Stadium: Horwath report to DCC (February 2007)

JimmyJones recently referred to the Horwath HTL Financial Feasibility Study, February 2007 (paragraph 2.4) saying that it shows Peter Chin and Jim Harland knew that their stadium was unaffordable, but they went ahead anyway, demonstrating their reckless decision-making:

“Preliminary consultation with the Mayor and CEO of Dunedin City Council indicated that, if funding is not an issue, they personally support the Trust’s vision for a new Stadium in Dunedin. However, they both noted that there is uncertainty, at this stage in the process, as Dunedin City Council has a significant number of projects before it and will need to review it’s (sic) priorities before committing funding for the stadium.”

You can download the report from the DCC website:

Horwath Report (PDF, 447.3 KB)
Financial feasibility and Economic Impact Assessment report for the New Carisbrook Stadium. (February 2007)

DCC has blacked out portions of the text. See below.

In the blacked out appendices of the Horwath Report it states that a leading real estate agency valued Carisbrook at $3 million.

When this was forwarded to the ODT they initially stated that there was nothing newsworthy in the document. It took much pressure to get them to publish the little they did.

A university lecturer said the blacked out portions of the report could simply be copied and pasted into a new document – the DCC had forgotten to put on the lock key. The same lecturer opined that what was happening was criminal!

Horwath HTL Restored Portions of Appendix 1 Final 17May2007
(DOC, 217 KB)

Posted by Elizabeth Kerr

16 Comments

Filed under Business, DCC, Economics, Media, Politics, Project management, Property, Site, Sport, Stadiums

16 responses to “Stadium: Horwath report to DCC (February 2007)

  1. Anonymous

    That valuation of Carisbrook matches neither the figure given by ORFU in its submission nor the sale price. But there’s no penalty for lying in a submission.

  2. Calvin Oaten

    The value of Carisbrook had nothing whatsoever to do with the $7 million price paid. It was simply the figure that Jim Harland came up with to bail out the ORFU. He was led to believe that the ORFU was in ‘hock’ for around $2.4m to the DCC and $3.6m to the BNZ. A total of $6m. He then decided that $7m would get the ORFU off the hook, leaving it with a cash surplus of around $1m, so he prompted a ‘tame’ valuer to come up with the appropriate value to justify the price of $7m.

    How do I know that? In a letter to the ODT 12/6/09 I asked Jim Harland a series of questions:

    1. Why did the DCC buy Carisbrook? A. To assist the ORFU as anchor tenant in the new stadium and to secure a piece of industrial land for the future of the city.

    2. What price did the DCC pay? A. This information is confidential until negotiations have been concluded.

    3. Did the price agreed take into consideration the $2 million odd debt that the ORFU owes the DCC? A. No response.

    4. Was the purchase price factored in as part of the budgeted $198m cost of the Awatea St stadium? If not, why not? A. No. The council’s concern is to ensure the ORFU is in a viable position looking into the future.

    5. What use does the DCC see for the purchase and what costs are budgeted for in order to demolish existing improvements, thus making way for reuse or sale of the site? A. No decisions have been made on the future of Carisbrook. The modeling prior to purchase took into account likely demolition costs.

    6. Did the purchase include the ORFU’s other properties on Burns St and parking areas on Neville St. A. Yes.

    So, there we have it, but in the end Harland was the ‘dupe’ because we now know that the ORFU had very considerably more debts than were disclosed. They have never become a signed up viable tenant. Harland, with a half an ounce of brain would have found that out before committing, but he was so ‘besotted’ with the desire to become part of the “establishment” that all of what little sense he possessed flew out the window. Aided and abetted by those three other delinquent assholes, Brown, Chin and Guest. They collectively brainwashed and bullied the rest of the ‘nincompoops’ and look what we have.

  3. Robert Hamlin

    Clarification – Said lecturer was not me.

  4. Walrus

    There must be some way that those elected councilors & staff,who knew all this information was based on lies, but allowed it to sold to the public without revealing the truth, can be held to account. Is there anybody out there who could advise, where & how this can be done.

  5. Hype O'Thermia

    Walrus, I think the answer is “As if!”
    In other sectors of society when people are ripped off and the official channels for getting it sorted out, they resort to paying some cash and bourbon to send some large gentlemen around to “explain the situation” using actions where spoken and written language has failed. This is not something I advise in this situation, I merely comment on how when correct process fails, “incorrect” process flourishes.

  6. Whippet

    Major News Release. The Aussie doping scandal is reported to have links with Dunedin councillors. They were convinced by a consultant at a cost of $2 million, during the decision making time for the stadium, that to take it would give them more muscle to get the stadium project off the ground. They were asked to give it much thought while they played in the sandpit drawing lines in the sand.

  7. Robert Hamlin

    The problem comes back to the registered valuer – if one was actually involved in this $6 million transaction. A Barbary Ape can estimate a real estate value to within 20% in a stable market as we have at present, until registered valuers can be held legally liable for valuations provided as a professional service for remuneration that are say 20% ‘off’ from realisable value at the time of valuation, then doubtful valuations will continue to be issued – There is simply no penalty that adequately offsets the potential benefits if these ‘off’ valuations are subsequently used as a basis for transactions with third parties. I demonstrated in an earlier post on this website how money can be extracted from finance companies using seriously ‘off’ real estate valuations.

    If this system of professional liability was applied to registered valuers, then, under such a system, if the DCC did indeed acquire a registered valuation of $6 million for Carisbrook, when its realisable value with reasonable marketing effort at the time was $3 million, then the bill to be presented to the registered valuer concerned (in person, not to a company – too easy simply to go belly up and rehang one’s plate the next day under a new name) can be calculated as follows:

    Registered valuation presented = $6,000,000

    Minus Error allowance of 20% = $4,800,000

    Realised value
    with reasonable marketing = $3,000,000

    Registered valuer’s liability = $1,800,000

    While this will not recover all the money that was transferred from the DCC over and above the realisable value of this asset on the basis of this purported registered valuation of $6 million (which document has yet to be seen or atttibuted to any registered valuer I may note), it may well serve to curb moments of excessive optimism within this particular community, and consequent financial mishaps to any unsuspecting third parties who may happen along.

  8. JimmyJones

    Here is another part of the Horwath Report that demonstrates (apparent) collusion between Mayor Chin, Jim Harland and others, to produce a marketing plan to influence the DCC and ORC councillors (the ones who weren’t in the club) and why the University had to be involved. This is also from paragraph 2.4 and shows the result of the apparent marketing plan:

    “The CEO of Dunedin City Council emphasised that to maximise the Council’s contribution it will be important that:
    1. The Stadium is perceived at a community level to be multi-purpose and cater for more than rugby
    2. The University is a partner in the development to demonstrate the communitywide benefits of the project
    3. The Stadium is governed by an independent Trust with Trustees potentially appointed by an Electoral College.

    A key interest of the Otago Regional Council is that the Stadium can be demonstrated to have regional level benefits, rather than simply Dunedin City benefits.”

    We don’t know when this discussion happened but the report was dated February 2007, which was before the final decision to proceed with the project (February 2009, I think). The key phrase is – “to maximise the Council’s contribution it will be important that: ~”. The implication here is that the council’s contribution will be the result of a council vote and maximising that contribution would require that the councillors would need to be persuaded that items 1, 2 & 3 were true. Most of this plan should be familiar to all of us because we the people were also exposed to the same spin-doctoring.

    This seems to me to be very dishonourable of Jim Harland and Peter Chin to wilfully corrupt the voting of the councilors with spin-doctoring and lies in such an organized way. Even today the spin-doctoring continues. Some would call it corruption.

  9. Maurice Prendergast

    While on the subject of dodgy/creative valuations (constructed to fit the plot) cast your minds back to the feasibility report published on behalf of the Stadium zealots by Horwath HTL in February 2007 where Councillors (which included me) were asked to ‘buy into’ a table of costings that revealed costs and revenue that gave a bottom line stadium project cost of $180M (not a penny more remember). But a critical line item in that table was a ‘credit entry’ showing $3M revenue from the sale of Carisbrook.

    When questioned, it was disclosed that the ORFU would be gifting Carisbrook to the City in return for preferential tenancy rights. “But” said I, and other dissenters, “ORFU is facing insolvency and the moment we adopt their asset we shall also adopt their liabilities”. Those liabilities were (to our knowledge) an unpaid debt of $2M to DCC, some $4M to a trading bank; plus demolition costs to prepare Carisbrook for redevelopment – a probable total liability of around $7M.

    Of course we dissenters were quickly ’rounded on’ by the presenters and told that it came as no surprise that there would be pockets of ‘negative people’ – a minority that had a limited grasp of commerce and implied comments were made that the majority of the audience were sufficiently enlightened to embrace the proposal in the interests of the City’s salvation.

    This was the Trust’s ‘modus operandi’ throughout this shabby exercise. Rather than admit to glaring errors/omissions, those raising the issues (like where’s the Valuation to support this $3M credit entry) were confronted by hectoring, marginalising and dismissive comments – the convenient reaction being to label anyone who expressed doubt as a negative ‘traitor from within’.

    Not only was there a total default by ORFU (and acquiesced by DCC) by reneging on the ‘gifting of Carisbrook’ proposal, but (following my departure) the ‘curiously ballpark’ figure of $7M that we the dissidents had calculated would be the ratepayer cost of getting into bed with the ORFU; suddenly becomes the precise ‘valuation based’ $7M that is disclosed as the DCC bailout of ORFU. The suspicion that this figure had nothing to do with a registered market valuation, but had in fact been tailored to fit ORFU’s liabilities is heightened by the fact that the $3M ‘sale revenue’ of Carisbrook that was budgeted as a credit – that held the stadium project cost to $180M – was claimed to have been also based on a registered valuation.

    So if we have any doubts as to whether the $7M price tag was tailored to fit the ORFU liabilities, please consider this: A property valued @ $3M prior to the 2007/09 collapse of property values suddenly assumes a (claimed) value of $7M amidst that collapse..

    Yeah right! There are also fairies at the bottom of the garden; and my arse is a fire truck!

    The final insult to us all is that a $3M credit that was an integral part of holding the project cost to $188M was apparently arbitrarily removed from the budget. Add to this loss the $7M ratepayer bailout of ORFU’s liabilities and we the ratepayers were rorted to the tune of $10M. And why was this possible? They could not have done it without the complicit behaviour of that untouchable/ unaccountable valuation industry. Or are the valuers the victims here? Has anyone ever sighted either of these valuations?

  10. Russell Garbutt

    I don’t think that anyone has seen it – although the late Cr Walls accused anyone that doubted its existence of conspirators or worse – remember, we all had opinions but he had the facts?

    I’d say this.

    Enough exists to suspect those involved of what the late Justice Mahon found when investigating Air NZ in the Erebus disaster. Wouldn’t it be nice if Chin, Harland and the stadium Councillors were to front up publicly and try and deny what was, as it turned out, an entirely shonky deal designed to benefit only the ORFU? Or will they proffer up the valuer for public scrutiny?

  11. Hype O'Thermia

    Russell, “an entirely shonky deal designed to benefit only the ORFU” leaves out those who profited from [? valuation again] sale of land, and assorted paid “work” [M Farry, a raft of new boards’ members] the decision that we MUST have the stadium.

  12. Great efforts today from All contributors at What if? – much appreciated, as always!

  13. amanda

    And how very quiet the stadium nincompoops are around Thomson’s big attempt to whitewash the stadium fiscal disaster; Thomson does not dare mention the seven incompetents sitting around council now who forced the city to take on their incompetent ‘fiscal business plan’. The silence from Crs Hudson, Noone, Bezett, Brown, Cr “glass half full’ Collins, Weatherall and Aklin is not surprising. The cowardly custards are all hiding behind Thomson hoping that he gets in the firing line and everybody forgets the ‘secret seven’ who are the real power on the council and are culpable for the city’s sorry financial mess. A fascinating little play of power, shove Thomson to the front and keep the real muppets nice and safe. These seven hold the majority on council now, thus they hold the power.

    • I’m still waiting for the Council to admit Thomson was not delivering ‘their’ maths in his ODT opinion piece. This could take a while. A case of any maths can suffice? (so long as it doesn’t add up)

      One catch, the action around the SH88 realignment.

  14. Anonymous

    Related note – the idiots who provide documents with text blocked (‘blacked out’) have just achieved a new, dangerous level of idiocy…

    One document, an affidavit supporting a High Court application for search, seizure and surveillance warrants, records the details of an informant considered particularly reliable because of his role in an earlier case that led to the conviction of a senior gang member for violent crimes. Those details are blacked out in the pdf file the police provided, but text under the black screen placed over it is revealed by the simple process of copying the file into another document.

    … and if that’s not bad enough…

    Police have now applied to the Invercargill District Court for an urgent order that the faulty files be handed back and a tentative hearing time has been set for tomorrow morning.

    … it’s all a bit late by then.

    This is a horror.

    http://www.stuff.co.nz/national/crime/8331505/Police-blunder-unmasks-secret-files

  15. Peter

    We do things differently here in Dunedin. We move on and not relitigate the past.

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