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

### 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.

### ODT Online Wed, 21 Nov 2012
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

STANDARD & POOR’S Rating Services
Dunedin City Council

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

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.

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!!!!

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.

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

Posted by Elizabeth Kerr


Filed under Business, CST, DCC, DCHL, DVL, DVML, Economics, Media, Name, People, Politics, Project management, Property, Site, Stadiums, Town planning, Urban design

26 responses to “Cull COVERS UP COUNCIL #massage

    • Elizabeth

      ### ODT Online Fri, 23 Nov 2012
      Credit agency debt warning to council
      By Simon Hartley
      Increasing debt levels at the Dunedin City Council have sparked negative attention from international credit rating agency Standard & Poor’s. S&P yesterday issued a negative financial outlook revision on the Dunedin City Council, raising concerns over its ability to meet financial targets outlined in its recently completed long-term plan. The decision follows last week’s confirmation the Office of the Auditor-general is to investigate the council’s subsidiary Delta over its Central Otago land purchases in 2008 and 2009. There was a one-in-three chance of a downgrade within the next two years.
      Read more

      • Elizabeth

        Transcribed – RNZ News item:

        A credit ratings agency says if a serious conflict of interest is proved at the Dunedin City Council it could trigger a potentially costly downgrade of the city’s AA credit rating.

        The Auditor-General’s Office is investigating land purchases by the council-owned infrastructure services company Delta in Queenstown and near Wanaka.

        A Standard and Poor’s analyst Claire Curtin says if a conflict of interest is proved it could change the agency’s view of the standard of financial management across the entire council and trigger a downgrade. If the rating were to be cut the interest the council is paying on $600m of debt could rise.

        The Auditor-General’s investigation could take up to a year to complete.

        Radio New Zealand News – Audio
        News bulletin recorded at 11 am
        From Hourly News at 11:00 am on 23 Nov 2012 (5′00″)


        16.11.12 Investigation ‘storm in teacup’

        • Elizabeth

          ### Updated at 5:59 am today
          RNZ News

          Dunedin council on negative credit watch
          Dunedin Mayor Dave Cull says a downgrade of the outlook on the city’s large debt is a timely reminder it has to watch its spending.
          Standard & Poor’s said Dunedin City Council has good financial management, but relatively high debts and restricted ability to service debt. It confirmed the council and its treasury arm at the rating level of AA/A-1+, but said there was a one-in-three chance of it being downgraded in the next two years.
          Dunedin’s total debt is about $620 million and If there is a downgrade, it may face higher interest costs on that debt. But Mr Cull says the council is determined for that not to happen.
          The ratings agency said the negative outlook was because the council might not achieve its financial targets and because of an investigation recently begun by the Auditor-General into property purchases by Delta, a council subsidiary.

          Listen to more on Checkpoint:

        • Sorry, I’m being random here.

          I backtracked to this [Harland era] post, a DCC media release:

          10.12.09 Dunedin City Council AA- Stable
          “It was further noted that if the Dunedin City Council did reach its forecast consolidated net-debt position of around 140% of operating revenue, it would likely put the rating under pressure.
          In discussing the stable rating outlook for Dunedin, the Agency expects the Council will maintain its strong financial position, while the increasing debt burden ensures that there is little upside to Dunedin’s rating.”

          Then to my old comment following a Radio NZ News item:

          [full transcription – Hourly News at 11:00 am on 23 Nov 2012 (5′00″)]
          “A credit ratings agency says if a serious conflict of interest is proved at the Dunedin City Council it could trigger a potentially costly downgrade of the city’s AA credit rating.
          The Auditor-General’s Office is investigating land purchases by the council-owned infrastructure services company Delta in Queenstown and near Wanaka.
          A Standard and Poor’s analyst Claire Curtin says if a conflict of interest is proved it could change the agency’s view of the standard of financial management across the entire council and trigger a downgrade. If the rating were to be cut the interest the council is paying on $600m of debt could rise.
          The Auditor-General’s investigation could take up to a year to complete.”

          The reason I did so was because of this latest handsome news:

          ### ODT Online Fri, 17 May 2013
          Small banks put on notice
          Global credit rating agency Standard & Poor’s has put eight local banks on notice over the rising risk of a housing bubble bursting in New Zealand.
          Smaller lenders Cooperative Bank, Heartland Bank, TSB Bank, Credit Union Baywide, Credit Union South, First Credit Union, New Zealand Association of Credit Unions and Police and Families Credit Union have all had their outlooks dropped to negative from stable, giving them a one-in-two chance of being downgraded in the next two years if the country’s economy deteriorates, S&P said in a statement.

          [Bill] English on Radio New Zealand this morning: “What we’ve learned from the global financial crisis is that in countries like Spain and the US, where they’ve had housing bubbles, is that there is widespread destruction when those bubbles burst, and Ireland has been the same.

          The outlook for bigger lenders, including ANZ Bank New Zealand, ASB Bank, Bank of New Zealand, Westpac New Zealand, Bank of India (New Zealand), Rabobank New Zealand and Kiwibank, was left unchanged due to expected support from their parents.
          Read more

          And then you think . . . if DCC is already overextended and exposed to the derivatives market [!!], there’s a housing bubble [??], what then for your local community [Dunedin] when everything else is going to pus . . .

  1. Hype O'Thermia

    That phrase “serious conflict of interest” jumped out of the radio and tickled me in both ears. There will be some people around town who perceive it more like a baseball bat, oh dear how sad.

    • Elizabeth

      BUT, Hype O’Thermia, think how fortunate it is the OAG investigation gets to spin out a year! Dave and the other turkeys can be re-elected before we know the results! That’s a heck of a coincidence. Tui.

  2. Anonymous

    Reading that “Credit agency debt warning to council” story and had to take a look back at what Simon Hartley had wrote before. It seemed a little… dull? You know, what about that debt, eh? Like WHERE did that come from? If the citizens had just shut up then all this ‘negative attention’ wouldn’t have the sort of consequences hinted at throughout it. Once again I get the feeling the paper passes the parcel it was all just an accidental economic blimp, nothing to do with a bunch of self-important Stakeholders and their self-serving Stadium Councillors, nothing to do with the current crop of Professional Rugby Councillors.

    Nice photo of Cull though. Haven’t seen that one before. Got a bit of the looking past the present, thinking of the future feel about it. The Spooks must have engaged their best photo freak for that make over.

    • Elizabeth

      Yeah, Simon played ultra safe given the local boys are implicated (?)… regurgitated the S&P media release, added a couple of ad lib gormless comments by interview. Hope he doesn’t get paid too much for the pleasure of No Hard Hitting investigative Work.

      How much longer can ODT survive if it’s not prepared to lead the main stories of the DCC financial demise as will pile up ahead, examining WHY WHO The Collapse without the Spooks throwing softsoap to blind us. I thought ODT needed media prominence! circulation! revenue!

      Maybe I’ve got it all wrong, maybe ODT has other ways of making money when the greater readership completely tires of pages and pages of inane broadsheet advertising offered as ‘news’.

  3. Martin Legge

    Fantastic, the OAG are investigating but it will take a year to complete. Mayor Dave Cull says the investigation is a storm in the tea cup which means he probably knows the outcome.

    The expectation of the rolling of heads and resignations just doesn’t happen in the world of politicians, bureaucrats and white collar criminals. Contrast this with how quickly Government forces swooped on the Dunedin mongrel mob for misuse of $20k following public outrage of Politicians and you’ll get my drift – two standards of law and order alive and well in NZ!!!

    • Elizabeth

      Martin, it’s called CERTAINTY. No-one, not anything, should rob the Dunedin mafia of white collar economic continuity.

      As Mr Faulty would say: Bastards!

  4. Calvin Oaten

    Hey, I see Dave Cull is calling an extraordinary meeting next week to consider a possible loan guarantee. The existing loans are all covered and protected by hedge deals and interest rate swaps, (which I simply don’t understand as he told me) so what can this possibly be about? A new loan perhaps which is for some nefarious reason, like covering for the fact that DCHL has said their tea pot is empty. But then in his ‘state of the nation’ address he definitely said he was going to cut down on expenditure, except of course, essential services. Stadium and highway 88 come to mind, and of course we must complete the Town Hall/ Conference Centre and the OSM, which are all obviously dragging on with extras piling up. If the council had any “balls” it would tell him no new loans, no guarantees, full stop. Chances? Snowball in Hell?

    • Elizabeth

      Dunedin City Council
      27 November 2012 – Extraordinary Meeting

      Agenda – Council – 27/11/2012 (PDF, 37.4 KB)

      DCC Link

      [from the Agenda]

      MEMBERSHIP: Mayor Dave Cull, Councillors Chris Staynes (Deputy Mayor), Bill Acklin, John Bezett, Syd Brown, Fliss Butcher, Neil Collins, Paul Hudson, Jinty MacTavish, Andrew Noone, Teresa Stevenson, Richard Thomson, Lee Vandervis, Colin Weatherall and Kate Wilson

      IN ATTENDANCE: Paul Orders (Chief Executive), Athol Stephens (General Manager Finance and Resources), Tony Avery (General Manager Operations), Sue Bidrose (General Manager City Strategy and Development), Sandy Graham (Manager Governance), Maree Clarke (Financial Controller), David Yates (Senior Financial Accountant) and Pam Jordan (Governance Support Officer)

      CHAIR: Mayor Dave Cull

      Item 2 (includes) Resolution to exclude the public
      Item 3 Loan Guarantee

    • Elizabeth

      Interest rate swaps are not an appropriate product for most farmers, Rabobank NZ’s chief executive tells Straight Furrow’s Jamie Ball.

      ### Last updated 05:00 25/11/2012
      CEO breaking ranks
      By Jamie Ball
      Interest rate swaps were not a suitable product to promote to rural banking customers, according to the chief executive of Rabobank New Zealand. “We were certainly aware that other banks were offering swaps to farmers at the time, but we took the view that our main rural products allowed farmers to manage their interest rate risk equally as well as a swap, without some of the downsides,” Ben Russell says.

      In view of the unceasing allegations surfacing about the mis-selling of swaps, does Russell believe that a full-scale inquiry is now justified? “All I’d say is that banks need to be very careful about the products they promote to any customer group,” said Russell. “I think there is a real obligation on bankers, or anyone who is promoting financial products to any person, to understand the products in full and to explain it very clearly to the client. That’s a non-negotiable part of being a banker in Rabobank’s view.”

      Given the estimated hundreds of millions of dollars the banking sector harvested from marketing swaps between 2006 and 2009, has Rabobank ever regretted not selling more swaps? “No, I’m delighted we didn’t sell swaps to people who didn’t understand them. I don’t regret any of the swap loans which we did sell, which you could count on one hand. We haven’t had a single complaint about how we handled those, but I’m pleased that we stuck with the rural products which have been designed and customised for our rural market.
      Read more

  5. Anonymous

    Sorry Calvin, it appears you might not understand what Dave Cull means on this matter too. Expenditure means paper clips, pens and only two trips to a café per day on the Ratepayer Credit Card. It is unlikely to include stadiums, the wants of the professional rugby bludgers and anything demanded by a Stakeholder. It’s nice to hope though.

  6. Calvin Oaten

    Anon; I am not sure you are right. I think this could be an emergency of ‘collateral’. Put it this way, the DCHL/DCC Group has on issue bonds as part of its total borrowings. Now bonds are rated according to the integrity of the collateral backing them. If the backing is eroded by a downgrading by the rating agencies ie Standard & Poor’s then the integrity of those bonds would be impaired, in a word the collateral drops. Now the backers of those bonds will want some form of reassurance to maintain their investment value. This could well be achieved by demanding, and accepting of guarantees attached to each of those bonds by the bond holders. This of course is the ratepayer. Now of course, we could refuse to meet these guarantee requirements, but that would immediately awaken the interest of the S & P people and an instant uptick in interest rates would result. No need to explain what that would do. The hedges and IRS’s would be thrown immediately into a very unfavourable balance as far as we are concerned. In fact, failure to make these guarantees could result in game, set and match. With the last one out to turn off the lights. Watch this space.

  7. Russell Garbutt

    Recently a number of local Councils have been going through this nonsense of guaranteeing loans. Of note in recent times has been the Tarras Water Scheme. While I haven’t looked at this in detail, from what I’ve seen it is a scheme to supply water to a number of farmers – probably wanting to do dairy conversions – and very little else. But the CODC and the ORC seem hell-bent on supplying these guarantees which means of course the ratepayers are holding any debts. Is it likely that there is some mad-cap scheme that the Council is wanting to get behind? Maybe the purchaser of Carisbrook who seems to have gone away for a while needs a loan guarantee, or how about the builder of the 28-storey edifice?

  8. Hype O'Thermia

    I bet they tossed a coin to pick which of those Items would be No 2 and which would be No 3.

    Being, like, all for transparency ‘n’ stuff.

  9. Anonymous

    There’s so much to guilt in that place it’s only a matter of time before this Mayor or one of his Stadium Councillors succumb to the paranoia of someone planting a listening device, lip reading from the door or hijacking Acklin’s laptop for something more entertaining than viewing his “miss you sweetie” messages.

    • Elizabeth

      I thought to pull my listening devices from various locations at City Hall since the witch hunts began. But council can ill afford the loss of honest and unassuming people working inside (your underground) to bring corruption to the surface.

  10. Anonymous

    {Comment moved to relevant thread. -Eds}

  11. Anonymous

    I have posted before that it would be trivially easy to plant a listening device within Chambers and retrieve it afterwards so as to record the discussion of items with the public excluded. In fact, it would surprise me that this has not already been done.

  12. Far more worried about item 2 than item 3.
    Item 2 just shows what a pack of under handed w…..s we have in office. The same ones that can’t be trusted. At all.

    Man up you skiving pack of lying thieves and tell us what’s really going on. What are you lot hiding THIS time???

  13. Anonymous

    Two interesting opinion pieces in today’s D Scene by Dunedin City Council watchdog Calvin Oaten and Cr Lee Vandervis.

    ### D Scene p9 5 Dec 2012
    Our debts won’t go away
    Desperate move to save situation makes us poorer
    By Calvin Oaten

    ### D Scene p9 5 Dec 2012
    Debt-laden council needs to change tack
    By Lee Vandervis

    Opposite is National clone Michael Woodlouse. Full of political bluster and little else. You may feel it fitting under current circumstances to deliver your steaming bags of dog poo to his office and few would deny you that thought. The big grinning image of himself always inspires such creative thoughts when waiting at the traffic light.

  14. Hype O'Thermia

    The Woodlouse did a great job of managing a private hospital. As a politician he has turned out to be a sycophantic waste of votes – party votes, alas, so there’s not a lot we can do about him. Apart from, as the sagacious Anonymous suggests, creative thoughts refined till such time as they can be put into action.

  15. Calvin Oaten

    Want to know what is wrong with our present ‘social model’? Just read today’s ODT opinion page. Start with Joe Bennett’s column, then Peter Lyons’ followed by Jim Sullivan’s. They say it all. Oh, and have a look at Peter Attwooll’s letter.

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