12 May 2012
      Stadium bill to hit $224.4m
      By Chris Morris
      Failings within the Dunedin City Council are to be scrutinised after an independent review criticised budget blowouts and unauthorised spending within the Forsyth Barr Stadium construction project. Results of the PricewaterhouseCoopers review were released yesterday and confirmed an $8.4 million overspending in stadium project costs, which lifted the price tag from $198 million to $206.5 million.

      Major overruns included an extra $1 million for the council’s share of the University Plaza, another $900,000 for a shared wall inside the University Plaza building, and nearly $2 million more than budgeted for administration costs. Another $3.7 million more than budgeted had been spent on the stadium’s catering fitting-out, without formal council approval.

      The council’s costs had also not included $18 million of interest accrued during the construction period, despite being obliged to, as the interest was considered part of the stadium’s construction costs.
      Read more

      PWC Report (via ODT)

      Note: CST was still managing the construction of the stadium, without an administrative budget.

      Cull: Speaking yesterday, Mr Cull told reporters he was pleased to have had an “honest, transparent, upfront” review showing the final stadium bill.

      To that we say, for example, what about the resulting costs of the redesignation (SH88 realignment) in all its detailed glory. DCC is far from being transparent.


      • Elizabeth

        ### July 10, 2012 – 5:40pm
        University Plaza opened this afternoon
        Another aspect of Dunedin’s much debated stadium was officially opened this afternoon. University Plaza is being touted as a vital hub for students and, while the costs may not have been resolved, student visits to the new facility are up.

  6. Hype O'Thermia

    9.30 last night on TV3, “2012 Comedy Gala”, recorded it, haven’t watched yet. Didn’t know Dave Cull, up and coming satirist, was in it – “honest, transparent, upfront” – what a crack-up!

  7. Anonymous

    Does he have a thought of his own? Seems like a one ring circus with the Mayor facing a silent crowd wondering why the story he’s just told fell flat at the punchline. Fortunately these moments are brief as the ringleaders are quick to step in and call in the clowns – they known the stadium councillors will sing and dance on demand.

    • Elizabeth

      Monday’s council meeting will be an anticlimax won’t it. Usual public lockout. Usual squabbling around the food trays. Will Cr Syd Brown massage it, like he came from nowhere with all the ‘resolutions’ (the role he owns by default). How far can Paul Orders go as a lone young chief executive in a foreign land, in a city council that is corrupt through and through, and with Athol Stephens arranging loans and interest for every new (unexpected)(not budgeted) ticket item. Oh wait, is Athol still there. At what point does DCC’s credit at bank dry up before the WATER is sold.

      • Elizabeth

        Banana Republic. Perfectly calm…
        I wish the stadium fraudsters and the bad arse creeps running this town would stop giving Garrick Tremain so much classic fodder.

  8. Rob Hamlin

    The critical part of the PWC report is given below. A deeply buried nugget on page 28 (of 43). As PWC note, the overruns excluding interest amounted to 206.4 – 198 = 8.4 million dollars – an overrun of around 4%. Which as PWC point out, is not that bad by the standards of such things.

    However, 20% of this total is accounted for by budget overspend related to the Carisbrook Stadium Trust’s own internal activities. They spent $5.4 million on their own activities, as opposed to a budget of $3.7 million, an overspend of 46% of budget – as opposed to the rest of the project, which overspent by 3% once the CST’s contribution to the overall overspend is removed.

    In addition, the reasons for the overspend in the other areas is covered in some detail in the other sections of the report and are fairly easy to understand (if not necessarily to agree with). The CST’s blowout contribution is different, with no real reason for this overspend appearing in the passage below. They were given a budget – they blew it – Why? PWC is silent – read on…

    Administration fees to CST

    127. Payments were paid to CST. These are properly included in the costs of the project. The payments made were for monthly fees and expenses which included travel, marketing, legal and other administrative costs.

    128. Initially set monthly fees were paid to CST and when personnel transferred to DVML once it was set up, the set fees ceased and reimbursement only was made for cash costs incurred.

    129. We have calculated these payments from September 2007. This is the date from which the DCC included costs from in their cashflow “Budget” of February 2009. There are earlier costs attributable to CWP which have not been included. These costs can be described as exploratory, when the Councils with ORFU were considering options for redevelopment of Carisbrook Stadium or building a new stadium.

    130. Projections for these costs were included in the original Cashflow documents of 9 February 2009. Those projections were for total costs of $3.7 million. In the end $5.4 million was expended.

    131. It is unsurprising that CST/PDT were incurring costs. Staff was employed, marketing programmes were developed and under the Service Level Deed, CST as the DCC’s Special Agent took significant responsibility for the project.

    132. In broad terms these payments can [be] described as follows: administration (includes set monthly payments) for CST ($2.09 million), PDT ($1.10 million), Marketing ($1.30 million) with the balance relating to CST’s involvement in the property purchases, various reviews and costs associated with the project planning and setup.

    133. It does appear that the CST/PDT’s budget was not considered in detail by the DCC. The only reference appears to be the inclusion in the 9 February 2009 cashflow which is all that is available to compare.

    134. A similar issue arises as with the catering. Had the matter been fully considered as part of the budget then either:
    a) A budget for CST/PDT that met expectations could have been developed; or b) Items that were paid for by CST/PDT, e.g. marketing, might properly have been included in the GMP.

    135. Following an agreed payments approval process CST/PDT invoices were passed to DCC staff for payment. Having gone through the process of approval, they were paid. No regard appears to have been taken of the level of payments, i.e. was the amount within the budget or not.

    136. In our view the structure of the project led to a lack of clarity around the two key processes when making payments:
    a) formal approval which relates to a process to be followed typically, with designated authority and/or legal obligation; and
    b) budget allocation i.e. do we have the money to spend?

    137. In summary, it appears that the arrangements for approval precluded DCC staff from properly checking those amounts against budget until they came to DCC for payment. The fact that Trust costs went beyond budget expectations must have been known at the time and we can find no evidence that anybody at DCC took that up with CST or the Council. We were told that Council staff considered that they had no choice but to pay the Trust expenses because those expenses had gone through the Trust’s own approval process.

    138. Only the approval aspect of the payments to CST/PDT appears to have been addressed, and not whether there was budget.

    139. If the budget was being tracked it would have been obvious to DCC personnel that it was about to, and eventually was, exceeded. The correct approach again would have been to seek additional funding from Council. This was not done.

  9. Peter

    Rob says, ‘However, 20% of this total is accounted for by budget overspend related to the Carisbrook Stadium Trust’s own internal activities.’ Square this with: ‘Every penny, every dollar was sweated over.’ Malcolm Farry, 10 May 2012.

  10. Anonymous

    The CST pumped the DCC for millions because they could. Both parties were as bad as each other but the DCC is responsible for making it possible. It was a black-ops budget and the CST did something most of us thought impossible with it – making “marketing” a dirtier word than it already was.

    There will be individuals at the DCC who knew exactly what was going on. It might be difficult to find evidence at this late stage but a quick check of who bought or replaced a paper shredder in recent times should offer some clue.

  11. Anonymous

    It could be a double meaning. Sweated over in the same way Scrooge McDuck swum in it.

  12. Peter

    Yep. $17m spent by the CST on ‘investigations’ before the first bit of dirt was dug. I imagine there will be a fair amount of sweat yet for the key stadium proponents. A bit of temazapan to get off to sleep may be in order.

  13. Ro

    Rob, thank-you for this. We were asking who was paying for the CST but getting bland reassurances in response. Malcolm can’t have got that far into the report before responding to the paper.

  14. Ro

    Does PWC say that CST continued to receive reimbursements after it was disbanded? How much before or after Jim Harland resigned was CST disbanded? Can anyone remember?

  15. Ro

    Well, there’s a thought… but what about when their role was taken over by DVML & DVL?

  16. Rob Hamlin

    The CST has not been disbanded. According to the records of the Charities Commission. It was founded on August 9th 2006 with an input of $10 between the six trustees ($1.67 each). The trust is a private trust. The last available accounts cover the year up to June 2011, which was pretty much when the Stadium was handed over.

    At that point, the equity of the Trust (That is the difference between what it had in current and non-current assets, minus what it owed in current and long term debt was $190,646). I am not sure what at this point they would have had to spend any more money on under the terms of the deed and the objectives laid out there, so this may be the final ‘wash up’ figure.

    If it is, then this represents a capital growth for the Trust of 1,906,460%, or if you want an annualised compound return on the Trustees/Settlors original ten bucks, 620%pa. So not everything supposedly charitable or public involved with the Foobar Stadium went backwards financially.

    A reading of the deed of trust indicates that when the time comes, the trustees can pretty much do what they like with the residual equity and not have to say too much about it. Residuals of charitable trusts do have to be contributed to charities, but there are a lot of them out there and if one can’t find one whose purposes and ethics suit your purposes, you can always set on up that can be relied upon to do what you want it to do with the money.

    The six current trustees are all pretty prosperous as far as I know. Becoming prosperous involves working hard and/or picking the destinations for your capital wisely. Five of these trustees were also settlors and therefore they all made an initial investment in the CST. One came in later, so I don’t know if he had to pay in his $1.67, maybe the existing trustees took it in goods (a Moro Bar perhaps?) but even coming in late, it all looks pretty rosy. – I’m not sure if these worthies contributed anything to the rather small amount of genuine private capital that the Stadium project itself attracted. Maybe they didn’t – Sensible fellows!

    • Elizabeth

      Repeated my search at the Register for charitable trusts – had to use Other Registers to find it using “Carisbrook” (key word). Problem was a “The” in front.
      Ron Anderson
      Stewart Barnett
      Bill Baylis
      Eion Edgar
      Malcolm Farry, chairman
      Kereyn Smith
      John Ward

      Spot all the conflicts of interest – it doesn’t get more puggish than this.

  17. Anonymous

    Don’t forget the morals. They appear to have.

    Has the Otago Daily Times reported on submissions extensively on the stadium or just this one which allows them to play with the numbers?

    This “by someone keen to pay off her share as soon as possible”:

    “By way of example, if a 20-year loan generated say $80 per year on an average rates bill, then a one-off payment of $1600 should be allowed to clear the stadium debt of that property.”

    Firstly, I doubt many people could afford a one-off payment unless they could put it on a credit card and hire purchase, and who REALLY wants to go there for this corrupt council and its rugby? Secondly, maybe a few pro-stadium will take it up but I doubt many would when the chips are down.

    On a positive note I like the idea as it would indicate how many people are actually prepared to contribute to this rort. Eion could even run around and give a bunch of fans $1600 each so they can make payments to plump the figures. But that’s about it.

    The ODT then concluded with a little love for their Mayor.

    Ps. Do you really believe any money paid would actually end up in the right place to make a difference?

  18. Anonymous

    Stadium Councillor Syd Brown and Athol I-Wanted-To-Be-The-CEO-Pout-Pout Stephens would probably have a jolly good old knee-slapping laugh over the words “clear the stadium debt of that property”.

    But in those words is the horror of it:
    Your property and home is the collateral on their stadium debt.

    Reward the Stadium Councillors by remembering to vote them out next time.

  19. Ro

    Had the CST only comprised people like this ratepayer “keen to pay off her share as soon as possible” instead of the blowhards it did, then the private fund-raising might have actually come about.

  20. Anonymous

    Thank you Ro, I hope my comment did not appear to reflect on the submitter – which was not the case at all – but on the few people who put us in this mess, compromised the city’s finances and our livelihoods for their desire to piss in Farry’s bucket.

  21. ormk

    Marshall’s plan would be great for people wealthy enough to front up – they would save a lot of money on interest.

    One good thing would be that the stadium debt would be very clearly reflected in house prices – this is currently obfuscated. Your property value would be worth a fixed $10k more or less and people would use this as part of the negotiation. This would certainly make quite a few rugby fans wonder whether they really wanted a roof over their heads for a few hours a week or whether they’d have rather bought a new car and a jacket.

    Of course those who rent will lose whatever happens as landlords will have to increase charges to cover their losses irrespective.

    I don’t want to pay for it at all. Rugby fans should pay for it. Ticket prices should be $200 for games.

  22. Ro

    Anonymous, I intended no reprimand to you; my reprimands are also reserved for the people who caused the mess. But as for the proposal: 49,000 ratepayers x $1600 doesn’t equal $206m – ($37.5m+$7m+$15m). (I don’t include the University’s contribution because it turns out that its was in effect an additional cost to us of half its party wall and plaza).

  23. Calvin Oaten

    I see that CEO Paul Orders is to consider the PwC report now that the cost has been established at $224m. While doing that, he would do well to consider DVL and DVML’s position relative to the “final figure”.
    Page 5 of DVL’s Statement of Intent displays its financial forecasts for the next three years (that’s right only 3).It shows accumulative Net Operating Loss of $27.214m. But then comes the interesting bit, there are offsetting “subvention payments” of $23.369m reducing the loss to just $3.845m. Questions: where do the “subvention payments” come from? Indeed, should that amount of $27.214m be added to the $224m to make $251.214m? What of the ensuring years operating losses? Then of course there is the matter of DVML’s ongoing operating losses, with shortfalls in producing the money to pay DVL its rent which together with the Private Funding proceeds which are for DVL’s debt servicing (not as Malcolm Farry claimed, for the construction budget). It is as predicted, the cost of building the stadium (even at $224m) will be overshadowed by the cost of having it. So, on balance, the stadium needs the ORFU hanging on its ‘hind teat’ like it needs a ‘bomb’. Oh! there’s a thought, the bomb might be the best alternative.

  24. Calvin Oaten

    Browsing my archives I came across this Opinion Piece published in the ODT, 11 January 2008. It seems relevant today.

    MISSION ACCOMPLISHED! This could well be the catch cry of the Carisbrook Stadium Trust. Not for the completion of the stadium, but rather, for the securing of the $5.9 million to make a total of $14.5 million in fees for the investigation and promotion of the concept.

    Having now read in its entirety the report as presented to council in December, it is abundantly clear that there is not a single bird in the hand, but a veritable flock in a very thorny bush.

    Bird no.1 Land procurement: Deputy Mayor Syd Brown says (ODT 11/12/07) “January 31 is the deadline for the CST to have conditional sale and purchase agreements for both owners and lessees of land at the Awatea St site.” Now anyone who has any experience of buying and selling of real estate is aware that a condition is just that. It could read: “this agreement is subject to and conditional upon a consideration acceptable to both vendor and purchaser being arrived at by a certain date.” Or, in the case of Fonterra, it could read: “This agreement is subject to and conditional upon the cool storage complex being relocated or replicated on a site suitable to the vendor in all respects and at no cost to the vendor. Further, this agreement is subject in the first instance to a satisfactory consideration for the above described property being arrived at between the vendor and purchaser.” You can see what I mean.

    Bird no.2 Roof and Turf: In the report it states that the test site monitored the effects on the turf of the reduced amounts of “photosynthetic” daylight, caused by the EFTE material. But no mention of the “fowling factor.” (excuse the pun).  By this I mean seagulls. One only has to look at the roof on the Display and Sell building adjacent to see the effect they can have. High mineral content dust from the Quarry mixed with gull guano could, within a couple of years see acres of scabrous lichens flourishing all over the roof, like my neighbour’s glasshouse. What price then the “photosynthetic” value?

    Bird/s no.3 Private Sector Funding: These are perched on a very high branch. At this point no amount of whistles, cajoling or feeding has enticed any into the cage. However, an experienced fund raiser has been engaged, the fund raising products confirmed and fund raising commenced. The fund raiser has confirmed the target is attainable and possibly could be exceeded. Perhaps the incessant use of the words “fund raising” will mesmerise the birds into falling into the trap.

    Bird no.3 Operation Performance: An update of the operational feasibility and a peer review of this work has confirmed that the venue will operate at a better than break even position. The trust is confident that this situation can be improved further by the DCC and the University looking for further synergy in the operation and marketing of attractions and facilities throughout the region. In this category I can see some 500 very pesky agitated little “student finches.”

    Bird no.4 Can it be Built for the Budget: This is the biggest, highest, most unattainable bird of all. It has been manipulated, crooned to, overfed, its talons and wings clipped. but still it remains perched well out of reach. We haven’t even been able to determine how we are going to feed it, if and when we catch it. The ratepayers are set to be well and truly plucked on this one. The ORC says it isn’t yet in a position to sow a crop let alone harvest any grain. The University says it has bag of grain but we can only look but not touch. The private sector, as we said, is very cagey indeed. And now there is  a new bird (a cadaverous vulture actually) which has never previously been seen or heard of. It is GST, which instantly increases the flock purchase from $188 million (if true) to $211.5 million. Looking decidedly shaky now, eh?

    It  looks now, like come about July/August, all of the birds will take flight for Siberia, the council will have egg all over their faces, left with a vision of the CST, whistling dixie, as they saunter off into the sunset with $14.5 million tucked in their pockets.

  25. Anonymouse

    That’s a great analogy, but I would point out that GST is irrelevant to the Stadium project as all the entities will be GST registered so all figures end up GST Exclusive, as for any (reasonable sized) business. So the GST paid for the Stadium would be claimed back from IRD as a GST refund taking the price back to GST exclusive. It is just a cash flow timing issue in that you often have to wait a while for the GST refund back for building projects while IRD check the documentation.

  26. Anonymous

    A poster on ODT says the submission “is an excellent idea and gives the ordinary ratepayer who can help the opportunity to offset the debt.” For some reason I can’t shake the feeling that’s scripted… Farry’s Soldiers, Cull’s Camp or maybe one of the Marketing Spooks at DCC? That aside, it is the words “ordinary ratepayer” that makes the whole uncomfortable. Not stadium proponents. Not rugby fans. But ordinary ratepayers. Not sure what makes someone ordinary but damned if I’ll be paying for the greed and stupidity of Stakeholders and Stadium Councillors. I want to see them thrown out of council or into a jail cell, not be an apologist for their behaviour.

    • Elizabeth

      The joke is the ability to pay the debt off more quickly (by lump sum) has been raised several times by many people, since the 40-year term of stadium debt first emerged as a prospect to cripple ratepayers and their families (an extra $100m payable in interest).

      Cull is now reported by ODT as saying the submitter’s idea is “extremely novel”. Absolute CRAP.

      Clearly a plant. At hearing, and at ODT. And I’m not feeling paranoid in the least. Because we know what the Mobsters are fully capable of.

      Dare I say Campbell Live the other night went to part of the Kaipara to talk to small businesses and residents stuck with massive rates increases that mean the end of those businesses…
      Mangawhai residents furious at council expenditure (article + video)

      • Elizabeth

        More on the Kaipara rates debacle…

        ### Monday 14 May 2012
        Morning Report with Geoff Robinson & Simon Mercep
        08:23 Ratepayer revolt threatened in Mangawhai
        A group of Northland residents are calling for government intervention in a dispute over rates rises. (5′48″)
        Audio | Download: Ogg Vorbis MP3 | Embed

        Related Posts:
        19.3.12 Local government reform
        12.3.12 DCC debt
        21.2.12 Kaipara this time

        Previous Comment (Campbell Live video link):

        • Elizabeth

          Audit New Zealand in an interesting position. As it is with Dunedin City Council.

          ### 29 June 2012 at 9:33 am
          Radio New Zealand National – News
          More Kaipara council rating errors revealed
          Kaipara District Council chief executive Steve Ruru says it is surprising Audit New Zealand failed to spot serious errors in the council’s rating process over several years. The council has uncovered another $7 million of wastewater rates that are legally invalid because they were not included in the council’s funding-impact statements. It brings the total of invalid rates to $16 million. Mr Ruru, who started with the council last December, says some of the new-found errors go back to 2006. He says while the council should have checked its rating process, he would have hoped Audit New Zealand might have noticed the mistake at some point in the last six years. Audit New Zealand, a business unit serving the Auditor-General, carries out audits of public entities, including councils. Mr Ruru says the Auditor-General, who is investigating the council’s borrowing, will take independent advice on the auditing aspect of its problems to avoid a conflict of interest.
          Read more

        • Elizabeth

          ### Wednesday 4 July 2012
          Morning Report with Geoff Robinson & Simon Mercep
          08:43 Lawyer says new rate in Kaipara is illegal
          The lawyer who blew the whistle on illegal rating by the Kaipara District Council says there’s a lot more at stake than a few million dollars. (4′06″)
          Audio | Download: Ogg Vorbis MP3 | Embed

  27. ormk

    Can DCC legally hit property owners up for these huge amounts of cash? I can’t remember the exact figures but weren’t we promised the stadium would cost each ratepayer no more than $66 a year. I wasn’t happy with even that. I certainly don’t want to pay any more. Most people living in Dunedin opposed it. I want to form a new town and push DCC aside….they can be all rolled up with ORFU and Highlanders and stadium if they want.

  28. Anonymous

    Yes they can. It’s something many ratepayers do not understand. The one real power a council has is to increase rates and we are responsible for the debt it accrues. They can even force you to foreclose if you get behind on rates. Don’t be fooled by their response they would cover all options with you before doing so. That’s just marketing speak out of middle management and we’re talking about the same council who makes that a dirty word.

    The Stadium Councillors are responsible for why Dunedin City ratepayers are in this financial mess.

  29. Amanda

    Yes. I responded to a post the other day on the ODT site. Someone had written they were proud of council for the stadium. I asked this person to tell us specifically who these councillors they were so proud of so we all are reminded of who on council supported the stadium spend. After all, politicians just love it when they get a chance to crow about popular public initiatives that they have had a hand in. Needless to say the ODT did not post it. Gosh no. These men must never be mentioned in an article about the stadium debt. Accountability? Transparent democracy? Who cares. And the best laugh? All of these fiscal incompetents wish to be returned to council again next year.

  30. {Too long, moderated. -Eds}

    The Real Cost of not fighting the Old Boys Network

    For nine years before I wrapped up DEADLINE (because it became simply too hard to keep doing business in a town whose retail and tourism industry is dying a rapid death — not in any small part unconnected to the fact that our local council is working for a virtual monopoly of controlled interests) we participated aggressively in the antistadium debate, breaking several stories that other papers would not touch. This not only got us blacklisted for doing our job but is a stance we're proud of and which has since been vindicated as the warnings of the antistadium section have all come to light.

    I would state as parting shot to this town as I look to possibly heading off to OZ, in response to the news that the final blowout was only $8 million: YEAH RIGHT! Pull the other one it's got bells on.

    My own figures are a bit different and work like this:

    "Final cost" $224m + SH88 $25m (estimated cost of stadium realignment of $65m) = $250 million, which is $62 million above the $188 million we were first told this stadium would cost. And that's just the start.

    You can then add approx $5-10 million which represents the investors' returns on Council bonds sold by Chin in private to raise funds for land sold to developers at more than 600%, circa 3% above normal returns for investments when they matured. Issued in the first month of Peter Chin's reign they paid out in 2011 just a week prior to Chin's re-election, in a story we broke that neither the ODT or D Scene published until well after the elections and a in very watered down manner. $255 million.

    Which is odd because this actually is a major story. For if the original investors of these bonds turned out to be the very same party involved in selling land to the council (at around 600% above government valuation) then you have a prima facie for laying insider trading charges.

    In our interview with mayor David Cull we thought it insightful that Cull would angrily try to claim the rates of return were not above normal rates (having spoken to a DCC bureaucrat and being told this was so) and that he would defend the secrecy of Chin in issuing these bonds, without offering mum and dad investors the same opportunity.

    Nor could Cull explain why his administration refused to name those investors claiming only the bank had those details. A story which might work in New York but sounds hollow in a town where the rich and famous only have one golf course to hang out in and that is sponsored by Forsyth Barr too. Hell, it's not like I haven’t been seated at the same table as Lincoln Darling and his bank manager and seen who's been buying the rounds – Dunedin is after all a very small Southern town, folks.

    I could never work out why exactly Chin was not in breach of the law from day one.

    After all, the Otago Casino (owned by Earl Hagaman, the chief backer of the stadium and owner of land sold to DCC under SH88 realignment at 600% above government valuation), played an active role in funding and promoting Chin's Chinese new year. This, while the TAB offers more serious gambling-related ties to both the Otago Warriors/Stadium, which surely put Chin in as Mayor of Dunedin and Commissioner of Gambling, a blatant conflict of interest. It is the Commissioner's duty to remain impartial and "not to be seen to put themselves in any position where accusations of conflict of interest would arise". I'm quoting Chin himself here regarding the required impartiality of the office after winning the 2004 election.

    I also believe that part of the cost we will never get to know is the amount in public relations revenue which (it is claimed) went 95% the way of the local newspaper as mouthpiece for this folly.

    Let’s call stadium spin a cool million dollars and I'm sure that's a very conservative figure. This is not to mention feasibility studies, assessment, and other consultancy fees which I'm pretty sure are excluded from the PwC report but are hidden in other DCC costings as non stadium payments though their entire purpose and existence lay with the stadium. $256 million.

    Likewise under the cost of stadium spin-doctoring let us not forget the DCC World Cup promo, designed to show us how lucky we were to have a new stadium, which again largely went to the newspaper and tartan mafia cheerleaders which blew out at a mere $78 million.

    Let's be kind and say even with old Carisbook we would still sadly have had the same morons managing the same event badly, and split the cost down the middle at $39 million. Now we're sitting at around $294 million and we’re still climbing wheeeeeeee…

    Having decided that Carisbrook was no good for a World Cup, what did the DCC do? Well they went and bought it off the Rugby Union who already owed us $8 million, for $7 million; then they had to wipe the debt clean when it became clear that neither the Rugby Union or the Warriors could spell calculator let alone use one. Cashing $309 million ….. and climbing (and this includes "The $1 million difference between what the council says, and what the union writes in its annual report, is not explained"). And yes, Cull confirmed last year that Carisbrook would be sold (can anyone confirm it was sold or will be for half of what it was bought for) and one of the potential investors looking to make use of Carisbrook to build an old peoples' home was a consortium which included the Farry family. $309 million. ("with a reasonable possibility the city would break even")

    Let’s assume that all funds pledged for private sales have been paid for, and the council will not be expected to top up for private boxes or seats that in the end are not paid for. How that turns out is anyone's guess, considering at one point when they were telling us $34 million in private funding had been raised this turned out to be in fact only $34.00 (leaving $41.9999 million in pledges yet to be paid for).

    * Bev Butler [ ], June 2011:
    "Dunedin residents are still waiting for money from the private funders to come in. The amount of donations for the stadium still only stands at $30. NOT $30m – just $30. There are "projections" of $42m for private funders to pay some revenue but the Dunedin Venues Management Ltd (DVML) have refused to release information informing the public how much private funding has been signed up in actual legally binding contracts – rather than wishy washy projections….. To rub salt further into the Dunedin debt wounds, DVML intend using the private funding as revenue to manage the stadium instead of paying off the debt for construction as was originally promised. The ratepayers were forced to act as guarantors to borrow the funds for the private funders' share of the construction costs and now even if this private funding eventually comes in it is going to be used for another purpose".

    $350 million – and I'm sure there are costs I have overlooked which other readers will consider.

    The story repeats itself over and over again and shows how in less than five years over half a billion dollars has been squandered.

    Now, Cull and the usual suspects are talking of developing the harbour – the idea has as much merit as the stadium and is certainly not wanted by the majority of tourism operators or small to medium sized industries in this area who are not represented by Tourism Dunedin gushing the sentiment this will be great for tourism (e.g. the Hagaman tartan mafia cartel) who stand to lose. This shows how hollow and confused Cull's vision of Dunedin is: an oil exploration hub and tourism in the same basin is just being farfetched unless you sell off the Port of Otago for this loony scheme and fill the hotel with Chinese oil workers who still won't shop downtown or eat in small boutique eateries.

    As to whether the city famous for bald people wearing horned spectacles and black polonecks will allow themselves to be sucked in again, the answer is I really don't know. It's hard to imagine any real change as long as Dunedin has a press which lives on the DCC purse strings and is routinely rewarded for consistently pulling its punches.

    Thanks Dunedin. So Long and Thanks for all the Fish.
    Ben Vidgen

  31. Elizabeth

    Darned messy.

    ### ODT Online Fri, 18 May 2012
    Stadium wall costs known ‘from day 1’
    By Vaughan Elder
    The University of Otago has questioned the inclusion of $900,000 the Dunedin City Council spent on the western wall of Forsyth Barr Stadium as “unexpected costs”, saying it was part of the council’s budget for the project “from day 1”. The council shared the cost of the $1.8 million wall, which separates the university building and the western side of the stadium, with the council reimbursing the university $926,481 for its share and the university paying $917,021. The money spent on the wall was included as part of the $8.4 million in budget blowouts revealed in the PricewaterhouseCoopers review of stadium costs released last week.

    “It is simply not logical to suggest that the stadium was designed and costed without a western wall.” -John Patrick, University of Otago

    Read more

  32. Amanda

    Yes. the local media is an important part of the whole lack of transparency and democracy in Dunedin. Witness Wilma’s article in the D Scene this week where she actually tells us all to forget about political accountability for the stadium councillors and intimates that to not do so is really just ‘blaming’. She had no particular insight into how political accountability is crucial if Dunedin is going to get economically viable again; how can the people whose fiscal negligence has brought Dunedin to its knees be looked to to get us out? Hudson and pals are not capable of doing this, as they have a lot involved in keeping the status quo ( they don’t want transparency, it would reveal too much about their ineptitude). But Wilma seemed to be saying in her article she cares not a wit about this, we just should do the usual, ‘smile, forget the past and pay the money’ and of course vote back in the same inept individuals to council next year. A strange article. But good to know where she (and the rest of the local media) stand on Hudson and co being held accountable (they must not be apparently) and how they will view any people who try to bring them to account, like Bev (basically as a bunch of people out for ‘blood’). The bottom line is the media’s lack of concern over politicians’ poor performance says something very loud and clear about our media. That we cannot look to them if transparency and democracy is something you value. But good to have such a frank expression of the media’s attitude.

    • Elizabeth

      Amanda, I read that thing by Wilma thinking my online edition of D Scene had been hacked. Either that or Wilma was having an attack of the vapours. Later it occurred to me that someone had paid off D Scene or threatened to withdraw substantial advertising.
      Weirdest thing I ever saw.

  33. Anonymous

    That was my reaction too. As odd as the Oddity.

  34. Amanda

    Yes. Weird, a journalist so bluntly sharing her political views when they are supposed to at least pretend to be impartial, even the ODT doesn’t do articles with journos spouting off about their particular personal political insights. A misstep. The media needs to realise they do not get to tell us what to do or how to think. They lost any pretense at insight into the city’s wellbeing when they supported the Farry vision.

  35. Amanda

    The ball is in the media’s court. Wake up, start asking important questions of the stadium councillors, gosh, you might even dare to name them in an article? (too scary?) or expect to be viewed as wiffle piffle on the most important threat this city has experienced, the stadium con.

  36. anon

    People with mindsets like Hagaman and Edgar, the Smiths, Farrys, and middlemen Chin, Harland and McLauchlan could only do what they’ve done with the support of the Stadium Councillors and the media. We know the stadium councillors failed us in the worst sort of way by violating the trust given to them in their position as guardians of this city. The media failed us as the last line of defense to keep its community of readers informed. The hype and spin was managed in the ODT and the D Scene appeared to get change managed when it got too close. What have stakeholders learnt from ripping off public money to make themselves richer? All the people can do is rally, protest, argue and disagree with them. That the government is doing the same on a much larger scale and the organisations set up to police this type of behaviour are themselves guilty of backing down when it matters the most. This evil of believing it’s “only public money and harming nobody” is hurting people at all levels and at the other end of their Rich List greed are those facing increasing hardship and uncertainty.

  37. Amanda

    Cull’s suggestion that those who want political accountability are after ‘blood’ is absurd and shows a basic lack of understanding of politics. He wants to make it personal, this is politics, the people who put this city into dire financial straits want to be return to council next year. So the media must call them out on their wrongdoings. Simple. If the media does not, fine. It will become beholden on the community to step forward and take the message to the voters. No more councillors who bow down to stakeholders, there’s even a word for it, dear media, it is called ‘cronyism’. I can well see why print media is dying. Can’t say I will lose too much sleep over it, not since our little Dunedin experiment.

  38. Hype O'Thermia

    Amanda, making it personal is the only fight-back available. If he/they could they’d use the much more powerful discussion-stopper – “You’re being racist!” But that’s a bit TOO far fetched in this case, even given the creep of convenient racism accusations into discourse on almost everything over recent times.

  39. Amanda

    Exactly Hype. Cull cannot argue that what Hudson and mates did was anything but reprehensible, but he can’t go there, so he must interpret any attack on them as ‘personal’. Cull did tell us that we were given information so that the stadium would go ahead, tell us WHO gave us this false information? Same to you indifferent media, I dare you.

  40. Cull is being fed his lines. Just a prop now for the stakeholders. It’s got to be taking a toll on a man who probably believed he could turn the table once in power. When you dance with the likes of Earl, Eion and wee Julian sooner or later its your blood found drying on the devil’s contract. Paul believes he can work with the stakeholders – probably seen worse in larger cities – but he’s running out of time to avoid the pitfalls of politics that come with trusting them.

  41. Elizabeth

    After plundering the Waipori Fund, councillors now want to return to basics. Hmmm. Suspicious.

    A little like Cull’s reply to Calvin Oaten’s letter published at ODT today (page 8) which asks about the subvention payments worth $23.369m to reduce DVL’s running losses over the next three years – losses set out in DVL’s statement of intent as being $27.214m.

    Calvin wanted the mayor to tell us where the subvention payments would come from.

    Cull replied: “The subvention payments will come from companies in the DCHL group.”

    What? The same DCHL which is reducing its dividends payable to Council?

  42. Hype O'Thermia

    Hot diggity damn, if Audit NZ can’t audit there’s a future for me in cosmetic surgery.
    Call now to arrange nose alterations, frown lines replaced with peculiar scars – hey I’m not promising perfection, just short waiting lists.

  43. Hype O'Thermia

    See you Monday, bring money.
    More money than THAT, whaddaya think I am, barely competent?

  44. Phil

    So, let’s see if I have this right. Student visits to a newly opened facility are up on previous figures when the facility wasn’t open. Yeah, I’ll buy that.

  45. Russell Garbutt

    I see that the stadium is now being modified at a cost of over $1m – the question that the dear old Oddity could have asked of St Farry of St Clair and Qtown was how come? St Farry continues to tell us all how brilliant he was and is despite being told otherwise by PWC and the rest of us. Now a brand new stadium delivered fit for purpose needs over a million dollars of our money spent on it to make it fit for purpose? Where are the questions?

  46. Amanda

    Yes. It is entertaining watching the ORT and its love of all things stadium and its funny little blankspots when it comes to how much the stadium costs or accountability of councillors for fiscal incompetence.

  47. Amanda

    If there is one thing we must impress on outside media is the important role our dopey local media has played in the whole stadium con. If I learned one thing in the whole rort I have learned to challenge anything our so called local journalists try to tell us. Many are bought and paid for, though entertaining, not very useful if you want to stop your city being ripped off by greedy stakeholders.

  48. Hype O'Thermia

    But Elizabeth – it’s going to earn more money! The oddity says so and they’ll have asked all the hard questions already, they just don’t want to bore readers with a lot of numbers in the story.

    • Elizabeth

      Silly me, Hype O’Thermia. ODT perpetuates the vacuum, the dumbing down. Who needs numbers. God knows the city councillors have no grip on the ill (long term) effects of publishing divorced numbers like $66, while they borrow to pay interest on council debt.

      Amanda, investigative journalists elsewhere have looked at the stories/coverage by ODT since January, as a sample, and laughed out loud.

  49. Amanda

    That’s good news Elizabeth. If we have learnt too late here how a town can be conned, maybe it is not too late for other cities that are at the beginning of the whole dismal process to learn from our mistakes and keep a watchful eye on how their local media spin a particular ‘vision’. We got to make a lemonade out of our lemon, cities of the world, learn from us!

    • Elizabeth

      Amanda, Dunedin’s one small town in a global continuum of property investment cons tied to organised sport, stadia, rezoning of industrial land, and undisguised (blatant) rorting of the public purse. And you’re right, other centres will fall victim. What’s also evil (see overseas examples) is the destruction of housing and slums without replacement (let’s move the poor on… to where? to utter roofless devastation?) to sanitise areas around ‘sporting facilities’ built for international sporting competitions. Not going to ponder where Dunedin ends up….

  50. Amanda

    As long as the local media ‘forgets’ to hold local politicians accountable for the economically ruinous stadium, then they are broadcasting to everybody that they are either stupid or complicit in the ‘vision’ of dunderheads.

  51. Anonymous

    Damn, that is a good post by JimmyJones. I am sometimes amazed by what IS accepted by Otago Daily Times. Most of the time they appear to protect or ignore the stadium rort and the evil bastards behind the council and its companies. At other times they let through a post like that one. The post on its own puts much of their stadium hype and reporting to shame. I wonder where Julian stands on all of this. Is he being protected by a layer of bad management? Feeding him on a variation of the shit poured all over the rent and ratepayers of Dunedin? I really don’t think he knows what is going on any longer. His office is too isolated from reality. The power has long moved from the shakers to the corrupt greedy. The sort of people who need a Spook department to cover their arses. Anyone who needs to protect the truth has a whole lot to hide.

  52. Anonymous

    Was there a protest against asset sales in Dunedin? Stuff reports protests in 15 main centres around New Zealand. I’ve been checking the ODT site but nothing up there. Mind you, probably not their thing to worry about asset sales, is it? Thinking about the stadium rort and all things corrupt about this council. That and the asset strippers with a firm grip on the helm of this city.

  53. JimmyJones

    Anonymous, I think that not much has changed with Mr Smith. He understands the power of controlling the information and I expect that the DCC partnership will continue. And of course he wants to keep the stakeholders happy.
    TV3 reported an asset sales protest in Dunedin; I call it “asset redistribution” and “debt avoidance” because the sale proceeds will be used to buy more useful assets. Our Government expects to increase the value of assets owned, so there are no net asset sales.

  54. Calvin Oaten

    The numbers on the relocating of the broadcast area at the stadium are obviously built around the standard formula used for the whole complex. Indeed, it is used for the whole DCC enterprise. Quite simple really, Imply that it will show a return and manipulate the numbers to show it is thus.
    In this latest, the implication is that there is a benefit in revenue of an additional $2ml over 10 years. For that we invest just $1.3ml. Do the numbers; $1.3ml at 7% interest plus capital plus depreciation (at 50 years)
    totals $208,000pa. $2ml income over 10 years equals $200,000pa. In the late “Jimbo’s” lingo, it is ‘fiscally neutral’. That’s always assuming the base figures are correct. A very big assumption, I suspect.

  55. Anonymous

    Regarding the lead story on the ODT website where the stadium boss and that ODT underling pummel other opponents… I’m not sure why this latest corporation fundraiser punch-up attracted so many businessmen prepared to spend thousands to invite special friends to watch men (and women?) beat each other silly but it seems it is the twisted reality they live in. It is unfortunate though the ODT did not go up against DVML or DCC but I’m guessing that’s a conflict too close for friendships. Beyond that, this boxing event and its association with the media and stadium does make me think of such things as, building up the hype, sucker punches, light footwork, throwing in the towel, or taking a fall.

    The only reasonable fights I’ve seen are those by Ryan Keen and Hamish McNeilly who seemed prepared to stand back up, even when the fat-neck corporate bastards were furiously gesturing they stay down.

    Coming soon: Dunedin City Ratepayers vs. The Stadium Councillors.

  56. Hype O'Thermia

    …meanwhile a team of consultants is drawing up a visionary plan for rearranging the deck chairs.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s