DScene: Dunedin needs “decisive leadership”

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### DScene 28 Nov 2012
Editorial
DCC needs to shape up (page 7)
By Mike Houlahan
Land transactions under investigation, illegal road building, a debt mountain, monumental building projects, possible credit downgrades. No, not some obscure Balkan country or African military dictatorship, but our home town. There is a vociferous body of opinion that Dunedin is going to hell in a hand cart and events of recent weeks have done nothing to persuade them otherwise.

Delta’s land transactions coming under Audit Office investigation, and a damning court verdict – which has seen Dunedin City Council cop a six-figure court costs order over the State Highway 88 realignment – follow an auditor’s report trying to establish the final cost of building the Forsyth Barr Stadium, and a controversial bailout of the Otago Rugby Union.

A “we will fight them on the beaches” opinion piece from Mayor Dave Cull last week sounded desperate. The announcement soon after from Standard and Poor’s Ratings Services that it had revised its outlook of Dunedin City Council from stable to negative made it look desperate, too. A negative outlook means a one-in-three chance of a credit downgrade in the next two years – unwelcome news for a city well in hock before it borrowed millions more to build the stadium.

The agency does offer a ray of hope – if the DCC’s budgets strengthen, as forecast, its rating could revert to stable. But having just stated doubts the DCC could achieve the financial targets in its long-term plan, Standard and Poor’s are going to take a lot of convincing all is well.

In response, Cull – sounding like a rugby captain before a test – said Dunedin “was up to the challenge of continued financial belt-tightening.” Sadly, in this comparison Dunedin is probably Scotland rather than the All Blacks. Quiet reassurance is no longer enough. If ratepayers are to have faith in the DCC as chamberlains of their assets, they will want to see decisive leadership.
#bookmark

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Posted by Elizabeth Kerr

Dunedin Amenities Society on district plan review

Received by email today.

The Dunedin Amenities Society have held strong concerns over aspects of the District Plan for some time, particularly over the way the Plan is integrated with management of public open space and reserves. Sites like the Town Belt are actually being hampered in their management by the imposition of the Urban Landscape Conservation Area rules, which fails to have regard for its status under the Reserves act 1977. The Minister of Conservation approved a management plan for the Town Belt in 2007, but what is the point if the District Plan overrides its principles.

The Society urges all members and people of Dunedin to consider how the reserve conservation areas that we have in Dunedin should be managed and how the District Plan should complement their management rather than impede it.

● The Dunedin Amenities Society established in 1888 is New Zealand’s oldest environmental society.

Visit their website at www.dunedin-amenities-society.org.nz
Follow the Society on Twitter
Visit the Society on Facebook

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Here is the latest update from the Society’s website:

A Conservation Conundrum
By daseditor

The Dunedin City Council is presently undertaking a review of the District Plan and that review will mean that the Dunedin Amenities Society will also be looking at the implications of those changes. The review includes looking at creating a new open space, reserves and recreation zone which would “reflect the different types of open space and recreation areas”. The current District Plan does not recognise reserve, conservation or recreation areas as distinct entities, but rather classifies them within the zone of the surrounding land. The problem with that approach is that the activities and land use that is associated with reserve, conservation or recreation sites is often quite distinct to the surrounding land use zones. Reserve sites such as the Town Belt are often over-arched with a wider zone classification such as the “Urban Landscape Conservation Area”. Thus the rules of the District Plan override the legal protection status of the reserve under the Reserves Act 1977 without fully understanding the nature of the reserve or its values. This creates inherent problems for reserves like the Town Belt when dealing with very real conservation management issues.
In one example the current District Plan actually hampers the ability of the Council to manage areas of high conservation significance. The rules (13.8.2) associated with the management of bush within Urban Landscape Conservation Areas have inadvertently protected the highly invasive Sycamore (Acer pseudoplatanus). Vegetation removal in these zones is a discretionary activity, which is infinitely sensible as it protects flora and fauna on private land. However, under the District Plan the rule “does not apply where the plants to be removed are listed in any Regional Pest Plant Management Strategy applying to the district of Dunedin City”. Here lies the conservation conundrum because sycamore is not included in the Otago Regional Council’s Pest Plant Management Strategy (that’s a whole other post at a later time). Which means that under the current Urban Landscape Conservation Area rules sycamore becomes classified as “bush” and the removal of individual mature seed bearing sycamore cannot be undertaken without resource consent.
Read more

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Posted by Elizabeth Kerr

Proposed hotel, 41 Wharf Street – indicative landscape effects

The following images (scans of scans…) were supplied by Madeleine Lamont in submission on application LUC-2012-212. The text of Madeleine’s submission has been lightly edited for posting. Her submission as lodged (No. 422) can be viewed here: Submissions 401 to 509 (PDF, 6.9 MB).

1. View from Mornington Park, off Eglinton Rd between Stafford and High Sts

2. (zoom) View from Mornington Park, off Eglinton Rd

3. View from Bellevue St, Belleknowes, just below Highgate

4. View from Adam St, near Russell St, City Rise

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Submission to Dunedin City Council
Re: Public Notice of application for Resource Consent Section 95A Resource Management Act 1991
Resource Consent Application No: LUC-2012-212
Name of Applicant: Betterways Advisory Limited
Location of Site: 41 Wharf Street, Dunedin, being the land legally described as
Lot 3 Deposited Plan 25158, held in Computer Freehold
Register OT17A/1107.

I submit in the strongest terms, that resource consent for the building of the proposed hotel structure on the above site, NOT BE GRANTED because of the structure’s significant, detrimental effects on the city landscape.

If the applicant had had the courtesy to supply comprehensive spatial design drawings of this structure in the context of the whole city, it would be obvious to all how inappropriate in SCALE this structure is. At 96m in elevation, the structure overbears the entire city and harbour basin, obstructing the entire city centre’s experience of the harbour, the peninsula and Dunedin’s nestling hills, offering an absurd conflict with the human scale and nature of both the historic and current character of city structures and city activities.

Of greatest concern are the western and eastern elevations of the structure. I submit Photo 1 taken from the lookout in Mornington Park, a view celebrated by Dunedin artists numerous times over the years, by visitors to the city and of course, by the hundreds of Dunedin households. The approximate silhouette of the proposed structure is drawn in to show the obstructive nature and ‘selfish’ size and position of the hotel. The scale of the building is completely inappropriate. Photo 2 is from the same position, zoomed in and marked with the Wharf St railway lighting tower measured at 35m used to indicate the dominance of the proposed 96.3m hotel structure. The eastern elevation from the peninsula suburbs too, will experience the overscale of the building against the city and hill suburbs.

Photo 3 taken, on zoom from Bellevue Street, Belleknowes, again includes the structure’s silhouette scaled off the marked rail light tower. If the cladding of the proposed tower is mainly glass, with it being so high above the city, the western sun will create issues of sun strike on roads leading down from the suburbs, and obviously, serious effects and obstruction to the views enjoyed by thousands of households.

Photo 4 is from lower down the Belleknowes spur, from Adam Street, with an estimated, but conservative profile (photo lacks a known structure to measure off) drawn. Again the aesthetic values and scale of the harbour basin are entirely offended by an ill considered structure.

What concerns me most about this application for resource consent to build an inappropriate structure (by position and scale), is the inadequacy of the supplied application documents to present the structure in the context of the city. Widely published images are fantasy, such as an elevated, high angle view from well above the harbour, attempting to diminish the perceived size of the structure. The only humans to view the structure from this angle, position and elevation may be those wealthy enough to, by helicopter. These images are notable for their lack of contextual structures that make, in fact, the character of Dunedin. Buildings of 2, 3 or more storeys set the scale appropriate for development and are absent from the application documents precisely to obscure the real affect this structure will have on the city’s landscape and its aesthetic values. Design consultancy information only focuses on the very immediate surroundings and contains no spatial plan for this giant structure in the context of the city. I have attempted to show how 120 degrees of the city centre and its hill suburbs will have their harbour and peninsula views and joy of place seriously obstructed. The peninsula suburbs will view a structure absurdly contradicting the city structures and rounded hill suburbs. All incoming transport links, as a special feature of this city, enjoy delightful revelation of the ‘great little city’, its harbour and the waters of the Pacific. These heartening views enjoyed by all, citizen and visitor, will be irretrievable spoiled and dominated by a tower designed (and possibly built) for a city the scale of Hong Kong, Kuala Lumpur or Singapore.

Lastly, the attempt at this sort of inappropriate development is an affront to the careful planning [of] the city’s forefathers to create an egalitarian community enjoying the delightful natural environment Dunedin offers. The proposed structure stands at 96m. This is only a matter of metres below the elevation of much of the Green Belt. Jubilee Park is at a 100m elevation. The Green Belt designed and implemented so long ago and maintained for the benefit of all, is carefully placed so that wherever a person stands in the city centre they can look up the hills to the skyline and see only green, the suburbs beyond obscured by the angle of view. This creates a very special intimate city, a human scaled city, for the benefit and edification of those living or visiting here. This, in conjunction with historical character (now lost in Christchurch), a rich, intelligent, creative and industrious community is what makes Dunedin a destination, a special, memorable place that with sympathetic development will continue to attract visitors and citizens who will not find the likes, elsewhere in the world. Structures like the proposed hotel are notable for being the same the world over. In being built it will change the very character of the place visitors will be seeking to experience.

I submit in the strongest terms that the Dunedin City Council turn down this application for resource consent and I suggest that the non compliance of this application to the requirements of the Resource Management Act to protect the amenity, aesthetic and cultural values and wellbeing of the people of Dunedin will bring this matter to the Environment Court.

Yours sincerely

Madeleine Lamont
B. Landscape Architecture (Hons), Lincoln University

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Compare these indicative images to those prepared by Truescape of Christchurch for the Applicant:

LUC-2012-212 12. Viewpoint booklet (PDF, 3.4MB)
This document is a scanned copy of the application for resource consent

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Related Posts:
20.11.12 City planner’s report recommends against consent for hotel
10.11.12 Dunedin Hotel, 41 Wharf Street (LUC 2012-212)
8.9.12 Waterfront Hotel #Dunedin (Applicant names?)
7.9.12 Waterfront hotel: DCC to notify resource consent application
16.5.12 Dunedin Hotel

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The Applicant, Betterways Advisory Limited, gets one and a half days for presentation to the hearing committee (Cr Colin Weatherall, Cr Andrew Noone, Cr Kate Wilson, and independent commissioner John Lumsden). Submitters have been allowed ten minutes each. Written communication from City Planning makes no time allowance for submitters wishing to use experts.

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Posted by Elizabeth Kerr

2012 Southern Architecture Awards – NZ Institute of Architects

Thom residence, Waitati (top). Otago University Union redevelopment.

### ODT Online Sat, 24 Nov 2012
Awards reflect straitened times
By Nigel Benson
Innovation in a difficult economic climate was a feature of winning designs in the 2012 Southern Architecture Awards, announced at Forsyth Barr Stadium last night. Awards were presented for seven Otago projects, ranging from public changing rooms to houses and a hotel. The design of the winning projects reflected the challenging economic conditions in New Zealand, awards convener and Dunedin architect Niko Young said last night. “Even though times are tough, client expectations remain high. This has resulted in innovative architecture produced to lean budgets,” he said. “Architects and clients doing more with less is a theme of the 2012 Southern Architecture Awards. Such an approach often involves the reworking of existing buildings.”
The judging panel comprised Mr Young, University of Otago design for technology department fellow Michael Findlay, Dunedin architect Regan Hall and Auckland architect Nicola Herbst.
Read more

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██ NZIA 2012 Southern Architecture Awards – winners information, citations and more photos at NZIA website

New Zealand Institute of Architects NZIA)
The New Zealand Institute of Architects represents over 90 percent of registered architects in New Zealand, promoting and celebrating the role of architecture in enhancing the built environment.
● Is my Architect a member of NZIA? (directory search)
● Find an NZIA Practice www.architecturenz.net

New Zealand Registered Architects Board (NZRAB)
– registers architects who have been assessed by their peers as competent
– confirms every five years that architects continue to be competent
– maintains an online New Zealand Architects Register
– investigates complaints and, if need be, disciplines architects.

NZRAB: Is my building designer a Registered Architect?
● The New Zealand Architects Register
● Find an Architect

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Posted by Elizabeth Kerr

Cull COVERS UP COUNCIL #massage

National Radio says Dunedin City Council’s debt has increased to $620 million.

@@@@ Actually, the debt is likely to be much higher than this.

Mayor’s shambolic response to botched SH88 realignment:

Asked if heads would roll over the council’s handling of the saga, Mr Cull replied “No”. “I think things in hindsight could have been handled better … Given the circumstances before the World Cup, there was a lot of pressure to get things done in a hurry. A few things slipped, it’s fair to say. At the time, council did not make the best decisions, but they probably made it in good faith, so that is the way it is.” ODT Link

### ch9.co.nz November 22, 2012 – 7:00pm
Nightly interview: Mayor Dave Cull
Dunedin Mayor Dave Cull has warned city council cost-cutting will continue next year, as the local authority looks to again cut into the rates increase. He suggested in an opinion piece in the Otago Daily Times debt and economic development were the headline issues. He is here to tell us why.
Video

### ODT Online Wed, 21 Nov 2012
Opinion
Debt reduction, economic development focus
Dunedin Mayor Dave Cull lays out what he sees as the challenges facing the city council next year. This year has been a time of challenge and achievement for the Dunedin City Council. Costs and rate rises were substantially contained despite significantly reduced cash-flows. Information flow and public transparency have been enhanced, council confirmed a visionary spatial plan and council company governance has been substantially overhauled and improved.
Read more

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STANDARD & POOR’S Rating Services
Dunedin City Council
http://www.standardandpoors.com/prot/ratings/entity-ratings/en/us/?entityID=272160&sectorCode=GOVS

S&P Statement:
Outlook On New Zealand’s Dunedin City Council Revised To Negative; Ratings Affirmed At ‘AA/A-1+’
Publication date: 20-Nov-2012 23:07:36 EST
http://www.standardandpoors.com/prot/ratings/articles/en/us/?articleType=HTML&assetID=1245343655677

MELBOURNE (Standard & Poor’s) Nov. 21, 2012–Standard & Poor’s Ratings Services’ said today that it has revised its outlook on New Zealand’s Dunedin City Council (Dunedin) to negative, from stable. At the same time, the ‘AA/A-1+’ issuer credit ratings on Dunedin were affirmed. The outlook on Dunedin City Treasury Ltd. was also revised to negative, and the issuer credit ratings were affirmed at ‘AA/A-1+’.

“The negative outlook reflects our view that there is a one-in-three chance of a downgrade in the coming two years,” said credit analyst Anthony Walker. “This is based on our view that Dunedin may not achieve its financial targets outlined in its Long-Term Plan, with its after-capital account deficits not improving as quickly as forecast. If this scenario were to materialize, we consider that Dunedin would have limited budgetary flexibility to improve its financial position without deferring asset renewals, which may lead to future infrastructure backlogs.”

Further downward pressure could be placed on the ratings depending on the Auditor General’s investigation into the management of Dunedin’s council-controlled trading organization (CCTO)–Delta Utility Services–which may weaken our assessment of Dunedin’s management of CCTOs; or if there was a change in policy direction such as the introduction of a hard rates cap, or a revised capital-expenditure program without an offsetting increase in revenue which would result in Dunedin’s after-capital account deficits not improving as forecast.

“The ratings could be revised to stable if the council’s budgetary performance strengthens as it forecasts, specifically if the council achieves after-capital account deficits of about 2% of consolidated operating revenues in 2014 and beyond, while maintaining its current budgetary flexibility, and a stable political setting,” said Mr. Walker.

Dunedin City Council’s (Dunedin) individual credit profile reflects the predictable and supportive institutional framework available to local and regional councils within New Zealand, plus our very positive view of Dunedin’s financial management, and the council’s modest contingent liabilities. In our view, these strengths are partially offset by Dunedin’s high debt burden relative to international peers, and low debt-servicing ratio.

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Comments received.

Martin Legge
Submitted on 2012/11/22 at 7:46 pm
The reality is most Government Regulatory Agencies are now filled with academics (usually law graduates) who love writing endless reports but lack the capacity, desire or hard edge to conduct interviews where the hard searching questions now being demanded by the “What if” mob will ever be asked.
The OAG have obviously held a cordial chat with the Mayor over this and I bet boundaries of the investigation have been set. OAG didn’t listen to Bev Butler, but the Mayor of Dunedin – he’s a man of importance so let’s get down there!!!!

Anonymous
Submitted on 2012/11/22 at 9:10 pm
The thing with the Delta transactions is that there is a fairly clear trail of what was purchased, where it was held and where the original money came from. The investigation should have Newtons Coachways and Delta Investments Ltd in its scope. If it doesn’t then it is toothless.

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Related Posts and Comments:
18.11.12 DCC Annual Report to 30 June 2012 – borrowing and interpretation
12.11.12 Delta purchases | Vandervis OAG complaint accepted

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Posted by Elizabeth Kerr

Safe cycling –Cr Fliss Butcher

Tweet (04:12 PM – 21 Nov 12):

Fliss @koFliss
just posted a brief argument for using Copenhagen style cycle lanes in Dunedin see flissbutcher.co.nz cycling in Dunedin. please retweet

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Footpath,

bike lane (often with low solid raised barrier),

car parking,

then the road.

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Posted by Elizabeth Kerr

City planner’s report recommends against consent for hotel

UPDATED 21.11.12

See comments at this thread:

Ro https://dunedinstadium.wordpress.com/2012/11/10/dunedin-hotel-41-wharf-street-luc-2012-212/#comment-29089

Elizabeth https://dunedinstadium.wordpress.com/2012/11/10/dunedin-hotel-41-wharf-street-luc-2012-212/#comment-29090

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“What Heydary found came as a shock, especially to some buyers who readily admit they were so blinded by the flash and cash of Donald Trump that they didn’t do proper due diligence: Buyers weren’t purchasing so much a condo as a share in a high-end hotel that, so far at least, is losing money.”

Trump Tower developer suing 7 disgruntled investors to close deals they now regret

Anonymous provided this edifying read. It ‘trumps’ what happened with the first tower built at Orewa, and the Spencer on Byron at Takapuna (referred to elsewhere at What if?, or google) – as far as 41 Wharf Street, Dunedin is concerned the tower-scam model is the same. So here we are, naive and wide open to the wiles of our own ‘good old boys’ and their unsavoury quest for a share of dirty-quick money from fickle overseas ‘connections’, and your life savings too.

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### ODT Online Wed, 21 Nov 2012
DCC report opposes city hotel
By Chris Morris
Plans for a 28-storey waterfront hotel towering over Dunedin have been dealt a blow by a Dunedin City Council report that criticises the design and recommends resource consent be declined. The report by council planner Lianne Darby, made public yesterday, identified the hotel’s height and dominant appearance as among areas of concern. A host of technical worries also raised doubts, ranging from traffic problems and shading to a lack of information about wind gusts magnified by the tower’s height. Ms Darby’s report left the door ajar by including a list of detailed conditions to impose if consent were granted, despite her recommendation.
Read more

Source: ODT Files

Note to graphic: Under the Resource Management Act (RMA) the commissioners to hear the application cannot consider the economic viability of the proposed hotel project – the matters with a red cross, at right, fall within the scope of the Act. The applicant is required to show the adverse effects of the proposed development are no more than minor.

Read Post Application Information at DCC website

‘New information’ about the hypothetical footbridge cannot be considered at hearing since it was NOT included in the notified application.

### ODT Online Tue, 20 Nov 2012
Hotel developer unveils link bridge proposal
By Chris Morris
The man promoting Dunedin’s proposed 28-storey hotel has unveiled plans for a “world class” pedestrian and cyclist bridge that could provide a missing link to the city’s waterfront. However, the idea is only the “starting point for a discussion”, with key details – including how much the sweeping structure would cost and who would pay for it – yet to be confirmed, Betterways Advisory Ltd director Steve Rodgers said.
Read more

Source: Ignite Architects Ltd (via ODT)

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Posted by Elizabeth Kerr

Dunedin City Council vs Anzide Properties decision: The road “has no legal basis”

Concerning the State Highway 88 realignment, skirting the new stadium.

Judgment-221310 (PDF, 109 KB)

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DScene breaks the news at Stuff:

Dunedin City Council fined for road botch up
A High Court decision has slammed Dunedin City Council’s (DCC) handling of a roading realignment in the city, ordering the cash-strapped authority to pay affected parties more than $185,000 in costs. Justice Alan Mackenzie indicated in a written decision the legality of the stretch of State Highways 1 and 88 through the city remained in question because of the council’s botch up.

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Related Posts:
9.6.12 City Property to compete more obviously in the market
27.5.12 SH88 realignment – information
25.5.12 SH88 realignment costs (injunction)
27.2.12 Bringing DCC councillors, staff, related entities and individuals to account
23.8.11 Stadium project tangles
24.11.10 SH88 realignment for stadium disrupts traffic
29.10.10 DCC Chief Executive resigns – timing is everything!
21.7.10 SH88 realignment – update
7.7.10 Goodbye to great store buildings in Parry St
21.4.10 SH88 realignment – update
31.3.10 SH88 realignment
24.2.10 SH88 realignment: Are ratepayers buying the land twice?
20.11.09 Interesting. SH88 realignment.
2.9.09 SH88 realignment past stadium
27.8.09 $294.8m investment for Otago region
19.5.09 There’s more, really?
12.2.09 DCC, and the right to ask?

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Posted by Elizabeth Kerr

Martin Legge: DIA audit criticism #pokierorts #coverup

Comment received from Martin Legge
Sunday, 18 November 2012 5:41 p.m.

In 2007, the National Party criticised the Labour Government following a damning report by the Office of the Auditor General into DIA’s regulation of the pokie industry. The boot has been on the other foot for four years, and yet do we hear calls from anyone in the Labour Party, particularly in Dunedin?

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Press Release [2007]
Auditor-General slams Internal Affairs over gaming says National Party MP

Internal Affairs Minister Rick Barker must act now to address the criticisms of his department over its failure to effectively control the operation of non-casino gaming machines, says National Party Internal Affairs spokeswoman Sandra Goudie.

The Controller and Auditor-General, Kevin Brady, today released his report Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

The report shows the department’s policies and procedures do not comply with the Gambling Act 2003 and includes 17 recommendations for change.

“The department’s own ‘comprehensive licensing manual’ outlines policies and procedures that do not comply with the Act and shows licensing staff were issuing and renewing licenses without delegated authority.

“The report also found that the department’s audit checklist and manual were not consistent with the Act, and information was missing from the department’s risk profile rating of operators.

“This report shows a department clearly out of touch with its key role and clearly being ignored by the Minister.

“How could the Minister have let his department get into such a state where any old staff member can approve a licence?

“Its [sic] no wonder eyebrows have been raised over the department’s inability to get convictions of operators in breach of the Act.

“It is time Mr Barker gave his department some much needed ministerial direction.”

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Audit Report from Kevin Brady
14 February 2007

Foreword
Department of Internal Affairs: Effectiveness of controls on non-casino gaming machines.

I felt it timely to review the effectiveness of controls on non-casino gaming machines because of the large amount of money placed in the machines (estimated by the Department of Internal Affairs at more than $8,500 million annually), the potential for the machines to cause harm in the form of problem gambling, the amount of funds from the machines going to clubs and the wider community, and a relatively new legislative framework covering gambling.

The Department of Internal Affairs administers controls on non-casino gaming machines. My review focused on three main areas of controls. These were the controls on licensing of non-casino gaming machine operators and venues, on operator and venue costs, and on the distribution and application of funds to the community including through grants.

I found that the Department of Internal Affairs has extensive policies and procedures for licensing and auditing of venues and operators, and a risk-based approach to compliance. However, there were areas of its policies, procedures, and practice that did not meet all of the requirements of the Gambling Act 2003. These included its procedure for renewing licences and for auditing. I also found that its licensing staff were issuing and renewing licences without the necessary delegated authority. The Department has committed to rectifying this issue, and had largely done so at the time this report was being finalised.

While the Department of Internal Affairs has committed to comprehensively monitoring the outcomes being achieved in the non-casino gaming machine industry, it is not yet doing this in a systematic or comprehensive manner. This limits the Department’s ability to demonstrate the results of its work and refine the way it works to achieve better outcomes.

I thank staff in the Department of Internal Affairs for their assistance, responsiveness, and co-operation during the audit. I also thank people in the industry who generously gave their time and views during the audit.

The Department has been very engaged in, and supportive of, the audit process. Its commitment to implementing the audit findings to make improvements is pleasing.

K B Brady
Controller and Auditor-General

[ends]

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Recent Posts:
13.11.12 Martin Legge replies to Sunday Star-Times story #DIA #coverup
11.11.12 Department of Internal Affairs #pokierorts #coverup #TTCF

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Posted by Elizabeth Kerr

DCC Annual Report to 30 June 2012 – borrowing and interpretation

DCC Annual Report (PDF, 1.1 MB)

Comments received.

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Mike
Submitted on 2012/11/18 at 12:48 pm
well spotted – so in essence DVML quietly borrowed an extra $8.5m and managed to transfer it to the DCC without incurring any tax because it was a ‘capital gain’ rather than a ‘dividend’

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Rob Hamlin
Submitted on 2012/11/18 at 2:07 am
Another little gem from the DCC annual accounts. A positive little Kimberly it is. Calvin Oaten and I found this little morsel from the sewers of local government yesterday and will now share it with you.

On page 132 it has a table of figures titled ‘Separately Disclosed Revenue’. One line entry towards the bottom is particularly interesting. The title is ‘Profit on sale of Stadium (2012)……. $8,480,000’. This profit appears in both ‘Core Council’ (DCC only) and ‘Consolidated’ (Council & DCHL) columns.

Initially, this seems like great news. We’ve sold the bloody thing and got eight and a half million dollars for it. But, as is always the case, things are not all as they appear.

Nearly sixty pages later, on page 188, we have the following sheet of gibberish:

“Sale of Forsyth Barr Stadium to Dunedin Venues Limited

On the 31 May 2012 the Council sold it’s [sic] interest in the stadium to a wholly owned subsidiary Dunedin Venues Limited. This was the culmination of a project spanning five years during which time the method of delivering the project changed and as a result there is a technical accounting surplus on disposal of $8,380,000. The following note is an explanation of these technical accounting issues.

Book Surplus on disposal of the stadium $ ‘000
Sale price 225,000
Capitalised stadium cost including interest 216,520
Surplus on sale of asset as per 2012 Annual Accounts 8,480
Less stadium costs written off to operations in 2007-2008 5,537
Plus stadium revenue included in operations in 2007-2008 (583)
Surplus on disposal 3,526

Book surplus on disposal of the stadium
The method of undertaking the stadium project changed over the years of the project. The accounting treatment always followed the method of project delivery and was audited as being the correct treatment at the time. In 2007–2008 year it was expected that the project would be delivered by a third party and that the Council expenditure was therefore operational. This resulted in $5,537,000 being correctly expensed in 2007–2008 year. In subsequent years once the decision was made that the Council would build the stadium, the expenditure was correctly capitalised. The surplus of $3,526,000 would remain as it is the difference between all the costs incurred by the Council and the sale proceeds received.”

Also on page 123 we have this note to one of the CCO fragmentary reports:

“CCO Property Plant and Equipment
All CCO property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
The Stadium is a separate class of asset and is recorded at cost less any accumulated depreciation and any accumulated impairment losses.”

So what happened? Well, you may remember that the total cost of the Stadium came in at around $216.5 million. Then, last year the DCC acquired a ‘valuation’ for the Stadium (God knows how and God knows from who) of $225 million. Its commercially realisable value is in fact, as we all know, the commercial value of the site minus the costs of demolition and removal, which is as near zero as makes no difference.

However, it now appears that DVL then ‘bought’ the stadium from the DCC at this higher valuation. It is hard to see any good reason why they would do this, as the historical cost of the stadium itself was $216.5 million – this figure would have fitted well with their own policy for valuation in the note on page 123. As the structure was brand new when ‘bought’, a second valuation was unnecessary. The historical cost of construction would have been more than adequate as a transfer price.

However, it appears that this unnecessary valuation exercise and its absurd outcome has allowed a further $8.5 million to be transferred from DCHL to the DCC this year on top of the $17.95 million handed over as a dividend, for a total of $26.45 million. It can also be claimed now with a straight face that DVL are acting in accordance with their requirement to record assets at cost as $225 million is what they ‘paid’ for it!!

Now let’s deal with the gibberish on page 188, which covers the financial year 2007-2008 (presumably ending 1 April 2008). Apparently, this specific structure incurred over five and a half million dollars of costs and over half a million dollars of REVENUE!!! before it had been fully designed or even approved as a specific entity that the DCC was actually going to construct! The final approval came nearly a year later I seem to recall.

I personally find this reduction in this ‘accounting profit’ to be wholly incredible. I can also find no adjustments matching this $5 million or so in the costs side of the DCC’s figures – even though the $8.5 million extra revenue appears in its entirety. Mind you, in the 200 pages plus of fragmentary and largely useless figures, I guess that I could have missed it.

Page 13 is also interesting. It is entitled ‘Audit Report’. Properly audited accounts require a signed statement by the auditor to form part of them, stating that the auditor’s unqualified opinion that they are satisfied with the accounts – or a statement of their reservations (qualifications) if they are not.

Page 13 is blank (surprised?)

On page 1, we have the following statement:

“This report asks the Council to approve and adopt the Annual Report for the year ending 30 June 2012.

The Director of Audit New Zealand responsible for the audit and the Audit Manager will attend to discuss the audit and answer any questions from councillors.”

In my opinion this is utterly inadequate basis upon which to approve this report. It should not have been even presented to Council, let alone approved, without a complete auditor’s report being attached to it.

It seems that the Council will have to find $25 million plus in savings by next year just to tread water, and that’s if we don’t get any more unpleasant surprises. Interesting times.

[ends]

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Posted by Elizabeth Kerr

Otago Polytechnic EXCITE 12 student showcase

Promising a compelling fortnight of emerging talent
from the diverse disciplines of art, carpentry, design, fashion, horticulture and information technology, excite 12 is the culmination of the time, effort and creativity Otago Polytechnic students have invested in their studies.This innovative and varied series of events offers the public a chance to see and even purchase a range of exceptional student work.

● School of Design – DEBRIEF design exhibitions
● School of Design – SURFACE creative studies exhibition
● School of Architecture, Building and Engineering – OPEN HOMES
● Dunedin School of Art – SITE 12 exhibitions
● School of Natural Resources – PLANT SALE
● School of Information Technology – exhibition ended

CHECK WEBSITE FOR DETAILS
Exhibitions open this weekend: DEBRIEF and SITE 12

http://www.otagopolytechnic.ac.nz/about/events/2012-excite.html

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Posted by Elizabeth Kerr

NZIA Southern: Inaugural Ted McCoy Lecture – David Trubridge

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All welcome
No admission charge

Friday 23 November 3.30-5pm
University College of Education Auditorium, 143 Union Street, Dunedin

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Posted by Elizabeth Kerr

Martin Legge replies to Sunday Star-Times story #DIA #coverup

### Sunday Star-Times Sun, 11 Nov 2012
Pokie man stopped from rort inquiries
By Steve Kilgallon
A senior Internal Affairs investigator says he was prevented from probing pokie rorts by his own department because it did not have the confidence to prosecute major crimes. Dave Bermingham, an investigator and analyst who left the department in August, said Internal Affairs was incompetent and should be stripped of its role investigating gaming machine fraud. {continues}
*No weblink available. Full text reproduced at post.

Comment received from Martin Legge
Tuesday, 13 November 2012 11:37 a.m.

Tony Molloy QC had this to say about a Government Regulator after his enquiry into the collapse of the finance industry:

“The destruction of billions of dollars of ma and pa retail wealth, through finance company meltdowns was the inevitable consequences of at least three decades of unreadiness, unwillingness and inability of regulators, enforcers, courts, lawyers and accountants to fulfil their roles with integrity.”

The Commission of Enquiry into The Pike River Disaster had this to say about another Government Regulator, the Department of Labour:

“DOL’s compliance strategy did not require an assessment of Pike’s safety and operational information. The inspectors did not have a system, training or time to do so. When, at the hearings, they were shown examples of safety information obtained by the commission from Pike’s records, the inspectors were visibly dismayed. This was not a case of individual fault, but of departmental failure to resource, manage and adequately support a diminished mining inspectorate.

DOL’s main public accountability documents, the statements of intent and annual reports to Parliament, did not reveal any concern about DOL’s ability to administer the health and safety legislation. The statements of intent and the annual reports contained many high-level statements on outcomes and outputs but it was impossible to gain much insight into the performance of the mining inspectorate, or the health and safety inspectors as a whole. Measures used, such as the raw numbers of investigations carried out by the health and safety inspectorate, were not informative.

The gap between the high-level statements in those documents and the reality on the ground was remarkable.”

Maarten Quivooy was the NZ Safety Manager at the DOL over this period but left DOL to become DIA’s head of Gambling Compliance. When the Sunday Star-Times put the allegations of cover ups and closing down of investigations within the pokie industry which he now oversees he had this to say:

“They do their investigation work to the best of their ability and from their perspective it can seem like it goes into a black hole but it has had active and thorough scrutiny by senior management.”

His comments suggest that the “remarkable gap” between high level statements and reality is now opening up within DIA !!!

To comfort the public and Politicians, Quivooy is quick to claim their investigation into TTCF was reviewed by Office of the Auditor General. What he doesn’t tell the public is that in July 2009, over the same period that Bermingham and DIA investigators were conducting their investigations into TTCF, Audit NZ was conducting its own independent and statutory audit of TTCF, as a public entity. That audit also found serious issues involving expenditure but neither Audit NZ or its parent body (OAG) took action or followed up on the findings at the time. DIA and OAG only bounced into life when I appeared as a “whistleblower” in October 2010.

OAG have never given me a satisfactory explanation as to why they didn’t immediately act or follow up to protect millions of dollars of public money but their own failure to act might explain why OAG have been so willing to endorse the DIA investigation that I have labelled a whitewash and Bermingham recently describes as a cover up.

A case of two well- resourced government regulators sticking together to avoid embarrassment.

[ends]

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Posted by Elizabeth Kerr

Delta purchases | Vandervis OAG complaint accepted

Read latest comments at this thread

### ODT Online Mon, 12 Nov 2012
Councillor lodges Delta purchase complaint
By Simon Hartley
A complaint has been lodged with the Office of the Auditor-General by Dunedin city councillor Lee Vandervis over Central Otago subdivision purchases which soured and left the council millions of dollars out of pocket.

DCC infrastructure company Delta bought part of a subdivision in Luggate in July 2008, and another at Jacks Point, near Queenstown, in May 2009, but their value has subsequently been written down by millions of dollars.

In mid-October, the DCC announced a $9 million write-down of Delta investments, including the subdivisions, which contributed to the Dunedin City Holdings Ltd (DCHL) group of companies’ booking a $5 million loss for the year to June.
Cr Vandervis claims pre-purchase details of the Jacks Point and Luggate subdivision acquisitions, plus details of City Forests’ mothballed wood-processing plant at Milburn, are being withheld from him.
Cr Vandervis contacted the Otago Daily Times yesterday, saying the Office of the Auditor-General had accepted his complaint and it had been passed on to its investigation unit, but he was yet to hear if the OAG would launch a full investigation.
Read more

A copy of the formal complaint was forwarded to What if? Dunedin on Thursday, 8 November 2012.

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Fairfax | DScene publishes Cr Vandervis’ questions (page 3):

Mayor sees red over Vandervis questions (ODT, 30.10.12)

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Related Posts:
31.10.12 Dunedin City Council – all reports posted, belatedly!
30.10.12 DCHL ‘run by a bunch of fools’ -agreed
26.10.12 No cloud has lifted off DCC, the sins are too great and numerous
26.10.12 DCHL: New directors for Aurora, Delta, City Forests
26.10.12 DCHL borrowed $23 million to bail DCC
17.10.12 The only thing up…. (for sale)
17.10.12 DCC on DCHL, subsidiaries and DCTL
12.10.12 DCHL, subsidiaries and DCTL
28.9.12 The End of The Golden Weather?
11.9.12 Delta Utility Services Ltd
30.8.12 DCC seen by Fairfax Business Bureau deputy editor Tim Hunter
24.8.12 Dunedin’s 3 waters, no CCO
16.8.12 Dunedin water assets
29.3.12 Dunedin City Council company sponsors Highlanders
7.3.12 DScene: Call for full inquiry into stadium project
20.12.11 Delta and the GOBs #DCHL #DCC
18.11.11 Delta rebrand
29.7.11 WE ALL SAID IT #DunedinCityCouncil #SHAME
9.2.11 DCC and DCHL, was there ever any doubt?
26.8.09 DScene: Delta, STS, DCC larks
9.7.09 Delta dawn what’s that flower…

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Posted by Elizabeth Kerr

Department of Internal Affairs #pokierorts #coverup #TTCF

● The Trusts Charitable Foundation (TTCF Inc) ● The Trusts Community Foundation Ltd (TTCF Ltd) ● Otago Rugby Football Union (ORFU) ● Professional Rugby ● Centre of Excellence for Amateur Sport ● Harness Racing ● Department of Internal Affairs (DIA) ● Gambling Commission ● Pokies ● Rorts ● Organised Crime ● Serious Fraud ● Political Interference

*Weblink not available at stuff.co.nz
The following text in the print edition of today’s Sunday Star-Times (page A6) has been scanned, in the public interest. This post will be updated when a link appears.

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### Sunday Star-Times Sun, 11 Nov 2012
Pokie man stopped from rort inquiries
By Steve Kilgallon
A senior Internal Affairs investigator says he was prevented from probing pokie rorts by his own department because it did not have the confidence to prosecute major crimes.
Dave Bermingham, an investigator and analyst who left the department in August, said Internal Affairs was incompetent and should be stripped of its role investigating gaming machine fraud.
Bermingham’s claims will be discussed in Parliament, with the Greens’ Internal Affairs spokeswoman Denise Roche prepared to table questions about the department’s behaviour. “They had no appetite for the [gaming] industry and they don’t understand it,” said Bermingham, a former fraud squad policeman.
“There are very clever people committing frauds… and a government agency which takes little or no action and wants to treat it as regulation and compliance. When investigators identified serious breaches of the Gaming Act, they were unsupported and stifled and their investigations [were] watered down, or just, over time, vanished.”
Bermingham said pokie scams revealed in the Star-Times over the past five years were just the “tip of the iceberg: some pokie trusts have been allowed to get away with blatant theft and dishonesty”.
For two years from 2008, Bermingham compiled several investigation reports into a controversial pokie trust, The Trusts Charitable Foundation (TTCF), and recommended serious sanctions, and even criminal action, be taken.
The case was later taken off him, and either no action taken or minor penalties issued.
When the case was reopened this year following Star-Times stories, Bermingham wasn’t asked for help. Instead, he says: “A senior manager here made a statement to me that he had been told to make the thing go away.
“I suspected it was a semi-flippant comment, but as it transpires, that’s what they have done. I was the person who knew the most information about the whole thing, but they deliberately never talked to me about it.”
Former TTCF contractor Martin Legge, who first brought the TTCF story to light, said Bermingham’s revelations were “further proof that the investigation into The Trusts Community Foundation was a cover-up. Internal Affairs are being dictated to by pokie trusts and protecting their interests above those of the community.”
After he filed his “damning” reports into TTCF, Bermingham said he was flown almost daily to Wellington to discuss them. Then suddenly he was shut out. “I accept you can’t always lay charges, but there are other avenues that can be taken. But the appetite was not there to act.”
Bermingham said he became increasingly frustrated and accepted redundancy in a reshuffle.
“The department has some very clever people who know how to follow the money, and they get stopped and everyone becomes deflated and stops looking.”
He said constant lobbying by politicians in specific cases had also made DIA gun-shy. Questions asked of the department by Revenue Minister Peter Dunne around the TTCF case had helped kill it, he said. “The mere questioning seemed to cause the department to go gun-shy and shut things down. Management fear for their careers; they would rather take no action, make no decision so they are not criticised.”
Just before leaving Internal Affairs, Bermingham conducted a detailed study of where TTCF gave grants, and discovered a huge flow of money from North Island poker machines into South Island racing clubs, but was told not to progress to the next stage.
Internal Affairs boss Maarten Quivooy denied managers had been told to shut down the TTCF inquiry.
He said decisions not to prosecute were rigorously tested with Crown Law while the TTCF inquiry had been examined by the auditor-general.
But he said he understood Bermingham’s frustrations.
“If you look from the perspective of a frontline inspector, that can sometimes be their experience,” Quivooy said. “They do their investigation work to the best of their ability and, from their perspective, it can look like it has gone into a black hole. But it has had active and thorough scrutiny and consideration by senior management.
“We can do better how we communicate that to staff and how we provide feedback.”
Graeme Ramsey, chief executive of the Problem Gambling Foundation, said despite a long history of rorts, there had yet to be a prosecution of a gaming trust trustee.

Who is Maarten Quivooy? See comment.

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Sunday Star-Times:
29.4.12 Steve Kilgallon Case closed without call to whistleblower
22.4.12 Steve Kilgallon The inside man

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Related Posts:
26.10.12 Department of Internal Affairs (DIA) – CULPABLE #pokierorts
24.10.12 Bad press for ORFU -NZ Herald
3.10.12 DScene: Russell Garbutt seeks DIA file to Crown Law #PokieRorts
1.10.12 Apology requested from ORFU [email]
15.9.12 Martin Legge responds to NZ Herald news
27.8.12 DIA’s political cover-up of TTCF and ORFU rorts
22.8.12 Martin Legge releases emails to Dunedin community #ORFU
15.8.12 Keeping ORFU sweet [email]
12.8.12 DIA reshuffle: new investigation teams, money laundering, criticism
28.7.12 Pokie fraud: ODT fails to notice own backyard
25.7.12 Martin Legge backgrounds TTCF (pokie trust) and Portage and Waitakere Licensing Trusts #DIA
24.7.12 Mention in NZ Herald dispatches: TTCF and friends ORFU
15.7.12 Martin Legge responds to media stories on Murray Acklin, TTCF and DIA
26.6.12 Department of Internal Affairs, ORFU, Centre of Excellence for Amateur Sport, and TTCF
22.6.12 Connections: ORFU and local harness racing
22.6.12 ORFU board responsibility for black-tie dinner bill [emails]
5.6.12 The Gambling (Gambling Harm Reduction) Amendment Bill
4.6.12 Questions: ORFU and the Centre of Excellence for Amateur Sport
26.5.12 DIA media release
23.5.12 NZRU-appointed change manager talks
29.4.12 Department of Internal Affairs, the gambling authority
22.4.12 DIA, OAG, TTCF and Otago Rugby swim below the line

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Posted by Elizabeth Kerr

Dunedin Hotel, 41 Wharf Street (LUC 2012-212)

All submitters received a letter dated 2 November 2012 from Dunedin City Council informing them of the dates on which the Hearings Committee will consider the Betterways Advisory Ltd’s resource consent application for 41 Wharf Street, Dunedin.

The council hearings committee is Cr Colin Weatherall (chairman), Cr Andrew Noone and Cr Kate Wilson. Submissions will be heard in the Edinburgh Room, Municipal Chambers.

Hearing dates:
Monday 3 December 2012 – 9am to 5pm
Tuesday 4 December 2012 – 9am to 5pm
Wednesday 5 December 2012 – 10am to 7.30pm
Thursday 6 December 2012 – 9am to 5pm

And if required:
Monday 17 December 2012 – 9am to 5pm
Tuesday 18 December 2012 – 9am to 5pm
Wednesday 19 December 2012 – 9am to 5pm

It is anticipated the applicant will present for the first day and part of the second day. Submitters are likely to commence their presentations from 2pm on Tuesday 4 December.

Altogether, there were 508 public submissions. Not all submitters wish to be heard. That’s right, the applicant has about a day and a half to present substantively; submitters get 10 minutes each. Such is the democratic process.

The intention must be that if the Council grants consent – red carpet – then we take it to the Environment Court on appeal.

There has been no cost benefit analysis for the proposed hotel. Given the shortcomings of the site, neither the Applicant or the Dunedin City Council have declared the potential costs, including infrastructure services costs, of this project to ratepayers. There’s quite a lot the Council isn’t saying publicly; and quite a lot it’s saying, politically, behind closed doors to the applicant, we hear.

The Application: (DCC webpages)
● Current notified applications
● LUC-2012-212 (Betterways Advisory Limited) – all documents

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Published on May 13, 2012 by DunedinNZofficial

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Dunedin lawyer Steve Rodgers said he remained convinced the hotel would be a “game-changer” for Dunedin and was “98.2%” confident it would win approval at next month’s resource consent hearing.

### ODT Online Sat, 10 Nov 2012
Hotel project spokesman confident of go-ahead
By Chris Morris
The man acting as the public face for a proposed 28-storey waterfront hotel in Dunedin says the project remains “full steam ahead” despite a public outcry. However, Dunedin lawyer Steve Rodgers – the director of Betterways Advisory Ltd, the company fronting the development – would not rule out changes to the hotel’s design, but hoped a fight through the Environment Court could be avoided.
Read more

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Related Posts:
8.9.12 Waterfront Hotel #Dunedin (Applicant names?)
7.9.12 Waterfront hotel: DCC to notify resource consent application
16.5.12 Dunedin Hotel

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Posted by Elizabeth Kerr

New Zealand Urban Design Awards

“The importance of upfront investment in the public domain, whether by a public authority or private developer.”

### idealog.co.nz Fri, 9 Nov 2011 @ 9:24am
Auckland tops at brand new Urban Design Awards
By Design Daily team
Wynyard Quarter’s Jellicoe Precinct and the Auckland City Centre Masterplan have taken the top awards in the first-ever New Zealand Urban Design Awards, a new biennial programme that acknowledges the importance of high quality urban environments.

Jellicoe Precinct, Wynyard Quarter – Winner, Built Projects category

Wellington waterfront – Highly Commended, Built Projects category

[Images via Idealog]

Jury convenor, former New South Wales government architect Peter Mould, said they looked for projects “which established or reinforced urban initiatives and executed them with demonstrable design excellence”. “Urban design is concerned not so much with individual buildings, but with the building of a city. It’s about place making, and it’s also about the public realm.”

Mould said that if a trend emerged from the first Urban Design Awards, “it was the importance of upfront investment in the public domain, whether by a public authority or private developer. Such investment sets the agenda for excellence in the future”.

Waterfront Auckland’s Jellicoe Precinct, stage one of the development of Wynyard Quarter, was an exemplary case of agenda-setting urban design for which consultants Architectus and Taylor Cullity Leathlean and Wraight + Associates deserved congratulation as winner of the Built Projects category.

The New Zealand Urban Design Awards are supported by the New Zealand Institute of Architects, the Urban Design Forum, the New Zealand Planning Institute, the New Zealand Institute of Landscape Architects and the Property Council of New Zealand.

Joining Mould on the jury were planning consultant David Mead, landscape architect Sally Peake, deputy head of the University of Auckland’s School of Architecture and Planning, Lee Beattie, and property developer Patrick Fontein.
Read more + Images

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Posted by Elizabeth Kerr

Stadium deathwatch II

The results were yet to be analysed in any detail, but there appeared to be a mix of constructive and critical comments coming in.

### ODT Online Wed, 7 Nov 2012
Public responds to stadium use review
By Chris Morris
More than 400 people have had their say on the future use of Forsyth Barr Stadium as a deadline for public input approaches. The Dunedin City Council launched a review of the stadium earlier this year – when faced with a multimillion-dollar loss by the company running it – and last month called for suggestions from the community. Council policy analyst Tami Sargeant said when contacted 428 responses had been received by yesterday afternoon, days before Friday’s 5pm deadline. Most of the feedback had come from the council’s People’s Panel, members of which were sent questions about the best ways to reduce stadium costs, increase revenue and optimise community use.
Read more

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Related Post and Comments:
5.8.12 Stadium deathwatch

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Posted by Elizabeth Kerr

Afternoons with Jim Mora: The Panel today [DCC interest rate swaps]

### radionz.co.nz Monday 5 November 2012
Afternoons with Jim Mora
http://www.radionz.co.nz/national/programmes/afternoons

The flirtations of our local bodies with money mechanisms on money markets that may be getting ratepayers into schtuck.

16:35 The Panel with Garry Moore and Finlay MacDonald (Part 2)
Topics – Every schoolboy used to know that, at the height of the empire, almost a quarter of the atlas was coloured pink, showing the extent of British rule. An Otago University academic says Dunedin ratepayers should be very concerned about losses on interest and currency swap schemes that appear in the council’s annual report. Millionaire Kim Dotcom would be putting his money where other investors wouldn’t if he goes ahead with plans to relaunch Pacific Fibre, according to Prime Minister John Key. (24′42″)
Audio | Download: Ogg Vorbis MP3 | Embed

16:50 Jim Mora, Dr Robert Hamlin and guests discuss Auckland City Council and Dunedin City Council activities with respect to interest rate swaps (IRS). Together, the councils may have squandered up to $200 million of ratepayer funds. Is a royal commission of inquiry required? In Dunedin City Treasury’s case, interest swap rates and financial derivatives may be being used to ‘assist’ stadium financing, and much more. In the city council annual report the IRS activity goes unexplained, being recorded as (multi-million dollar) losses (see page 146).

****

The (NZ) Banking Ombudsman suggests some customers & their advisers don’t understand the product. [IRS and Derivatives]

http://en.wikipedia.org/wiki/Interest_rate_swap

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### stuff.co.nz Last updated 05:00 04/11/2012
Business
Banks ‘plundering society’ globally
By Rob Stock
Claims banks missold interest-rate swaps to businesses and local authorities have been making headlines around the world. Interest rate swaps are a derivative financial tool used by sophisticated businesses with skilled treasury functions to limit interest rate risk. But it is becoming clear that in places such as Britain, Italy and America, interest-rate swaps were sold by banks to organisations that did not understand the risks they were taking. In case after case, interest rate swaps often sold in 2007 and 2008 as “protection” against interest rates rising sharply have served mainly to protect bank profits by locking businesses and local bodies into high levels of interest ahead of those rates falling.
Read more

****

This article is from the May/June 2012 issue of Dollars & Sense magazine.

The Swap Crisis
We have your city. Pay up, or else!
Interest rate swap deals have allowed the big banks to hold local governments and agencies hostage for tens of millions of dollars.
By Darwin BondGraham
In 2002 a little-known but powerful state agency in California and Wall Street titans Morgan Stanley, Citigroup, and Ambac consummated one of the biggest deals to date involving a type of financial derivative called an “interest rate swap.” A year later the executive director of the Bay Area’s Metropolitan Transportation Commission, Steve Heminger, proudly described these historic deals to a visiting contingent of Atlanta policymakers as a model to be emulated. Swaps were opening up a brave new world in public finance by extending the MTC’s purchasing power by $200 million, making a previously impossible bridge construction schedule achievable in a shorter timeframe. The deal would also protect the MTC from future volatile swings in variable interest rates. To top it off, the banks would make a neat little profit too. Everybody was winning.
Then in 2008 it all came crashing down. The financial system’s near collapse, the federal government’s unprecedented bailouts, and global economic stagnation mean that the derivative products once touted as prudent hedges against uncertainty have instead become toxic assets, draining billions from the public sector.
Read more

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Posted by Elizabeth Kerr

Stadium: DCC caught in headlights

Blindsided?

The Otago Daily Times (1.11.12) states:
“Dunedin city councillors are pointing fingers after some were blindsided by a $3.2 million loss by the company running Forsyth Barr Stadium. Some councillors spoken to by the Otago Daily Times yesterday admitted they were unaware they had accepted reports detailing the loss at Monday’s council meeting. Other councillors were aware of the reports, but were still yet to read them properly.” ODT Link

Blissfully unaware, or deliberately avoiding and shielding knowledge of the fact, thereby keeping the public and media at arm’s length from the true state of council finances relating to the stadium project?

That is a question for all elected representatives at Dunedin City Council, the council’s chief executive, the executive management team (EMT), and the governance manager.

Sadly, the annual reports don’t tell the full story of the ‘stadium effect’ – that is, the figures that Dunedin renters and ratepayers will be facing, and unable to pay, when the whole system is called to ‘correct’.

Fire away, Dunedin public.

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It’s as if the newspaper editor has suffered a blunt contusion. Sees the problem then runs away to John Wilson Ocean Drive (closed from August 2006), and ends weakly, out of steam, with the hope that those in power “will turn their full attention to making our new stadium a profitable investment of which the city can be proud”, and would they please read the annual report[s].

### ODT Online Sat, 3 Nov 2012
Editorial: Council must keep eye on the ball
Just as it seemed the Dunedin City Council was determined to focus on a different attitude towards debt, revelations that a worse-than-expected $3.2 million loss by the company running the Forsyth Barr Stadium was not even discussed at this week’s full council meeting have put it back in the firing line and raised questions about its priorities. The loss – nearly $1 million greater than forecast – was recorded in Dunedin Venues Management Ltd’s (DVML) 2011-12 annual report, which was released a day later to this newspaper. But it had flown under the radar at the council meeting, with no mention of the reports on DVML or Dunedin Venues Ltd (DVL), which owns the stadium, on the meeting’s public agenda, and no indication those reports had been circulated publicly and to media – as required under the Local Government Official Information and Meetings Act – ahead of the meeting. The reasons for that are unclear and convoluted.
Read more

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From our Northland cuzzies, some clues for rabbit hunting…

Image: NZ Herald

### New Zealand Herald 5:30 AM Saturday Nov 3, 2012
Inside Kaipara’s ratepayers revolt
By Andrew Laxon
Many residents of a small coastal town are refusing to pay for a $58 million debt that has crippled their local council and left them with the bill.
The Mangawhai Ratepayers and Residents Association chairman Bruce Rogan has at least 500 local residents refusing to pay an estimated $1 million in rates this year because the Kaipara District Council secretly ran up an unsustainable $58 million debt building a sewerage treatment scheme for about 2000 people who own homes here.
Read more

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Dare we say, Dunedin, the amount currently owed by each city ratepayer well exceeds that owed by the good ratepayers of Mangawhai, on the Kaipara.
So, what now?

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Posted by Elizabeth Kerr

Stadium financials: Calvin Oaten on DVML, DVL and DCHL

### ODT Online Fri, 2 Nov 2012
Opinion
DCHL covering DVL and DVML losses
By Calvin Oaten
Stadium finances dismay, says the headline (ODT, 31.10.12). The story states Dunedin Venues Management Ltd (DVML) as posting a loss of $3.214 million. Mayor Dave Cull says “it is not sustainable”.

But let’s look at the combined performance of DVML and Dunedin Venues Ltd (DVL) and we see a fuller picture. Let’s face it, these two entities are joined at the hip and are no more than an arrangement of convenience, for the dispersion of liabilities attached to the stadium. DVML’s loss at $3.214 million is arrived at after receiving revenue of $6.093 million, offset by expenses of $6.395 million.

It then pays DVL $3.667 million rental for the use of the stadium. This is offset by receiving a (subvention) payment of $782,000 from Aurora. Net loss $3.214 million. But we then need to add the carried forward loss of $3.256 million from the previous period to disclose the consolidated loss at $6.470 million.

Turning now to DVL, we find the declared position is: Revenue $3.672 million, expenses $16.051 million for a loss of $12.379 million. This is offset by a (subvention) payment from Aurora of $7.292 million leaving a loss of $5.087 million.

This is offset by a tax credit of what could be $775,000 for a net loss of $4.312 million To this is added interest rate swap losses (a totally incomprehensible concept) of $8.579 million for a total consolidated loss of $12.891 million.

So combining the two scenarios we have a total consolidated loss attributable to the stadium of $19.361 million. This, Mr Cull, is really what is not sustainable.

Interestingly, nowhere in either set of accounts can one find any evidence of income derived from the much vaunted private funding. Why? Is it because as the PwC report says, it can only be treated as operational revenue, and therefore goes direct to the events promoters such as the ORFU?

Looks like it. They in turn simply pay – or not – a rental to DVML for the use of the stadium by event. This is what is expressed in DVML’s revenue statement. All this raises the question: what happens if DCHL is unable to produce those subvention payments?

It has already served notice that since July 1, 2012, it will no longer borrow to provide payments of $23.2 million to the DCC which consisted of, $10.450 million dividend, $5.25 million capital repayment of stadium debt, and subvention payments to DVL and DVML. As can be seen this amounts to $17.25 million offsetting the already considerable losses incurred.

There is no doubt but that the stadium will figure very largely in the city’s future funding difficulties, which are so manifest.
ODT Link

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Posted by Elizabeth Kerr

Stadium financials: JimmyJones v Peter Hutchison (DVML) on accounting method

### ODT Online Wed, 31 Oct 2012
Stadium finances dismay
By Chris Morris
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium’s finances are “not sustainable”, after confirmation the company running the venue lost nearly $1 million more than expected in its first year of operation. The result was contained in Dunedin Venues Management Ltd’s 2011-12 annual report, released to the Otago Daily Times yesterday, which showed the company lost $3.2 million in its first year. […]A copy of Dunedin Venues Ltd’s annual report was also released yesterday, and showed the company that owned the stadium – and received rent from DVML – recorded a $4.312 million loss for the same period.
Mr Hutchison cautioned against adding the two losses together, as they overlapped, and because DVL’s results were largely accounting losses – not cash – and expected. “It [DVL] is behaving exactly as it should do.”
Read more

More ‘fallout’ stories at the Otago Daily Times:
● Wed, 31 Oct 2012 – Report about stadium loss slips under radar
● Thu, 1 Nov 2012 – Councillors blindsided by DVML results
● Thu, 1 Nov 2012 – Stadium loss rates fears
● Fri, 2 Nov 2012 – Stadium rate ‘tax on being busy’

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The following comments appear at ODT Online, in reply:

DVL loss not as expected
Submitted by JimmyJones on Thu, 01/11/2012 – 2:56pm.

DVL and DVML director Peter Hutchison says that the size of DVML’s $4.3 million loss was as expected. This statement does not match with the official forecast in DVL’s Statement of Intent which predicted that the year’s result for 2012 would be $6.5 million (before the ratepayer subsidy). This latest result is a loss of $11.6 million (before ratepayer subsidy) – so this is much worse than expected.
The loss of $11.6 million is much bigger than the official $4.3 million loss because this doesn’t include the $7.3 million DCC subsidy. It is wrong to exclude the DCC subsidy when considering the overall effect on the finances of the DCC and the ratepayers. Both DVL and DVML are paid a subsidy that doesn’t show-up in their net profit/loss figures.

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Stadium losses add up
Submitted by JimmyJones on Thu, 01/11/2012 – 11:47pm.

Mr Hutchison, the director of the stadium owning company DVL, says that the losses of DVL and DVML can’t be added together because they overlap. This is misleading and seems to go against the basic principles of accounting. Each of the companies is a separate entity and they have separately audited accounts. To say that the losses overlap is to claim that one or both full year results are wrongly stated. As a director, Peter Hutchison did however vote that these accounts were true and correct; Their auditor has agreed with this. There is no overlap, and they can be added together.

Adding the two losses gives $3.2m + $4.3m = $7.5 million. The real loss is, however, a lot more than $7.5 million because this figure does not include a number of disclosed and undisclosed subsidies, paid either directly or indirectly by Dunedin’s renters and ratepayers. The DCC has so far actively avoided providing the total of all the ongoing losses and costs of their stadium.

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Big, real, ugly, stadium loss
Submitted by JimmyJones on Thu, 01/11/2012 – 11:57pm.

Mr Hutchison says that “DVL’s results were largely accounting losses – not cash – and expected”. In saying this he is implying that the year’s loss is mostly not a real loss. Our accounting system has evolved over a few thousand years to provide the most “real” measure of profit/loss. This is about the best we can do, and that means that both cash and non-cash items are included. If Mr Hutchison thinks he has a better way, he should write a book about it, but in the mean time he needs to stick to the standard NZIFRS method. His statement is in fact wrong, because most of DVL’s expenses are actually cash expenses and because the loss is a real, authentic, auditor certified loss. DVL’s finances are a sensitive area for the DCC, and Mr Hutchison should not be seen to be promoting any particular viewpoint.

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Posted by Elizabeth Kerr

Community halls of small-town New Zealand

Michele Frey and Sara Newman
Photographs John Maillard and John O’Malley

November 2012
RRP $45
Paperback, 260pp, 235 x 235mm Full Colour
ISBN 978-1-927145-37-1

Canterbury University Press
http://www.cup.canterbury.ac.nz/catalogue/saturday_night.shtml

Yeah, it’s great being out with the jokers
When the jokers are sparking and bright,
And its great giving cheek to the sheilas
Down the hall on a Saturday night …
Peter Cape, 1958

On a Saturday Night is a warm and colourful celebration of the strength and spirit of small towns all around New Zealand. From Whakapara in the north to Mossburn in the South, community halls have been the focal point of small towns for as long as the towns have been on the map.

These halls have hosted school classrooms, general elections, stag parties, birthday parties, film screenings, Rabbiters’ Balls, flag euchre evenings, farewells and welcome-home parties for servicemen from both world wars, memorial events for those who did not return, farm auctions, clearing sales, weddings, Christmas parties, Civil Defence teams, mayoral celebrations, church services …

Some halls have been demolished and rebuilt over the decades, other have been lovingly restored several times and are still going strong. Some halls have been transported on the backs of trucks to new locations as towns have grown and changed. Fires and floods have taken their toll in more than a few cases.

Michele Frey and Sara Newman visited these halls with photographers John Maillard (North Island) and John O’Malley (South Island) to talk to the locals and try to capture the essence of what each hall has meant – and means – to its community. In these stories and pictures they have recorded an aspect of New Zealand’s unique culture that seems to be passing into history.

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Michele Frey is a Strategic Planner (Natural Environment and Recreation) for Opus International Consultants Ltd in Napier. She has always had a strong affinity with the notion of community, and seized eagerly upon the idea of producing a book on small-town halls, with the opportunity it offered to gain insights into the dynamics of small New Zealand communities. Along the way she developed some lifelong friendships. This is Michele’s third book for Canterbury University Press.

Sara Newman grew up in a small town and knew all about the importance of community halls. She has had articles published in magazines in New Zealand and abroad, including Takahe and New Zealand Memories. While a member of the South Island Writers’ Group she won the Ngaio Marsh Trophy for fiction in 2009. Her work is included in several anthologies and her family history Living Between the Lines has been read on National Radio. She loved visiting the halls and meeting the people involved with them.

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### radionz.co.nz Friday 26 October 2012
Country Life
with Carol Stiles, Susan Murray, Cosmo Kentish-Barnes & Duncan Smith
http://www.radionz.co.nz/national/programmes/countrylife/20121026

21:18 On a Saturday Night
Sara Newman talks about a new book she has co-written with Michelle Frey about the community halls of small town New Zealand. (10′08″)
Audio | Download: Ogg Vorbis MP3 | Embed

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Posted by Elizabeth Kerr