Tag Archives: Debt servicing costs

Reminder to DVML | Annual cost for Stadium stings renters ratepayers $25M

16.12.15 ODT: Concerts a $20m bonus
International promoters are eyeing Dunedin for regular sell-out concerts after Forsyth Barr Stadium delivered strong ticket sales and a nearly $20 million boost to the city’s economy […] DVML chief executive Terry Davies said the results showed the stadium was delivering on “two key drivers” – delivering economic benefits and a boost to the city’s pride.
http://www.odt.co.nz/news/dunedin/367093/concerts-20m-bonus

Comment at ODT Online:

Stadium economic dis-benefit
Submitted by JimmyJones on Mon, 21/12/2015 – 8:15pm.

DVML claims an economic benefit to Dunedin of $19.7 million for the concerts held this year. Economic benefit figures are notoriously exaggerated, especially when they are provided by someone whose reputation is at stake.

Anyway, it is misleading to claim a $20 million boost to the Dunedin economy without mentioning the annual $25 million (aprox.) cost to renters and ratepayers to fund the stadium. This is a net drain on the local economy and something Mr Davies and Mayor Cull should be ashamed of.

Also, almost none of the citizens forced to pay for this financial disaster receive any financial benefit from this so-called economic benefit – this is a wealth transfer, with a few businesses benefiting greatly at the expense of all the citizens of the city – the many suffer, to benefit the few. On the whole the stadium continues to be a millstone around the neck of Dunedin’s economy.

[ends]

Posted by Elizabeth Kerr

projectimagestreamstadium2-ashxForsyth_Barr_Stadium_ ETFE_Roof_5 of 6

*Images: fubar stadium, Dunedin

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Stadium costs, read uncapped multimillion-dollar LOSSES

Forsyth Barr Stadium critic Russell Garbutt, of Clyde, is not surprised by reports of looming stadium losses.

### ODT Online Wed, 26 Feb 2014
Opinion
Stadium costs predictable, so why the surprise now?
By Russell Garbutt
The ongoing revelations on stadium losses detailed today (ODT, 21.2.14) come as no surprise to anyone who has closely followed this debacle from when the Otago Rugby Football Union first gathered the Carisbrook working party together until now, when a succession of different managers, directors and councillors are all realising that what was promised is as chalk is to cheese.
While not directly specified in the article, the turnaround of an expected $10,000 profit to a $1,400,000 loss in 2014-15 is in the operational budget, and it seems Sir John Hansen, chairman of DVML, is putting most of the blame for this truly stupendous reversal of fortunes down to costs of running the stadium.

While ratepayers continue to face annual injections of over $9 million into the stadium, this is by no means the real figure.

The ”realities” of the real costs of running the stadium are now being recognised, it seems. But let us all just remember a few things that occurred when the stadium was being proposed and then built.
Read more

Related Posts and Comments:
11.2.14 Stadium: ‘Business case for DVML temporary seating purchase’
24.1.14 Stadium: It came to pass . . .
20.12.13 DVML: No harassment policy or complaints procedure, really?
3.12.13 DVML issues and rankles [Burden’s reply]
30.11.13 DVML in disarray
18.11.13 DVML: Burden heads to Christchurch #EntirelyPredictable
12.10.13 DVML works media/DCC to spend more ratepayer money
4.10.13 DVML . . . | ‘Make the stadium work’ losses continue
20.8.13 DVML foists invoices on DCC
20.6.13 Stadium: DVML, DVL miserable losers! #grandtheftdebt

For more, enter *dvml* or *stadium* into the search box at right.

Posted by Elizabeth Kerr

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DCC Draft Annual Plan 2013/14 for consultation #RIOTmaterial

Email received from Lee Vandervis this evening.

My overview regarding the Annual Plan that has gone out for consultation today is that little has changed.

Rates rises continue to be disguised, first by getting DCHL to borrow up to $23 million on our account, continuing to take more than policy allows from the Waipori Fund [proposed relaxing Waipori rules to justify], continued significant underspending on drains, and now buying $3 million in paid-up share capital of DVML – yet another multi-million dollar gift to bail out overspent Stadium operations.

The official result – the long heralded 4% rates rise.

I believe the real rates rise to be somewhere between 25% and 30%, as the DCC continues to amass all kinds of liabilities and debt that will have to be paid for in the future. CEO Paul Orders has made real gains finding significant DCC staff efficiencies, but most are simply going to bail out Stadium operational inefficiencies.

Stadium annual drains on the ratepayer now include:
● $1,666,000 rates subsidy via a ‘Stadium Differential’ [LTP 2013/14 – 2021/22 p8]
● $750,000 annual ‘Stadium Community Access’ fund
● $725,000 ‘Stadium Capital Repayment’ fund for each of the next 4 years
● Annual $400,000 ‘Stadium Event Attraction’ fund.

The Dunedin City Council is now going to buy the events that the Stadium was supposed to attract by itself. These further Stadium subsidies will only prolong the currently unaffordable wasteful Stadium operations, and entrench the directorships, fat contracts, and rugby cronyism that plague current Stadium costs.

If anyone can think of any other type of ‘fund’ that might possibly go to the Stadium please don’t tell the DCC or we will shortly be paying that annually too.

From an email I sent to senior staff and the Mayor last Monday:
“I have been uncomfortable with the timing and presentation advantages enjoyed by DVML in being perfectly positioned to come into our workshop and present and pluck us for millions yet again, but I accept that their issues needed to be addressed.”

Many Annual Plan issues have not been addressed but they have been bought into.

The predetermined Plan has just happened again.

DCC homepage portrait nightmares 6.1.13 (screenshot)

Posted by Elizabeth Kerr

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Editorial spin, disagrees?!

The Editor’s reply (ODT 23.1.13):
Russell Garbutt: Thanks for your comments but we don’t agree with them.

[Email]

From: Russell and Bev Garbutt
Sent: Tuesday, 22 January 2013 10:46 a.m.
To: ‘editor@odt.co.nz’
Subject: Letter for publication

[Contact details deleted. -Eds]

The Editor
Otago Daily Times
Dunedin

Dear Sir

Your editorial on the urgent need for an austerity budget for Dunedin is too little too late.

For years now at Council Plan consultation meetings also attended by your reporters, the financial stupidity of the Council’s decisions have been graphically pointed out by a long line of submitters. The practice of Council owned companies being forced to borrow to pay dividends which you now describe as being “worse than poor” was emphasised by a large number of submitters, but largely ignored by the ODT for many years.

While ultimately all of the spending decisions made by the Council are those of the Councillors – many clearly out of their depth – the weight of public opinion assisted by informed and investigative stories by the City’s only daily paper, has no small part to play in what has happened in this town over recent years. It is hard to see why the ODT has failed to meet its obligations or role in this regard. Many believe that it is because the ODT is a strong supporter of the stadium which has caused a major part of this debt, and of its proponents and major user.

While the ODT has adopted a position of supporting the new rugby stadium, even now that the full costs of the stadium are more or less known, your position is that you appear to be supporting the establishment of a significant fund to subsidise the use of the stadium – despite your reluctant acknowledgement that while the fund will cost the ratepayers dearly, there is no believable data that shows any tangible benefit.

I look forward to the ODT being part of the process in holding those that have made the decisions that have put Dunedin into these astronomical levels of debt responsible and accountable – but I’m not holding my breath.

Russell Garbutt

Read Russell’s comments in reply here.

Related Post and Comments:
22.1.13 ‘Liability Cull’ and council chasten for election year

Posted by Elizabeth Kerr

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DCC Draft Annual Plan 2013/14 – ‘Liability Cull’ and council chasten for election year

“Levels of debt are still high … you cannot say we are in a comfortable position – far from it.” -Orders

### ODT Online Tue, 22 Jan 2013
Tight years ahead for Dunedin
By Chris Morris
A decade of discipline is needed to protect the Dunedin City Council’s fragile finances until debt repayments ease the fiscal squeeze, council chief executive Paul Orders says. The warning came as Mr Orders confirmed the council was set to remain beyond a self-imposed debt ratio limit for at least the next three-year council term. The council’s 2013-14 pre-draft budget – to be considered by councillors later this week – showed the council would begin repaying more debt than it was borrowing for the first time in 10 years.

Mr Orders said the council would still have “little or no” headroom for new spending until 2022.

However, the size of the council’s debt meant it would still be operating beyond its self-imposed limit, which sought to restrict interest as a percentage of total revenue to no more than 8%, until 2016-17, Mr Orders confirmed.
Read more

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### ODT Online Tue, 22 Jan 2013
Mayor’s rates warning
By Chris Morris
Dunedin city councillors will have to choose between a 2.8% rates rise and extra spending on key priorities – including debt repayment – that will drive up the bill for ratepayers. The choice was presented in the 2013-14 pre-draft annual plan, to be considered by councillors in public for the first time this week. [Chief executive] Paul Orders said the cost-cutting had been achieved in part by reduced staff costs, including not filling all vacancies, absorbing inflation and strictly controlling the council’s capital spending programme.

Overall operational costs had increased by just $500,000 as costs were cut in other areas, while capital spending had been cut in half, from $105 million in 2012-13 to less than $50 million in each of the next three years, Mr Orders said.

Key reports were yet to be made public, including one discussing the financial future of DVML, the stadium and the need for a new events fund. Others would consider options for the Waipori Fund, car park operations in Dunedin and the city’s aquatic facilities, as well as the future of the council’s investment property portfolio.
Read more

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[On council companies…] The practice of businesses having to borrow to pay dividends is worse than poor.

### ODT Online Tue, 22 Jan 2013
Editorial: Dunedin’s austerity budget
The local government annual plan season is beginning, with councils facing austerity budgets. Some, as in Dunedin or Queenstown Lakes, have gorged on debt, and must face the slow process of digesting it. Others will be aware that communities have had enough of rates increases continually topping annual inflation. The Dunedin City Council, easily Otago’s largest council, has feasted on new projects and on high general costs, and its consolidated debt is peaking beyond the extraordinary figure of $600 million. Although it includes council company debts, it is still an astronomical figure. As projects small and large – like the Toitu Otago Settlers Museum, the Town Hall, the water and sewerage system upgrade and the stadium – came up for discussion, the annual interest costs were often the financial focus.

[ODT blondness…] To make the stadium a success and to compete with other centres, the council might have to seriously consider an events fund. This will again cost ratepayers, but could benefit the city overall.

The long-term accumulation of debt and cumulative interest totals could be sidelined behind an unrealistic optimism, leaving a legacy of commitments to years of whopping rates increases. Fortunately, the folly of this course has been recognised, and vigorous efforts are being made to turn to a sustainable direction.
Read more

DCC homepage portrait nightmares 6.1.13 (screenshot)

Related Post:
16.1.13 DCC Draft Annual Plan 2013/14 – Aaron Hawkins on the money

Posted by Elizabeth Kerr

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