DCC, DCHL, debt, democracy (and professional rugby)

Cr Vandervis told yesterday’s meeting the council holding company would borrow $6 million to help fund dividend payments to the council in the 2012-13 year. The council would also draw another $3 million from the Waipori Fund in the same period, and taking money from other “places it doesn’t exist”.

Cr Kate Wilson denied the council was engaged in “trickery”… describing Cr Vandervis’ comments as “lies”.

### ODT Online Tue, 7 Aug 2012
Ire and apology at heated meeting
By Chris Morris
Allegations and threats flew when a Dunedin City Council meeting erupted yesterday over claims the organisation was relying on millions of dollars in loans to keep rates down. Cr Lee Vandervis began a verbal melee at yesterday’s meeting by claiming borrowing by Dunedin City Holdings Ltd continued to offset council rates. The suggestion was quickly rejected by DCHL chairman Denham Shale, who last night confirmed to the Otago Daily Times the practice had ceased under the company’s new board as of July 1.
Read more

It’s interesting Cr Syd Brown has inside knowledge on (the latest iteration of) DCHL’s financial manipulations, while other councillors appear not to. Since when has Audit New Zealand been the last ‘honest’ word on (iffy) council accounting and book shuffling. We built the stadium didn’t we, and we fund professional rugby as if we ACCEPT this as council core business. You’re excused for thinking Audit New Zealand has hands in pockets; we do know it runs a conveniently narrow brief for audit purposes. But isn’t this FUN FOR SYD.

Cr Syd Brown, chairman of the finance, strategy and development committee, said the community should be reassured the 5% rates increase had been struck for 2012-13. That followed a democratic process accepted by councillors, which had also been “given the all clear” by Audit New Zealand, he said. He also reassured councillors DCHL had committed to paying dividend payments without borrowing to do so.

Do we accept Sydney Brown as Apologist for Dunedin City Council?

Who is DCHL now? (spot the token woman)

Arthur William BAYLIS (Queenstown)
Appointment Date: 31 Oct 2011

Graham William CROMBIE (Dunedin)
17 Jul 2012

Kathleen Enid GRANT (Mosgiel)
17 Jul 2012

James Denham SHALE (Auckland)
31 Oct 2011

****

### ODT Online Tue, 7 Aug 2012
Councillors back four-year term
By Chris Morris
Chants of “four more years” could soon be ringing out inside the Dunedin City Council chambers. That is if Dunedin city councillors get their way after voting yesterday to support a push to extend three-year local body terms to four years. The idea was already being promoted by councils in Christchurch and Wellington in their submissions on the Government’s better local government reforms, which are before a select committee.
Read more

How to lock in sheer incompetence for four years… Is this more or less DEMOCRACY? What would we know, people keep voting back in the likes of Brown, Hudson, Collins and Stevenson.

Posted by Elizabeth Kerr

20 Comments

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

20 responses to “DCC, DCHL, debt, democracy (and professional rugby)

  1. suprise suprise

    Kathy Grant, who is also on DN Airport which technically part of DCHL in a sense, how is that appointment consistent with Warren Larsens recommendations about the importance of the DCHL Directors being wholly independent as to allow a cold hard reality check on activity?

  2. Elizabeth

    Comment at ODT Online:

    DCHL borrowing to pay dividends
    Submitted by JimmyJones on Thu, 09/08/2012 – 7:29pm.

    Monday’s council meeting it looks like Cr Syd Brown didn’t understand Cr Lee Vandervis’ point. We know the official rates increase is 5%, but Cr Vandervis was saying that this has been achieved by loading-up DCHL with debt as a way of funding the DCC’s irresponsible level of spending.
    DCHL chairman Denham Shale, Mayor Dave Cull and Cr Syd Brown claim that the habit of funding dividend payments to the DCC from borrowings has finished. The only problem with this assertion is that DCHL’s recent financial forecast (Statement Of Intent) clearly shows that DCHL’s profit for the current financial year (2012-13) will be a feeble $8.81 million, including a $5.25 million stadium subsidy.
    Read more

    We’ll never know why the comment was abridged by the ODT Online editor.

  3. Hype O'Thermia

    With a bit of luck JimmyJones will post the whole comment here.

  4. Calvin Oaten

    The plain fact of the matter is that both the DCHL and the DCC is in the “three monkey” state of denial. They can’t come up with the required money. They can’t understand how, because they were all brainwashed into believing that if you looked away long enough a problem would go away and somehow it would all be resolved by the financial boffins. But of course they are all charlatans, meddlers and improvers. This mental phase would be reinforced by the knowledge that it was they who created the problem (not acknowledged) in the first place. Some were driven to drink (and drive), some are just plain in denial whilst most are innocently ignorant. A wonderful case study in the psychology of group thinking.

  5. Elizabeth

    http://www.dunedin.govt.nz/your-council/latest-news/august-2012/dchl-board-now-complete

    ****

    Mr Shale said last night he thought the new appointments were “brilliant”.

    ### ODT Online Tue, 14 Aug 2012
    Two join DCHL board
    By Debbie Porteous
    Otago Polytechnic Council chairwoman Kathy Grant and Polson Higgs chief executive Graham Crombie have been appointed as the final two directors on the board of Dunedin City Holdings Ltd. They join chairman Denham Shale and Bill Bayliss, who were appointed last November to the board of the company responsible for the city’s council-controlled organisations.

    [The board] has also started reviewing Dunedin Venues Management Ltd and the Forsyth Barr Stadium’s operations and finances, including the future mix of commercial and community events inside the venue, after a reported $1.9 million loss by DVML for the first six months of the 2011-12 financial year, and a forecast full-year loss of $2.4 million.

    Read more

    The correct spelling is “Baylis”. The error has carried over from the DCC media release. -Eds

  6. JimmyJones

    Calvin, Group-think is definitely part of the problem with our DCC/ORC councillors. They also suffer from Learned Helplessness and obediently believe everything they are told by council staff. Mostly I think that it is a lack of competence that is the cause of the poor decision making in recent years. Until we fix this problem, councillors should avoid making any decisions.

    It would be impolite to post the abridged comments from my ODT comment DCHL borrowing to pay dividends, but my main point is that Lee Vandervis was correct to say that DCHL is having to borrow to pay the dividend to the DCC. This has been vigorously denied by Syd Brown, Dave Cull and the DCHL Chairman, but the official forecasts show that the dividend exceeds the profit. They can only do this by increasing their debt. This is a very short term solution and threatens the survival of DCHL.

    As I read the Local Government Act, the DCC are prevented from borrowing to provide for operational spending, but DCHL is not restricted by this. In this way the DCC are using a legal loop-hole to go on a spending spree with borrowed money. Our children won’t thank us for allowing this to happen.

  7. Calvin Oaten

    Jimmy; I think it was Robbie Burns who coined the phrase “Oh what tangled webs we weave when once we practice to deceive.” And that is the crux of the matter with the unholy tactics of the DCC/DCHL over recent years. It first came to my attention back in 2006 when the Annual Plan called for a rate increase of something like 12.5%! Shock, Horror! We can’t have that chorused the Chin council. CEO Harland was charged with the task of finding reductions (councillors themselves offered nothing). A week or ten days later CEO Harland made the announcement that council was to receive a “one off” bonus dividend of $10 million from DCHL. This was on top of $9 million which was already factored into the draft AP. This resulted in the rate increase being lowered to around 5%. I contacted Athol Stephens and asked him how DCHL managed that when their profit at that time didn’t even cover the $9 million? His answer was that they had looked at the overall asset base of DCHL and decided that some assets were undervalued. City Forests’ standing forests were revalued upwards, thus improving the group balance sheet to the point where it could stand more debt. So DCHL actually increased its debt by around $16 million. Problem solved. But that idea sort of caught on from the point where DCHL’s term borrowings in Y/E June 2005 stood at $212.486 million. As at 31 December 2011, the six monthly report showed term borrowings at $602.008 million. I wait with interest to see where they are at on 30 June 2012. I realise that there is some cross pollination between DCHL and DCC’s debt but the general consensus seems to be that total debt across both is somewhere north of $800 million. And that does not include City Property’s borrowings. Like any drug addiction, it is easy to establish and bloody difficult to stop. I personally feel that we are past the point of no return. Particularly as the present Mayor and council (Lee Vandervis excepted) do not have the will nor the expertise to take any remedial steps and the former DCHL directors certainly will excuse themselves, leaving the finance/treasury admin. boffins to sort it. And as we know, ‘turkeys would never vote for an early Xmas’. It will be interesting to see how the new boards of the group and subsidiaries perform, seeing as how they seem to all come from the same club. The fact that Mike Coburn is still on City Forests board and Mr Crombie is from Polson Higgs as was Ross Liddell. All innocuous no doubt, but it does leave one wondering.
    We live in interesting times.

  8. Anonymous

    overheard in Dunedin: “this is the biggest dog we have ever seen”

  9. Calvin Oaten

    Do these ‘turkeys’ know what they are doing? Today’s ODT reports Cr Noone as saying that there is earnest consideration of hiving off the assets of the city’s $1.6 billion water network to a CCO (Council Controlled Organisation) and on top of that they are considering contracting Delta to undertake all provision of services attached to the strategic infrastructure. Delta’s CEO Grady Cameron says: “it is estimated that it could provide a $50 million revenue boost for the company, savings of $2 million to $3 million a year across the DCHL group and a $3 million to $5 million jump in annual dividend payments to the council.” Bloody brilliant!! Let Delta rip off the citizens (ratepayers) by overcharging so as to ensure those surpluses of between $50 million and $60 million, then magnanimously give back an additional $3 million to $5 million by way of extra dividends. That is of course, after tax has been paid. What’s in it for the ratepayers? Why increased costs of course, because our general rates will have to make up the monies paid to Delta to ensure its surpluses. And let’s not forget the additional costs over and above the $50 million to $60 million to cover Delta’s other loss making activities. There is the interest on the debt incurred to set itself up for the project, the serious write down of value of the Jacks Point and Luggate land deals; there is the $750,000 write off of the investment in the IT start up “The Street”; and numerous other expenses like corporate box and sponsorships at the stadium, and other rorts. Delta is quite renowned for its “big noting” in the corporate world, all done with other people’s money.
    Would Andrew Noone have a clue? Only what he is told by the high value consultants commissioned to report.
    A council staff report prepared last year had estimated the efficiencies of a CCO model could save the council up to $12 million over a decade. That’s right $1.2 million per year while Delta take $50 million to $60 million per year.
    As I say, Cr Noone best stick to sheep farming, it would be better for the sheep and the citizens as well. A “win win”.
    But watch this space, I would be prepared to bet money on them coming up with some hair brained story to justify their actions. In times like this, when the DCC/DCHL are quietly (at the moment) sinking beneath the tide of debt, it always helps to introduce a diversion, and this one is a “DOOZY”.
    Just look at all the projections of returns and economic benefits that surrounded the Stadium and Town Hall/Conference Centre when mooted. And just look at the results. BEWARE!! Brothers and Sisters, for we ain’t seen nothing yet.

  10. Elizabeth

    “We don’t need consultants to tell us the time.”

    ### ODT Online Sat, 18 Aug 2012
    Consultants cost DCC $32m
    By Chris Morris
    After spending more than $30 million on consultants in three years, Dunedin City Council staff are under pressure to slash spending on outside help, it has been confirmed. Figures released to the Otago Daily Times this week show the council spent $32.59 million on consultants, within Dunedin and further afield, over the past three years. Annual spending was dropping steadily, down from $13.34 million in 2009-10 to $8.66 million in 2011-12, a trend council chief executive Paul Orders was keen to see continue.
    Read more

    • Elizabeth

      ### ODT Online Sat, 18 Aug 2012
      Earthquake contracts for Delta
      By Chris Morris
      Dunedin-based company Delta is to recruit more staff after securing $5.5 million in new contracts for earthquake reconstruction work in Christchurch. Delta chief executive Grady Cameron said in a statement released yesterday the company had been awarded three contract packages to repair or replace damaged wastewater infrastructure in the Garden City. The extra work meant the company would need to recruit another eight staff to add to the 50 already based in Christchurch, a Delta spokesman, Gary Johnson, confirmed. The company had maintained a presence in Christchurch since 2001, and had already completed about $5 million worth of repair and reconstruction work since the earthquakes struck, he said.
      Read more

    • Elizabeth

      It’s been said before! Keep repeating, it might sink in at DCC….
      Comment at ODT Online:

      The skills are there
      Submitted by topsy on Tue, 21/08/2012 – 7:09pm.

      One of the major weaknesses within the DCC organisation is the lack of a central skills database. All too often, department managers reach out to consultants because the required skill does not exist within their own department. That same skill, meanwhile, is sitting unused within a neighbouring DCC department, usually within the same building.
      The DCC currently has qualified project managers, quantity surveyors, valuers, etc. The problem today is that no one outside of that employee’s department knows that the person exists. Often that person is not employed in a role which uses their specialist skill, making it even more difficult for other department managers to identify that skill from within the DCC ranks.
      I would recommend that Mr Orders conduct an in-depth staff skills survey – not amongst the managers, but directly with the staff. He may well find that he already owns the solution.

  11. Elizabeth

    The Dunedin public aren’t stupid. It’s been widely observed that maintenance and upgrade of roads in the DCC metropolitan and rural areas has been sloppy and substandard for some time. “Rougher”, is already in place. How much rougher is the question when DCC – “Cull’s deadly council” – is happy to pour extra millions of DEBT FUNDING into the stadium project, continually and seemingly without end (without a community or ratepayer mandate), at the risk of ‘devaluing’ the roading network required as an economic mainstay (core council business). But who are we to have such practical concerns ?

    ### ODT Online Mon, 3 Sep 2012
    Roads to ‘get rougher’ as budget slashed
    By Debbie Porteous
    A $4 million hole in its roading budget means the Dunedin City Council will be unable to do all the work it had planned to do on the city’s roads in the next three years. The shortfall comes after confirmation last week of lower subsidies than hoped for from the New Zealand Transport Agency (NZTA) over the next three years, together with a June decision by the council to reduce its contribution to the roading budget to reflect the anticipated subsidy levels. Council staff are now working on where cuts will be made. Council transportation operations programme engineer Michael Harrison said the projects already included in the council’s long-term plan would still go ahead and the feeling was people would not generally notice that other work had been postponed, but the situation was not ideal for the long-term life of the city’s roading assets.
    Read more

    Having (ex DCC CEO) Jim Harland in the NZTA picture is, as always, a ‘grating’ quirk of fate.

  12. amanda

    I don’t have any idea how much more funding Cull will pour into the stadium blackhole, but it will be a lot more because he is not afraid of us, but is afraid of his true taskmasters who pull the strings, ‘the stakeholders’, or shall we call them the Dunedin’s Business Geniuses? That happy group who Cull allows to have direct access to public funds so that they can continue to make private profit? And god help us if he gets elected as mayor next year. Cull is proof that being a very nice person does not mean you will be a useful politician. He shows that being a nice guy translates into weakness in the political arena. The city cannot afford his brand of weakness for much longer.

  13. Anonymous

    Another politically idiotic move for Cull. Hanging with National is not a good look presently, especially those arrogant and self-invested puppets who have the best interests of multinational corporations at heart. It is only Mr Oil himself and the unreality class who believe they’re appreciated beyond their mirrors.

  14. Elizabeth

    ### ODT Online Mon, 17 Sep 2012
    Council squeeze on costs
    By Chris Morris
    The blowtorch is on Dunedin City Council staff to save more money as part of a push to accelerate debt repayments. Staff are already under pressure to find $4.6 million in savings by early next year to achieve a targeted rates rise of no more than 4% for the 2013-14 financial year. That was part of a council push announced last year to limit rates rises to no more than 5% in 2012-13 – a goal already achieved – followed by 4% and 3% in the following two financial years. However, new budget guidelines issued to senior staff last month – and now released to the Otago Daily Times – showed councillors wanted to go further cutting costs.
    Read more

  15. Elizabeth

    The ODT item cries out for a lengthy companion opinion piece and or investigative overview by a senior columnist… concerned with exactly why the mayors and councillors (named) of this and the last council have – with upmost speed – allowed descent into this complete financial mess.

  16. Anonymous

    It’s an interesting piece. I almost get the feeling Chris was into it when typing that up. One of the interesting bits is the connection between a 1% rates rise and its equivalent cost of $1.2M (adjusted up from $1M for inflation?). Yet here we have a Mayor who at almost every turn has spent more millions on the stadium and professional rugby. So saving 1% is a token gesture when they’ve added over 15% of rates increases since taking up his role as the New Our Stadium Mayor.

    Syd Brown and the Stadium Councillors must be so damn proud.

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