Delta #EpicFail : L is for (Slow) Luggate Learner and T is for Turnip.

Received from Christchurch Driver [CD]
Wed, 4 May 2016 at 12:55 a.m.

Readers, I must admit defeat. I have I think, even if I say so myself, achieved some quite good lines in my quest to succinctly describe the various acts of stupidity committed by Delta at the Noble Subdivision. But recently, an associate (probably keen to cut me down to size !) sent a piece from Fairfax by Tim Hunter, now at the National Business Review, following the Auditor-General’s report in 2014. I saw immediately I had been bested by a better scribe : He memorably described the Delta management as having “commercial acuity about as sharp as a turnip” . That I could reach such cutting brevity !! Mysteriously, no threat of defamation was forthcoming to Mr Hunter….

And as the coast is clear, to honour Mr Hunter, Delta management shall henceforth be referred to as the Delta Turnips….

Your correspondent was intrigued to read of the Lazarus like re-emergence of Luggate Park as a premium lifestyle subdivision destination of choice with prices for sections between $325,000 – $495,000. (Note, no offers are entertained – these are fixed prices say developers Willowridge !) If this goes according to plan, there appears to be a profit even larger than the reported Delta loss of $5.9M* for the enterprising Mr Allan Dippie, the latest owner of the ex Delta land.

Now, your correspondent understands that Mr Dippie may not have as many university degrees as the Delta directors, or possibly not one at all. Mr Dippie does not breathe the same rarefied directorial air as the likes of Mr Stuart McLauchlan, Mr Denham Shale and other ….directors. However Mr Dippie does know his Central Otago subdivision market very well, and further knows that land development sometimes has to be viewed long term, the way a Japanese banker views the deadbeat property loans they made in Tokyo in the 1980s that are still underwater. That is, if you still own the asset you haven’t lost anything, and time will do its work and lift values. The critical thing is to have the courage of your initial convictions, and stay the course. Yes, yes, I know, the Japanese banks are still waiting, but no waiting is required, it seems, in Luggate.

Readers, take a good long draught of Choysa : Delta had TWO choices in 2012 : Sell the land for basically nothing ($1M vs a total Delta investment of around $7M), or…wait until the market improves. Of course, Delta chose to destroy ratepayers’ funds value in a desperate attempt to show ratepayers they had “moved on” and it was all a bad dream –

If Delta had an ounce of the foresight of someone like Mr Dippie, who has been both very successful, and also very patient at times, they would have held the land. A few facts about the land – the 42 entry level sections to be sold in the next stage will be worth around $6M, added to the $9.17M of the 22 premium sections, gives a total of $16.2M. There possibly could be further sections that would increase the value, but the glass is dark on this detail.

After allowing for subdivision infrastructure and selling costs, the land that Delta sold for $1M three years ago would now realise them $9-10M. Yes readers, Delta could have made a genuine, non Aurora subsidised profit and got the civil work they wanted, at good prices. They could have even paid Mr Boult’s bank debt off, paid off the $1.935M bank loan, some interest to DCC treasury and the entire $5.5M advance and still have a bit left over.

What possessed them to act like lemmings jumping off a financial cliff ? Two words … Denham Shale. Mr Shale was the alleged heavy hitter brought in to clean up the Dunedin City Holdings Ltd (DCHL) and Delta mess after the Larsen report in 2011, along with Mr Bill Baylis and others. He knew even less about property development than the likes of Mr Ray Polson. L for Learner developers indeed. As Mr Hunter exclaimed, turnip acuity was all around. Mr Shale was of the school that says when you have a mess, a clean out, not a clean up is needed…. A clean up keeps the items that have a chance of retaining value. Mr Shale told Mr Polson to write down the value of Luggate and get shot of it in April 2012. Mr Polson, being the invertebrate mild mannered accountant he is, then parroted that line to the Delta board a month later. The rest is well known. A bath. This is all in the Auditor-General’s report, in Section 6, for readers that doubt your correspondent.

Mr Denham Shale’s legacy to the City of Dunedin is a $8-9M loss due to turnip advice (aka profoundly stupid advice) to sell land for a fraction of its cost and value. Any developer or person involved in land in Central Otago for any length of time has seen huge fluctuations in value, generally in a 7-year cycle… Your correspondent is one such person, who lays no claim to visions of the future, but who has had to hang tough for extended periods in Central Otago on various deals.

All Delta had to do was talk nicely to DCC Treasury, to explain the $5.5M advance they gave Delta was a couple more years away – they had already waited for five years, who’s counting anyway ? Make an offer to Mr Boult of his 50% share of slightly more than the $1M they received (he had already asked Delta to buy him out having seen the Delta trough was empty), and start paying interest on the $1.935M bank loan. Not difficult. But required some vertebrates.

Mr McLauchlan, Mr Shale, Mr Cameron and the other directors, yes, they all displayed “commercial acuity about as sharp as a turnip”. –How I love that phrase ! This band of Delta Directors could not grasp what to Mr Dippie is as natural as breathing – that they stopped making land a long time ago, around the time of the flood and Noah’s Ark. That people want to live in Central Otago, so therefore the land price will rise, maybe not when you think, but given time rise it will. This, Mr Shale, Mr McLauchlan, and (2014 Young Director of the year) Mr Cameron is called, SUPPLY & DEMAND. Your elementary lack of foresight and myopia has cost the City of Dunedin millions. L is for Learner, T is for Turnip. Which one applies, readers ?

[ends]

Election Year : This post is offered in the public interest. -Eds

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Related Post and Comments:
30.4.16 Luggate à la Dunedin’s lad, Dippie

Auditor-General’s overview
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point. Access the Auditor-general’s full report here:
http://www.oag.govt.nz/2014/delta

*The ‘Auditor-General’s overview’ states (page 5):
“Delta lost about $5.9 million on the Luggate investment and has projected a loss of about $2.8 million for Jacks Point. These losses are before tax, and Delta expects that they might yet be off set by tax credits of about $1.5 million for Luggate and about $0.8 million for Jacks Point. If so, the overall loss would be about $6.4 million.”

█ For more, enter the terms *delta*, *luggate*, *jacks point*, *auditor-general* or *noble* in the search box at right.

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Posted by Elizabeth Kerr

Image: pinterest.com – turnip

Dairying, Housing : More on Resource Legislation Amendment Bill 2015

Irrigation [lincoln.ac.nz]

█ Interpretation of the existing RMA has led to dairy intensification destroying waterways and threatening public health and welfare, in large measure.
A bit of a tour….

### Stuff.co.nz Last updated 14:29, March 23 2016
Canterbury rumbly-gut outbreak linked to dairying
By Pat Deavoll
An outbreak of “rumbly-gut” among communities in Canterbury has Waikato veterinarian and agri-ecology consultant Alison Dewes concerned. She thinks the outbreak is the result of dairy intensification and irrigation contaminating public drinking water. Thirty per cent of the region’s shallow wells have already experienced an increase in nitrogen and pathogen levels after 10-15 years of irrigation on shallow lighter soils, she says. “We have the highest rates of ecoli diseases in the world, and the highest rate of campylobacter, cryptosporidia and giardia in communities in the Hinds region. We have the highest rates of zoonoses (disease spread from animals to humans) in the world in some of the irrigated/dairy catchments like Selwyn and Hinds and the government is promoting a further 40,000ha of irrigation in an already allocated and at risk catchment. Economics and dairy intensification are trumping public health and welfare.”
Read more

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### NZ Herald Online 8:42 AM Wednesday Mar 9, 2016
40pc of farms fail to lodge consents
By Zaryd Wilson – Wanganui Chronicle
Forty per cent of dairy farms required to lodge a resource consent application with Horizons Regional Council have not done so. A total of 229 dairy operations were required to have lodged an application by January 1 this year under the regional council’s One Plan, which aims to limit nitrogen pollution of waterways. The One Plan – adopted by the council in 2014 – limits nitrogen leaching by intensive farm operations, namely dairy, commercial horticulture, cropping and intensive sheep and beef farming. Figures released to the Chronicle under the Official Information Act reveal that only 137 of the 229 dairy operations which came under new rules have lodged consent applications. The new rules took effect on July 1 last year, and farms had six months – up until January 1 – to apply.
Read more

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Wetlands [nzarm.org.nz]

26.11.15 NZH: Resource Management Act reforms to be introduced
The Government will introduce its long awaited Resource Management Act reforms to Parliament next week after securing the support of the Maori Party. The reforms to the country’s main planning document stalled two years ago when National’s support partners refused to back them because of their potential impact on the environment.

Ministry for the Environment

█ About the Resource Legislation Amendment Bill 2015
This page has information on the amendments proposed in 2015 to the Resource Management Act 1991.

█ Resource Legislation Amendment Bill [New Zealand Legislation website]
The Resource Legislation Amendment Bill (the Bill) was introduced to Parliament on 26 November 2015.

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Leading New Zealand law firm Chapman Tripp say:
OPINION Most of the provisions in the Bill have been telegraphed in advance so there is little to surprise. If passed as drafted, it has the capacity to reduce costs and speed up planning processes – but probably only at the margins. For more radical and meaningful change we may have to await the results of the Productivity Commission’s inquiry into urban planning (see Chapman Tripp’s commentary here, dated 2.11.15).

RMA Reform Bill – busy with change but less than National wanted
Chapman Tripp 26 November 2015
OPINION The ‘phase two’ RMA reforms, initially to have been passed in 2014, have now finally been introduced to Parliament as the Resource Legislation Amendment Bill. The Bill is a busy piece of legislation running to more than 200 pages, and aims to help streamline planning and consenting processes. But National has had to abandon its proposals to remove the “hierarchy” some saw as enshrined in the existing Part 2 of the RMA, promoting environmental values ahead of economic development in sections six and seven. After the loss of the Northland seat to Winston Peters in March, it does not have the votes to get the wider and more far-reaching changes through. We look at the Bill:
Major changes
● Requiring councils to follow national planning templates (once such templates are available) with standardised provisions across the country.
● A range of measures aimed at producing faster, more flexible planning processes. These include: tighter timelines for plan production and the introduction of two new tracks – a collaborative track and a streamlined track.
● Reduced requirements for consents – allowing councils discretion not to require a resource consent for minor changes, creating a new 10 day fast-track for simple consents and eliminating the need for an RMA consent when consenting is provided for in other legislation.
● Stronger national direction – especially in relation to hot-button issues like providing for new housing or addressing dairy stock in rivers.
Read more

Blue skies review for urban planning – the take-off
Chapman Tripp 15 January 2016
OPINION The blue skies review into urban planning has now left the runway, with the release by the Productivity Commission before Christmas of an issues paper seeking feedback on possible directions for change.

Dunedin housing: building up or Brown-like sprawl #intensification #costlyinfrastructure

There was a risk that Government intervention could actually drive up house prices in Dunedin.

### ODT Online Wed, 12 Jun 2013
DCC seeks changes to housing Bill
By Chris Morris
The Dunedin City Council could be forced to open up land for development – sidestepping long-term council planning in the process – as part of a Government push to bring down house prices. The concern was raised at yesterday’s planning and environment committee meeting, as Dunedin city councillors discussed a council submission on the Housing Accords and Special Housing Areas Bill. The Bill, which is before a parliamentary select committee, would allow the Government to create ”special housing areas” in parts of New Zealand deemed to have significant housing affordability problems. Councils would be able to enter into accords with the Government to create the new zones but, if they resisted, the Bill would give the Government the power to force the creation of the new areas.

The council had been given just 10 working days from May 16 to respond, which was “completely insufficient” to allow councils and the public to assess and provide detailed feedback on the Bill, it said. ”In our view, these consultation time frames raise serious concerns about the democratic nature of our legislative process and New Zealand’s system of representative government.”

And, while the Bill appeared aimed primarily at Auckland, Dunedin could also qualify for one of the new housing areas, city councillors were warned. Dunedin could be deemed in need of a special housing area, based on criteria proposed under the Bill, council city strategy and development general manager Sue Bidrose told the meeting. That was largely because of the high population of students and the elderly, whose economic circumstances skewed the city’s housing affordability results, the council’s submission said.
Read more

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Related Posts and Comments:
2.4.13 Dunedin: Developers stoop to resource consents…
29.3.13 Reykjavik, Iceland: The strongest mirror [speculative apartments]
3.3.13 RNZ Sunday Morning | Ideas: Re-imagining the Urban House
29.10.12 Govt to open up more land for houses
29.8.12 Beloved Prime Minister ‘Jonkey’ speaking #childpoverty
14.4.12 How perverse is the New Zealand housing market?
17.2.12 Salvation Army: The Growing Divide
2.2.10 “Tax codes, zoning, community boards, and financing…”
8.12.11 interest.co heats NZ housing debate – listen up
23.11.11 Last night, did John Key watch Inside New Zealand (TV3)…
26.10.11 2011 Voices of Poverty: Research into poverty in Dunedin
26.12.10 New Zealand housing, a sorry tale

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In early 1937 the government provided new loan money for councils to build new dwellings to help meet a chronic housing shortage. The aim was to provide an affordable alternative to the government’s state-rental scheme. Dunedin was among the councils that took advantage of the measure, building hundreds of dwellings for private sale in suburban Clyde Hill. The first three houses were opened by Prime Minister Michael Joseph Savage in September 1937.
http://www.teara.govt.nz/en/document/32437/dunedin-houses-opened

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Posted by Elizabeth Kerr

*Image: Dunedin housing (detail) [ODT files]