Asset sales (would Dave’s council sell us up)


### Mon, 28 May 2012 7:00p.m.
Local councils under pressure to use asset sales
Assets sales are never far from the headlines, and always, it seems, controversial. The Government is pressing ahead with the partial sale of four state-owned energy companies and Air New Zealand. They made their plans clear during the elections and therefore claim a mandate to sell, but how far does that go? Because it’s no longer just state-owned assets being eyed for potential sale, local councils are under increasing pressure to consider asset sales to fund new projects and reduce debt. Auckland has already said no, and now Christchurch has suggested in a very polite fashion that central Government should sod off. The Christchurch Council and ratepayers face extraordinary costs following the earthquake, but the mayor is firm that there will be no sale of the family silver.
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Posted by Elizabeth Kerr


Filed under Business, DCC, DCHL, Economics, Media, Name, People, Politics, Project management, Property, Stadiums

48 responses to “Asset sales (would Dave’s council sell us up)

  1. If Cull uses his head (I know I know) he’ll realise this is the one thing that will get him outta there faster than lightening, in fact I don’t reckon his big bro will survive it either.

  2. Suomynona

    It appears Grima Wormtongue has the ear of King Theoden.

  3. Anonymous

    The stadium is not on the list of asset sales because it is a liability, not an asset.

  4. Peter

    Nothing wrong trying to flog a liability if the seller can get someone with ‘vision’ to buy it.

    • Elizabeth

      The stadium books show citizens and ratepayers lack both ‘vision’ and wherewithal. Oh dear, underperforming asset. Massive flatlining. Dave!

  5. Calvin Oaten

    Sell assets, what assets? We don’t own any assets. The banks do. Try selling any DCHL operations (we can’t call them assets) and they remove its equivalent value in security collateral for the massive debt DCHL is carrying (largely so they could continue to pay interest and dividends to the DCC for the years of Harland’s reign), this would immediately bring a response from the lenders. If you wish to reduce your assets then you must reduce your debt accordingly, they will say. So, how can any of this help the DCC? The only things that they could sell is the DCC property portfolio, but as soon as you mention that, they cry but some of those are showing returns greater than the investment costs. I say great, that makes the price more attractive. If the returns on investment properties don’t match or exceed the costs for the non returning properties (stadium, town hall/conference centre, settlers museum etc.) then a sell down of all non strategic assets makes sense. But only if the proceeds are used to reduce debt of the aforementioned items. The frightening thing is that our dopey lot would, if they found some money would immediately spend it on some wasteful inclination like the latest “improving development” they are currently mulling over. They just wouldn’t know a balance sheet if they fell over it. A balance sheet is a document which balances assets with liabilities. If there is a surplus, the city is in good heart, if it is in deficit then the city is in “schtuck” to the amount of the deficit. Currently Dunedin is in “very deep “schtuck” indeed”.

  6. Anonymous

    City Property portfolio should be liquidated forthwith and City Property division dismantled. That solves two problems:
    1. Revenue now when it is needed
    2. Removal of all impediments to central city development.

    For example, you could propose turning George St into a pedestrian precinct a la Cuba St Mall in Wellington. DCC would no longer be able to object that its property values would diminish.

    Liquidating City Property portfolio frees up the city and shows vision.

  7. Robert Hamlin

    What Calvin says is true. Debt is a precisely known liability on the balance sheet of the issuer of said debt. The same debt’s market value as an asset on the lenders’ balance sheets may be a different matter. This is typical, as the value of any asset is always a matter of opinion. So the opinion of an unknown valuer used by the DCC is that the Stadium is worth $225 million. My own opinion is that it is worth the value of the cleared site, minus the net cost of demolition and removal, which is zero.

    However, it is the valuer’s opinion that has been used to transfer DVL into DCHL. The valuer’s opinion means that the accounts of DCHL now show that DVL is solvent, and that the stadium ‘asset’ could be liquidated, and the money raised could pay off DVL’s debt and still leave a residual of some $60 million or so that could be used to retire debt, or more likely build another non-income earning folly to relieve the distress of our troubled local big building companies.

    It is of course complete fantasy. DVL and DVML are both totally insolvent, and as such now represent a net liability on the DCHL balance sheet – if reality is the standard that is applied to the figures therein. I have no doubt that many similar asset valuation fantasies exist within DCHL, and that DCHL, far from being a potential source of funds via liquidation of net assets, may actually be in net capital deficit. I could be wrong, but as the official accounts of DCHL from now on will contain the Stadium fantasy as their version of reality, I now no longer believe any or all of them.

    This City only has one asset left to it that can earn significant revenue for its owner, that is not hocked to the hilt, and that thus does have signficant net positive capital value, and that is the City’s water and sewage system. I have no doubt that this asset will be rolled into DCHL at some point. It is the required sugar coating on the DVML/DVL/Stadium fiscal dead rat, and its transfer to DCHL is a prerequisite for any subsequent pseudo asset liquidation that Cull, Stephens et al may wish to stage. If this is not done, then the lenders simply will not tolerate liquidation of assets without matching debt paydown within DCHL itself.

    Unless of course the City stages this pseudo sale, and secures its position by a guarantee that is secured on a direct charge on the rates (ie by securing its debt directly on your own homes) – At that point you should get worried.

    How does a direct rates charge guarantee work? Well let’s say that ‘the Lads’ want to sell City Forests for $100 million and transfer the proceeds to DCC to reduce the DCC’s headline debt (hooray!!!). DCHL’s lenders may say “OK, you can do that, but this leaves DCHL as a whole in a net negative equity position of $80 million, so we will need a guarantee for that amount.”

    ‘The Lads’ now have a problem in that DCC does not have net assets that could cover that amount to secure such a guarantee. However, the DCC does have one cast iron capability, they can screw as much rates out of us ratepayers as they like, when they like (eg recent North Island water system rates demands). So what is agreed is that the DCC quietly issues a promise that, if the lender wants their $80 million back in a hurry, the DCC will just turn round, stick us with a special rates bill for that amount, and then promptly hand over the money to the lender. That’s what a guarantee based on a charge to the rates is. When used previously by the DCC, It has been expressed as a precise percentage of YOUR property’s value!!!

    So let’s say that things go pear shaped within DCHL, and the lenders demand their money back via this guarantee (remember you do not have to pursue the borrower to liquidation if a standard guarantee is in place).

    A few days later a letter will drop through your letterbox. You will open it up and there will be a rates bill (charge) for $2,000 from the DCC (your share of the guarantee). This will be accompanied by an apologetic little note saying that the guarantee was placed in good faith some time ago, and that they never intended this to happen, but could you pay within 20 working days? – as the lenders are pressing. However, if you can’t do this, the DCC have helpfully aranged a financial package with one of the banks that will allow you to transfer the amount owing to them, and then pay off your debt in installments (plus a hefty interest charge to the bank of course).

    I stress, this is not a hypothetical situation. DCC have already secured debts by a direct charge on rates in the recent past. Maurice Prendergast, among others, noted the dangers inherent in the precedent thus set.

    A bill of this nature is not discetionary, you must pay it – unlike the heating bill for instance, which you can avoid by not heating your home. Many elderly citizens on fixed incomes would be forced to take this option, thereby stimulating economic activity within the community via increased funeral home revenues – It’s an ill wind.

  8. Amanda

    This was Noone, Acklin and Hudson’s plan all along, of course. Just sell off assets and the people of Dunedin will ‘jump up and down’ as Acklin describes citizen protest, and learn to do as their masters tell them. This is why the stadium councillors should never have been returned to council, they will do anything, sell anything to make the stadium look like it pays.

  9. Hype O'Thermia

    Calvin – what to do with “spare” money – rename museum:
    Poll at online oddity –
    What is your preferred renaming choice for the Settlers Museum?
    First City Museum 4% (77 votes)
    Dunedin Heritage Museum 24% (423 votes)
    Platform 2 5% (90 votes)
    The Settlers 6% (110 votes)
    Heritage Depot 3% (44 votes)
    Rewind Otago 3% (50 votes)
    Museum of Dunedin 3% (54 votes)
    Otago Settlers Museum 52% (904 votes)
    Someone pointed out that its current name is mentioned in innumerable non-council on- and off-line places. Lose that connection and gain confusion, sound like a plan with the desirable Vision Quotion.
    The confusion from re-naming an existing institution is well-known by those of us trying to find goods and services. It’s no use trying to find the old “Dept of XYZ” or “XYZ supplies and permits” – no, it’s got a “concept” name like Advance, Aspire, Engage, Enfold. (I await the less-bull more-truth move to Confuse, Disturb and Evade and the one that’s always worth a try, Guesswhat.) Where a verb is found wanting there are initials BWJ, WJM, JMB or tortured into an acronym – FART Facility for Recognition of Travel would be the place to get a bus pass, or pay parking fines………

  10. Amanda

    This is why we need sites like this one, with a sleepy media in love with all things stadium and stakeholder related; these stadium councillors are set to return to council next year and continue their asset selling.

  11. Amanda

    We’ve got to demand an investigation of this council.

  12. Suomynona

    First and foremost Syd Brown must go.

    But never forget: The New Stadium Mayor Dave Cull has supported this Stadium Councillor as Chair of the powerful Finance committee from the beginning of his tenure. The Chin council created the debt that has made asset sales possible and now Cull is bringing the long term planning of its stakeholders to fruition. They are not finished with Dunedin City while there are millions of dollars to line their pockets further.

    It’s daylight robbery, stealing from the poor to give to the rich, and still there are so many voters eyes wide shut to it all.

  13. Amanda

    It’s those voters with their eyes wide shut that Cr Hudson and mates, and Our Stadium Mayor, are counting on to sell assets to pay for stadium debt. They got the stadium through by relying on voters’ complacency. They need to get down on their bended knees and pray real hard those people stay asleep.

  14. Anonymous

    Robert, few people understand that their property is collateral for the decisions made by this council. Many who do, don’t want to think about it on top of the financial concerns with their day to day cost of living. The Stadium Councillors have affected the wellbeing of my family just so they can build a colliseum to rugby and line the pockets of some greedy bastards.

    But the threat of international banks is not too far off, is it? Financial crisis is occurring all around the globe and slowly but surely coming our way. New Zealand has weathered the storm well but is not immune.

    In the media we are seeing those same banks making financial decisions that cost them billions, foolishly selling successful assets and still failing to turn a “profit”. Soon those banks are going to look at their “little investments” held in smaller countries and start calling in their loans.

    Sure a $100M in interest over 23 years might look good on the books but what if they needed their $100M repaid now?

  15. Anonymous

    If Council is looking at selling off “underperforming” CCOs and other assets, would that include Council itself, or has that already been bought and paid for?

  16. Been thinking the same myself Anon. No council assets would mean no council, all their buildings and other related crap not required, no councillors ripping into our back pockets. No wasting money on their bullshit. No councillors (I know I already said that).

  17. The Government is taking action on the Kaipara Council.
    Stephen Franks has some comments:
    Will Dunedin be next?

  18. Anonymous

    Lot of frightening keywords in that. Probably the most disturbing is the suggestion ratepayers need to be quelled. As if THEY were the ones who committed its [community] to that level of debt. I think we can guess which way the ODT would swing when given a similar media release from the DCC. Not a great track record there of seeing the ratepayers’ point of view when it came to the former Stadium Mayor and the Stadium Councillors.

    Dunedin’s debt has grown in hundreds of millions in such a short time so if Kaipara is facing a 100% rates rise, we are certainly facing much, much worse. Unfortunately for Dunedin we have a stadium which seems to have National distracted from the mountain of debt and the Stakeholders’ Get Richer Schemes that hatched it.

    I hope CEO chief Paul Orders is now seeing the real interests of these evil bastards. They’re in it for themselves and not the best interests of Dunedin City.

  19. Amanda

    “…The council is struggling with a debt mountain of more than $80 million and open rebellion from some ratepayers facing rate increases of more than 100%….” Beautiful words.

  20. Amanda

    “…a ratepayer rebellion over a proposed massive rate rise locals say they won’t pay…” Even more beautiful words. Good on them.

  21. Amanda

    The government we have now is partly to blame for the state this city is in and with no help from dopey Labour (represented by Clare Curran). They need to step forward and take responsibility for throwing this city to the wolves.

    {And David Clark (Labour) – Dunedin North. -Eds}

  22. Hype O'Thermia

    Stephen Franks has a nice turn of phrase.
    ‘……[T]he local government camel created in 2002 when they all got “general competence” or the power to do whatever came into the Councillors’ heads as a good idea.
    That was constitutional barbarism then, and we are reaping the costs now. Among other things, it reinforced the trend to Council being a full time occupation for too many who would never get such a job from any boss who needed value for money…’

  23. Anonymous

    While everyone is getting increased rates rises, the stadium continues to get rates relief packages. The DCC stadium councillors went there and now the ORC stadium councillors are in there trying to justify this as well. It’s a rort that involves them all.

    Decision to cut stadium rate defended
    By Rebecca Fox on Thu, 31 May 2012

    Who are the Stadium Councillors?

  24. Peter

    A shame his ACT Party colleague, former Local Government Minister, Rodney Hide, was so useless. Typical pattern of opposition parties – talk tough in opposition and going marshmellow once in government.

  25. Dave M

    I have another name suggestion for the Otago Settlers Museum. It reflects both its links with transport and the bold direction our Council is taking us in:


  26. Amanda

    You have to laugh. Cull in the ORT today calls Vandervis’ email to stadium councillor Weatherall “unforgiveable” but Cull’s response to Stadium councillor Acklin’s drunk driving? “…”He’s remorseful about it. It’s regrettable when anybody does something like that…” . Oh the tender love between brothers so long as you have six other councillors sitting behind you at your back on council. Vandervis seems to be complaining about cronyism on council. Any news to what happened after Hudson’s daughter got that very generous payout from the DCC for the restaurant in the Octagon? Oh that’s right, nothing happened.

    {Link -Eds}

  27. Hype O'Thermia

    Lee has been pointing out the folly of the stadium, and an assortment of other wastes of time and money for years, and with growing public understanding of what a mess we are in he is gaining popularity because though he is often gobby he is seen as a plain-speaking guy who wouldn’t kiss anyone’s backside for votes (or freebies). This makes him a much more dangerous opponent for Cull, with the local body elections drawing nearer. Any excuse to publicise his faults has to be grabbed with both hands!
    Bill Acklin, on the other hand, doesn’t go in for independent thought. With a bit of mind-massage behind the scenes he can be relied on to support whatever is supposed to be supported, vote for whatever the Cull-ORFU brotherhood want approved.

  28. Amanda

    Yes, the polar opposite of Cull on council is Vandervis. With Cull’s new motto being: “Let’s all forget who caused fiscal nightmare shall we? We need to all smile, pay the money and say thank you to stakeholders so that they can continue to run the city as they see fit. Thank you.” Vandervis is not really the sort to smile and nod to this new Cull philosophy.

  29. Anonymous

    Otago Stadium Times is stirring up a bit of the ol’ electioneering love for New Stadium Mayor Dave Cull again with its use of extra garnishing.

  30. Anonymous

    It seems unusual Mayor Dave Cull, the Otago Daily Times, or Cr Weatherall himself would want it public he was in hospital “recovering from the removal the previous day of a burst appendix and part of his lower bowel”. Readers would not have been aware of this without somebody choosing to use that information in the story. A personal matter like this was not essential to the issue and could have been left out in Cr Weatherall’s interests. But since it has been raised in public now it also seems quite a few of the stadium councillors are unwell.

  31. What? A dose of the guilts going through the place is there? I find that hard to believe.

  32. Calvin Oaten

    Talking of asset sales, I see that Delta are retrenching in the Queenstown Lakes area. Putting off staff to reduce costs in line with revenue. A good time to be invested in highly speculative land banks at ‘Jacks Point’ and ‘Luggate’. Let’s hope that the downturn doesn’t jeopardise Delta’s ‘corporate suite’ at the stadium. Goodness knows, that could really depreciate it as an asset for potential sale in order to save the DCC’s debt malaise. Oh, I forgot, if the corporate suites were defaulted that would make the stadium’s financials even worse. Oh Lordy me, how intertwined this little city’s fortunes are.

  33. Anonymous

    Very accommodating of the Otago Daily Times to place a Sunday story about stadium Cr Colin Weatherall at the top of its home page.

  34. ormk

    Vandervis will have my vote at this stage. I think it is highly likely that Cull will continue to sell us down the river to the scoundrels running the illegal gambling / corrupt construction / odd rugby game.

  35. Anonymous

    Agreed, there is a lot of collusion occurring in this city. Only takes one to overlook a tangled lie and the whole lot will spring open with more Jokers than Jacks with their heads above the line. The stripping of Dunedin’s assets is the high game of stakeholders. Media and marketing put Chin in and media and marketing replaced him with Cull. It’s about the right personality for the task at hand. They’re all frightened but the game is in play and there’s no way to take their souls off the table until the final hand is dealt.

  36. Lindsay

    I see that the movie on Maori Television last night was “Apocalypto – As the Mayan kingdom faces its decline, the rulers insist the key to prosperity is to build more temples and offer human sacrifices.”
    Almost there.

  37. Anonymouse

    Great article in SST re Stadium, although it makes Dunedin look like it’s run be a senile old boys’ gang with delusions of grandeur. Oh wait….. it is. Particularly giggled at the reference to the “proposed” hotel, as if it is a fait accompli which justified the stadium’s existence.

    {Link – or see new post. -Eds}

  38. Amanda

    Cull will sell our assets to the lucky stakeholders waiting in the shadows, no question; he is a nice man but a lousy Mayor. We don’t want a pussy cat willing to roll on its back at the head of council but a hardnosed mayor who can stand up to bullies in suits. Cull clearly can’t. Not many can I think, Aaron Hawkins in his diatribe against Vandervis ( in the Dscene) also shows that he prefers to go up against the easy target who is causing waves than the stadium councillors responsible for bringing the city to financial ruin.

  39. Anonymous

    I was a bit miffed by Aaron. He is clearly aware of what is being done to Dunedin, how it is being managed in the media and who has their fat hands on the helm so it seemed odd for him to go all lop-sided. Generally he is a bit more understanding, with the best interests of Dunedin in mind when forming his arguments.

  40. Amanda

    Yes, though he is still a ‘wanna be’ politiican, and clearly in little old Dunedin that means not ruffling important stakeholder/stadium councillors feathers. Just like greater Dunedin, best to smile and let bygones be bygones if you have political ambitions.

  41. ### ODT Online Mon, 2 Sep 2013
    Referendum to be held on asset sales
    A referendum will be held on asset sales after confirmation that a petition under the Citizens Initiated Referenda Act gained the support of 10 per cent of eligible electors.
    The petition, organised by the Keep Our Assets coalition and led by Grey Power president Roy Reid, asked: “Do you support the Government selling up to 49 per cent of Meridian Energy, Mighty River Power, Genesis Power, Solid Energy and Air New Zealand?”
    The Clerk of the House of Representatives, Mary Harris, today said she was satisfied the petition had more than the 308,753 signatories required on March 12, the day it was delivered. The Speaker is expected to present the petition to the House tomorrow.
    The Government will then have a month to set a date for holding the referendum or specify that it is to be a postal referendum. The date of the referendum must be within a year of its presentation to the House, unless the House by a 75 per cent majority vote agrees to postpone it for up to a further year. APNZ
    Read more

  42. This could be John Key’s ‘Rubicon’! If he barges ahead with the Meridian sale he will raise the ire of the petitioners who will see him as ignoring them. There may well be enough grumpy enough to oust him next year. If he backs down he might well lose the ‘window’ of opportunity as the way the world’s economies look, it doesn’t seem that a six months or more delay will be a good time to try again. Either way, it is not ideal as the government is dependent on the short term benefits of the sales for its budget. This will bring out the politician in him. My guess is that he will go for it and try, in his usual manner to convince the people that he knows best what’s good for them. Interesting. If Cunliffe and co, plus Norman exploit this then we might even see an early election.

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