Comment received from Mike
Submitted on 2014/05/11 at 12:42 pm
Now is a great time to remind people of section 63 the Local Government Act which reads:
Restriction on lending to council-controlled trading organisation
A local authority must not lend money, or provide any other financial accommodation, to a council-controlled trading organisation on terms and conditions that are more favourable to the council-controlled trading organisation than those that would apply if the local authority were (without charging any rate or rate revenue as security) borrowing the money or obtaining the financial accommodation.
http://www.legislation.govt.nz/act/public/2002/0084/latest/DLM171886.html
Which as I read it means that the council can’t fund DVML in a more advantageous way than it would receive itself from its own bankers – my reading of this is that just bailing DVML because it’s losing money would be illegal, they have to loan them money at a comparative rate to what they would get from the bank.
It’s an obvious target for a ratepayer’s injunction …..
The reason for this law is pretty obvious, the government wanted CCOs to compete with private enterprise on a level playing field – if DVML wants to rent out space it shouldn’t be able to undercut a competing landlord who can’t tap the ratepayers’ pockets to charge a rent below cost.
[ends]
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Dunedin City Council – Media Release 9 May 2014
Extra Funds Proposed for Stadium Debt Repayment
The Dunedin City Council will consider using savings to repay more debt associated with the Forsyth Barr Stadium. The Council will next week consider approving a one-off payment of $2.271 million to help balance the Forsyth Barr Stadium accounts. Of that, $1.77 million would be used to repay DVML debt, with the balance to fund a cash shortfall. The payment would be funded from DCC savings made in the current financial year. DCC Group Chief Financial Officer Grant McKenzie says, “A one-off payment to reduce debt further would be good for all parties and would clearly respond to community demand for the DCC to reduce its overall debt level.” Read more
█ Download the Forsyth Barr Stadium 2014/15 Budget Report (PDF, 200KB)
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Media Stories:
9.5.14 ODT Stadium debt reduction to be considered
9.5.14 Stuff (Fairfax News) Stadium could cost Dunedin ratepayers millions
10.5.14 ODT Stadium payment may rise
Related Post and Comments:
9.5.14 DCC Draft Annual Plan 2014/15 Submission by Bev Butler
10.5.15 (via comment) ODT In Brief: Stadium review sought
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Posted by Elizabeth Kerr
What if? Dunedin... 