DCC consolidated debt substantially more than $616m to June 30, 2012

Your council doesn’t want you to know that.
Massage. Lack of accountability.

### ODT Online Mon, 29 Oct 2012
Council debt to peak at $600m
By Chris Morris
The Dunedin City Council and its companies are about to reach the top of a $600 million debt mountain and start down the other side. However, it was likely to be years before there was room on the council’s books for any major new projects, potentially leaving the council exposed if “something untoward came along”, Mayor Dave Cull said.

Council figures showed consolidated debt – spread across the council and its companies – had risen to $616 million by the end of the 2011-12 financial year on June 30, including core council debt of $216 million.

Overall debt was expected to peak in the next eight months, but would then begin a gradual decline as two decades of major capital projects and upgrades came to an end. The details are contained in the council’s latest annual report, for the year to June 30, to be considered at today’s full council meeting.
Read more

Dunedin City Council
Meeting: Monday, 29 October 2012
Council Chamber, Municipal Chambers, at 2pm

Agenda – Council – 29/10/2012 (PDF, 118.9 KB)

Report – Council – 29/10/2012 (PDF, 1.1 MB)
Approval and Adoption of Annual Report

Other reports

At ODT Online:

This is what we owe
Submitted by russandbev on Mon, 29/10/2012 – 10:09am.
Based upon the $616m debt figure, which is not necessarily the correct level of debt, each ratepayer owes $10,807. Compare this to Kaipara where a debt level of $4,395 per ratepayer was considered to be unsustainable and a commissioner was appointed by Government. This Council is out of control and does not yet recognise that the decision to build the stadium based on the PWC proven falsehoods was wrong, and by the continued pouring of money into keeping it open makes no sense whatsoever.

Posted by Elizabeth Kerr

10 Comments

Filed under Business, DCC, DCHL, DVL, DVML, Economics, Media, Name, Politics, Project management, Property, Site, Sport, Stadiums

10 responses to “DCC consolidated debt substantially more than $616m to June 30, 2012

  1. Elizabeth

    In all of this I wonder how Paul Orders is actually situated – as against where Syd Brown and Dave Cull are sitting, with advice from Stuart McLauchlan, Denham Shale and Bill Baylis, and Athol Stephens still hanging in there. The hornet’s nest.

  2. amanda

    Good to see the mug shots of two prime fiscal muppets on the front page of the ODT. Cr ‘What’s a business plan’ Acklin and Cr ‘Glass Half full’ Collins are loving the attention as the election draws nearer. With dimwits like these two is it any wonder that the John Wilson Drive is used as a distraction and drawn out? Keep an eye out for other mugshots of councillors wanting re-election.

  3. Elizabeth

    This appears to be an ‘Editorial’ posted under Dunedin News at ODT Online today ?
    Posting and link now corrected (as here).

    Dealing with council debt
    Wed, 31 Oct 2012

    Dunedin ratepayers will no doubt be relieved by this week’s comment from Mayor Dave Cull that the Dunedin City Council has undertaken a “really significant” and “different attitude to debt”.

    The comments were made after the release of the council’s annual report for the year to June 30, in which Mr Cull and chief executive Paul Orders said: “For the first time in recent years, the council will be repaying more debt annually than it is drawing down.” Of less relief, however, is the monumental nature of that debt.

    The figures showed consolidated debt – spread across the council and its companies – of $616 million, including core council debt of $216 million.

    The figures mean that, according to the council, it will be at least five years before it can embark on any major new projects, it will take a decade to reduce debt to a more “acceptable” level, and the situation leaves it no room to move in the case of any unexpected demand on spending – such as a major natural disaster. (This is significant, given $1.5 billion of the city’s network of infrastructure assets is uninsured. The fact all councils are in the same situation as the result of hikes in insurance premiums in the wake of the Canterbury earthquakes is of no comfort.) The core council debt paid for upgrades to the Tahuna wastewater treatment plant, the Toitu Otago Settlers Museum and the Dunedin Town Hall complex, among other projects.

    Overall debt included $146.6 million of stadium debt transferred to Dunedin Venues Ltd this year.

    This paper – and the city’s ratepayers – have long voiced concerns about the seemingly spendthrift nature of previous councils and the city’s ability to pay for the various big-ticket projects.
    Read more

  4. Anonymous

    Good news for the Council Debtmongers and the Stakeholders… more bad news for the Dunedin City Ratepayer. We are responsible for filling that debt hole, not the corrupt who are still digging it. The sinkhole is massive… well over a 600% rates rise if you apply the 1% per million wasted.

    The Hagamans, Farrys and the Edgars thank you.

    ### Stuff Online Last updated 05:00 17/02/2013
    Debt spike revealed in council plans
    By Rob Stock
    The speed at which local councils expect to borrow has increased dramatically, a comparison of their plans reveals, but Local Government New Zealand says taking on debt is sensible and prudent. However, moves to limit contributions councils charge to developers could leave a funding hole that will need to be filled by ratepayers, LGNZ chief executive Laurence Yule said.
    Read more

    (Posting is enabled on this article.)

    • Further to Anonymous’s comment with the Stuff link:
      http://www.stuff.co.nz/business/industries/8310769/Debt-spike-revealed-in-council-plans

      [excerpt]
      Councils seek to manage their risk, though even this can bring risks. They can find themselves locked into higher interest rates by derivative contracts designed to smooth the cost of servicing debts as has happened to Dunedin City Council. Yule said such debt levels fell well within the responsible rule of thumb. The justification for spreading the cost of infrastructure spending between generations was a fair thing for councils to do.

      He warned, however, that if the Government limits the “development contributions” which councils charge when new homes are built in a bid to bring down the cost of building, that would leave a hole in the revenues of some councils which would need to be filled by raising money from ratepayers. Yule said the Government was coming around to recognising that development contributions in New Zealand were similar to those in other countries. “All that would happen is that ratepayers would be subsidising developers,” he said. The LTPs have the councils budgeting on “development and financial contributions” running into hundreds of millions a year.

      While the headline LTP figures show a significant rise in council debts, there is a wide spread of approaches to debt. Some councils have little, or none, while others, such as Dunedin, Tauranga and Kaipara District Council, have amassed debts to a level causing deep local concern.

  5. Calvin Oaten

    To me, the smoking gun is DCHL. If we realise that in the current Plan the budget is dependent on DCHL delivering dividend and interest of $10.450m plus $5.25m to DVL for stadium debt reduction. A total of $15.7m. We can also see in the draft plan produced for consultation, that DCHL is to reproduce those same amounts each year till at least 2022/23.The current year’s payments are to come out of DCHL’s current years activities. That’s right, it doesn’t have the money in the bank for the DCC at commencement of the year. As we have yet to hear the six monthly (31/12/12) report. We don’t know if the money will definitely flow. The newly appointed directors last year announced that as from 31/07/12 they would no longer be prepared to borrow in order to meet the DCC’s requirements. Not surprising when we look at its long term borrowings as at 30/06/12 being $557.399 million, with total liabilities at $880.030 million. Now, we know that DCHL booked a loss of ($5.087m) for the year ending 30/06/12 after paying the DCC and DVL a total of $23.2 million.
    So, what is the likelihood of a turnaround of some $20m in DCHL’s fortunes, and maintaining that year after year? “Diddleysquat” I would have thought. Does Dave Cull and his dwarves (Cr Vandervis excepted) appreciate that? Don’t be daft, they wouldn’t even understand the first sentence, So watch out for the “Default”! I don’t know when it will come, but be assured it will. If not, the ratepayers will be beggared. Come to think of it, they will be beggared either way. A good time for the young to sell up and get the hell out of it.

  6. Anonymous

    Move to Kaipara? Maybe we could all just camp out at Eion’s or find a permanent seat at one of Hagaman’s establishments. You know, insert your money here: And… it’s gone. Gambling, gambling, gambling… what does that remind me of? Ah, yes, what this council has been doing with our money and futures.

    While the headline LTP figures show a significant rise in council debts, there is a wide spread of approaches to debt. Some councils have little, or none, while others, such as Dunedin, Tauranga and Kaipara District Council, have amassed debts to a level causing deep local concern.

    Deep. Local. Concern. Nice way of saying massive corruption and catastrophic failure.

  7. Hype O'Thermia

    OK so there’s justification for “spreading the cost of infrastructure spending between generations was a fair thing for councils to do”. Saving up, i.e. putting money aside instead of going “Ooh, lovely money, let’s buy some shiny things!” is better. Where prudence is exercised already and there is still not enough money to save up ahead of time, that’s when involving future generations is prudent too. But buying shiny things on the never-never and locking generations ahead into high rates bills, making Dunedin less attractive because more expensive to live in, is well outside normal-range human stupidity.

  8. Calvin Oaten

    The ‘ticker tape’ of DCC/DCHL’s “Derivatives and Interest Rate Swaps” is running and is currently at negative ($34 million). We actually are living in our own casino!

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