Tag Archives: Town Hall meeting

Cr Dave Cull speech to Town Hall Meeting

TOWN HALL SPEECH 29TH MARCH 2009-03-31
CR DAVE CULL —Copy supplied.

[begins]

A year ago I opposed public funding of the Stadium project on three grounds:
• Affordibility – This city cannot afford a project this expensive, largely paid for with borrowed money, and showing little or no return.
• Risk – of building budget blowout and on-going revenue shortfalls.
• Opportunity costs – what will we not be able to do or afford because all of the City’s spending and debt carrying capacity is committed to the stadium?

However, although it had already ignored a number of its own deadlines, Council decided to proceed with the stadium project subject to a number of conditions.

Some of those conditions were:
• Project cost not to exceed $188m. Remember “not a penny more”?
• Guaranteed Maximum Price (GMP) for construction.
• Contract entered into with Uni and we would have written confirmation of facilities they proposed for land.
• We would sight and approve occupation and revenue agreements between CST and ORFU
• That Council continues to identify ways to reduce ratepayer contribution by $20m.
• Minimum of 60% of Private Sector Funding (PSF) $45.5m be signed up, and Council to be satisfied as to funding the remainder (incl funds to service any bridging finance required). That last condition was added some 6 months later.

In addition:
• Community Trust of Otago was to contribute $10m.
• The stadium promised was a state of the art, multi-purpose venue that would set a new bench-mark for stadia in NZ.

Fast forward almost exactly a year to now, and what do we find with those conditions?

• The total project cost has risen by $10m. That’s a lot of pennies.
• The GMP contract offer contains exclusions that potentially expose DCC to risk of price increases. The Otago Regional Council was specifically warned about that by its chief executive. If those exclusions remain and something unforeseen turns up then there is a very real possibility of cost increases.
• A contact has not been finalised with the university
• An occupation and revenue agreement between CST and ORFU has not been finalised.
• The $20m has not been found or even any part of it.
• The CTO promised only $7m
• The design and specification of the stadium had been changed in order to keep the construction cost within the agreed budget. And those changes have:
They have:
1) reduced the ability and flexibility of the stadium to cater for much more than rugby without spending a lot more money.
2) lowered the specification and standard of finish so that while initial costs are lower, long term maintenance costs will be higher.

• 60% of PSF had not been obtained. But Council decided to accept unsigned agreements for corporate boxes and seating as if they were finalised.

But in any case, and far more worryingly, the whole concept of the PSF had been changed. In fact to call it PSF now is farcical. It was initially reasonably understood as money raised from non-public sources (ie not ratepayers or taxpayers) and contributed to the construction cost of the stadium. So there was an expectation that the money (or most of it) would be available on Day 1 of construction. However by March last year, a shortfall was already predicted and some $10m bridging finance was identified as being needed to make up the difference at the start of construction.

Well the PSF fell even further short of target. The private sector didn’t buy in. So the marketing was changed and now the PSF will be:
• obtained from the sale of seating products (corp boxes/lounge memberships and sponsorships)
• no payment for these will be required until the stadium is built
• after that payments will be made annually

But as I said, the money is needed for construction. And the amount of bridging finance required to tide things over has risen now to $27m loan + $15m underwrite. That’s some $42m + interest on some of that over time, required to achieve the balance of $45.5m now.

The CST obviously can’t raise that debt itself because it can offer no security, so Council will effectively borrow the $27m and the govt will underwrite the $15m. That’s an additional liability on ratepayer and taxpayers and that borrowing will have to be repaid from the revenue from those seating products etc after the stadium is operating. I’ll come back to this.

So a year ago I had concerns about Risk, Affordability and Opportunity Costs. But we now have a further reason to be extremely concerned about this proposed project. And that is the process by which Council has progressed it.

Because all of those failures to meet the Council’s own conditions are CHANGES from what was promised a year ago.
Individually, some of them might not seem so important. Taken together however, they amount to a significant change to the whole project and impose a huge amount more risk and liability on the ratepayer.
In brief:
• The overall cost is higher.
• The stadium isn’t the same as the one the community was promised.
• Ratepayers’ liability for debt is increased markedly because Council is effectively taking responsibility for the PSF.
• the GMP is really a Claytons GMP because if the exclusion clauses remain the price could rise.
• And that doesn’t even start to take into account the deepening world-wide economic recession. If ever there was a time to be careful, to limit your risk, to keep your powder dry and your cash liquid: it’s now.

These are all have pretty ominous implications but before I look a bit closer at the PSF I’ll touch on the GMP:

Other speakers have looked at this so I will simply point that once Council is locked into a construction contract, with clauses allowing the construction price to increase under certain circumstances, there is no way out. If those clauses are activated, we will have to keep going and paying and the ratepayer will have to foot the bill. So much for a GMP.

Now the PSF.
We have been told that just 3% of the so-called PSF will be paid up on the day the stadium opens. After that the revenue stream from the leasing of corporate boxes and lounge memberships and naming rights sponsorships and other revenue will come in each year. So in fact, apart from some naming rights and sponsorship deals, the PSF is actually revenue earned by the stadium for facilities or services offered. In any case, most of the other 97% will have already been borrowed by Council, and that debt is expected to be serviced AND repaid by those on-going revenues.

BUT, and here’s the catch; the reason that extra borrowing is necessary is because the revenue stream, the cashflow, the PSF was so weak. But hang on. Isn’t that the very cashflow that is now expected to be strong enough to cover the borrowing AND pay interest on it as well as the operating costs?! Spot the contradiction.

If that cashflow stream is not forthcoming, or it peters out for whatever reason, like the Highlanders franchise disappearing followed closely by its audience, Council will be left with a debt and few funds to cover it and they will also have a football stadium with no user. Who will have to stump up year after year in that event? The ratepayers. You.
So not only has the PSF been largely taken over by the ratepayer, the means provided to cover it could be shaky.

But how likely is that?
A couple of professional reviews of the CST’s cashflow projections have been done. Those reviews described the predicted cashflows as “not conservative”. In other words they thought the Trust was being overly optimistic about what the place could earn. So the reviewers reduced the cash quantum of some assumptions, and even after that they still reckoned there were “significant risks” that even the reviewers’ reduced predicted revenues would not be achieved. Indeed the reviews concluded that there is very real chance that the stadium will run at a considerable loss. And that’s after Council and its companies (read ratepayers) have paid the bill for interest on the main borrowing and depreciation. After all, almost no stadium anywhere in the world makes a profit.

And it gets worse. The changes made to the design to reduce construction cost, like no synthetic turf reinforcing and no dividing curtain at the east end, also reduce the stadium’s useability. So it’s earning power is also reduced.

Anyway by the time the money promised in those seating contracts and sponsorships has started coming in, the Council will own the stadium, and the PSF obligations will have been passed to Council. It will be Council’s job to find the money, the so-called PSF, and make the place pay, if it can.
How on earth can that be called PSF?

The worst case is the combined effect of the two possibilities: PSF revenue shortfalls and a blow-out in GMP could see double digit rate rises for years just to stay where we are! No possibility of anything else being afforded. You can forget other capital projects.

In that case the cost to ratepayers over the 22 odd years it takes to pay this off are likely to be much, much higher than the $66 per annum for the average residential ratepayer that is so often quoted. That is the very real risk this project carries.

I am deeply concerned about that risk of increased cost: either from increased construction cost and operating deficits or both.

But I am even more concerned by the cavalier way the Council, of which I am a member, has treated this community. I am deeply embarrassed to acknowledge that:
• Assurances have not been honoured.
• Conditions designed to give the public confidence that risks were being contained, have not been met. Indeed risks have been allowed to escalate.
• Promises have not been kept.
• And the community has not been listened to. And I’m sorry to say it looks as if a deaf ear will continue to be turned your way. The projected spending for the stadium is contained in the draft annual plan currently going out for consultation with, and submissions from, the community. “We want to hear what you think.” You are told.

But despite that and despite all the changes to this project in the last year: its funding problems, its increased costs and liabilities and ratcheting risks; despite all of the clamorous protest, letters to the newspapers, submissions to Council, and overwhelmingly negative survey results; it is quite possible that a contract for construction will be signed before a single one of your submissions is heard.

I wonder how this community can have confidence that they are being listened to, that their opinions, their interests and most importantly their futures are cared about, when this project continues to be rammed through regardless of so many ominous indicators, changes for the worse, unachieved targets and greatly heightened risks; all of which ratepayers will ultimately have to pay for.

What can you do? Council needs to know the weight of your opinion. Tell us. Make submissions. And send Council a message that we can’t mistake.

[ends]

****

### ODT Online Tue, 15 Mar 2011
Extras for stadium approved
By David Loughrey
Forsyth Barr Stadium extras with a combined cost of $5.15 million have been approved by the Dunedin City Council. The funding has been described by Mayor Dave Cull as an “underwrite”.
Read more

Related Post and Comments:
11.3.11 Stadium funding

Posted by Elizabeth Kerr

4 Comments

Filed under Architecture, Business, Carisbrook, Construction, DCC, Democracy, Design, Economics, Events, Highlanders, Hot air, Media, Name, New Zealand, NZRU, ORFU, People, Politics, Project management, Property, Site, Sport, Stadiums, STS, Town planning, Urban design

StS: blatant fundraising mode

Home at their website…
StS Link

URGENT APPEAL FOR FUNDS FOR
STS HIGH COURT INJUNCTION

Dear Members

You will know, by now, of the High Court injunction we have taken out against the DCC, in a last minute attempt to get them to listen to the submissions on the Long Term Council Community Plan (LTCCP) before signing the contract with Hawkins Construction.
Read more

****

StS emailed members this afternoon with the same message. StS didn’t tell members before this that everything “went” on the Town Hall meeting.

What no ability to seek sponsors. What no ability to fundraise in advance, not after the event. How many months has StS had to collude or collide with ‘money’.

StS reaches new heights. Mind you, I suspect it has a $$$$$meaty advance from somewhere to get to Court, Thursday. It’s after the hearing that hurts.

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Filed under Economics, Politics, STS

StS April newsletter

From: sts@taniwha.com
Date: 5 April 2009 12:28:11 PM
To: [Recipient]
Subject: April newsletter: Rates Protest and other urgent action you can take

Dear Members

Thank you all for the marvellous turnout at the Town Hall Meeting. It was a record-breaker, according to former Mayor Sukhi Turner, who observed that no local issue in her nine years as Mayor had ever galvanised so many people.

The speakers were superb, each treating the stadium issue from their own unique perspective, and no rational person, by the end of the meeting, could have remained in doubt that the Awatea Street Turkey is indeed the most monumental folly ever to surface in Dunedin (if not the whole Southern hemisphere).

The Master of Ceremonies, Dougal Stevenson, set the tone for the evening; his magisterial and eloquent demeanour impressively linking the contributions of the speakers. The stadium project was dissected as never before in public, with a wealth of information – much of it hitherto inaccessible. The project’s ramshackle financial underpinnings were graphically revealed, and the Carisbrook Stadium Trust’s complete failure to meet its stipulated targets was left in no doubt.

One of the most significant features to emerge was the fact that the stadium proposition, as it now stands, is very different from what was originally promised. It is now a lower-quality building, constructed of inferior materials, with skeletal fixtures and amenities. Seating has been progressively reduced, and any former multi-use pretensions sabotaged by the building’s minimalist specifications. Far from being a “state of the art” edifice, it has degenerated into a cut-price facsimile of every other loss-making plastic barn that has been foisted upon a duped community.

The financial aspects are just as shoddy. As several speakers confirmed, the private funding (100%, as originally promised by Mr Farry) has disappeared. Private enterprise, not surprisingly, has shunned this obvious lemon, and there will now be NO private capital committed to its construction. ALL the risks involved in the project have been shifted to us, the ordinary public, via our rates and taxes. A more complete con would be hard to envisage.

We shall not attempt to summarise all that was said at the meeting. Suffice to say that it was a huge success, and has radically changed the political climate surrounding the stadium debacle. The Minister for Local Government, Rodney Hide, has undertaken to come to Dunedin to examine whether or not the DCC and the ORC have acted prudently and responsibly. The Minister has also expressed concern about proper consultation, and will consider this issue as well. The “done deal” mentality of recent days has evaporated, and brighter possibilities beckon.

What next?

Most members will already know about the rates protest, announced by Sukhi Turner. This is a simple, practical action available to every ratepayer. There is no risk at all, and the cost, over a full year, will only be a few dollars. (There was some confusion about this, caused by an inaccurate statement in the ODT, but we can confirm that the protest – based on advice provided by Prof. Henaghan – is genuinely no-risk and will incur only a minimal financial penalty). Members who are not up-to-date on this strategy should look at the attached rates-protest flyer for full details. Mrs Turner has said she will participate, and I urge you to do likewise.

The next significant action concerns the Dunedin Community Plan (the LTCCP).

This plan, which includes the building of the stadium, is now up for public submission. The details may be found in a recent postal communication from the DCC, or on the DCC website (Google Dunedin City Council, go to Home Page, and click on Community Plan. It is very easy to make an electronic submission from this site). Submissions may be as brief or as detailed as you wish – the important thing is to do one, and send it to the Council. To assist you we have attached a basic submission, already filled in with the project’s major shortcomings. There is space to add further comments, should you want. Simply download it, fill in your personal details, sign it, and post it to the DCC. Submissions are a vital part of the democratic process, and the more people who oppose the stadium in this way, the more pressure there will be on the Council. Persuade your family and friends to participate as well.

You should also express your concern personally to your representatives on the City Council. Phone, or email, or write to the Mayor, together with the pro-stadium Councillors. Express your opposition to the stadium and your disgust with the Council’s arrogant behaviour – and remind them that they are all heading for defeat at the next election. The relevant email addresses are:

    Paul Hudson – paul.hudson@dcc.govt.nz
    Richard Walls – rfwalls@xtra.co.nz
    Andrew Noone – anoone@dcc.govt.nz
    Colin Weatherall – cweather@dcc.govt.nz
    Bill Acklin – bill.acklin@xtra.conz
    John Bezett – john.bezett@dcc.govt.nz
    Peter Chin – pchin@dcc.govt.nz
    Neill Collins – ncollins@dcc.govt.nz
    Sydney Brown – sydney.brown@dcc.govt.nz
    Michael Guest – michaelguest@xtra.co.nz

Send your message to all of the above.

Bev Butler. President. (and STS Committee).

___

Reminders

To participate in the Rates Protest you will need to cancel your direct debit with the DCC and pay your rates – minus $16:50 per quarter – by whichever alternative means you prefer.

Keep sending letters to the ODT, D Scene, etc.

On Sunday, 5 April 2009 at 5:00 pm there will be a meeting in the Port Chalmers Town Hall to voice the concerns of our community with regard to the proposed stadium. Our City Councillor, Andrew Noone, has agreed to attend the meeting and address these concerns.

We would like to encourage all people in the Waikouiti Coast – Chalmers Ward, which runs from Ravensbourne to Waikouiti, to attend this meeting. Cr Noone needs to know how we feel about this important issue He is under the impression that his ward is overwhelmingly in favour of the Stadium. A strong turnout will tell him otherwise.

People from other areas are welcome to attend with the hope that this meeting will inspire them to do the same in their own ward.

If you cannot make the meeting, please contact Cr Noone and let him know where you stand.

Cr Andrew Noone
03 465 7157 or 027 430 1727
anoone@dcc.govt.nz

A DVD of the whole town hall meeting is available from Channel 9.
(Ph. 4774774).

Our website continues to be a demanding task, and some assistance would be welcome. If you have any skills in this area – or know anyone who does – please get in touch with Bev. Ph. 4776861.

Finally, and most importantly, email, write, or phone Rodney Hide, who seems to be wriggling a little on his promise to come to Dunedin. Remind him that he unequivocally undertook to come here and investigate the whole stadium issue. Tell him what you will think of him should he try to back out now. Rodney Hide’s email address is:rodney.hide@parliament.govt.nz His phone is 04-8176823, and postal address: Rodney Hide, Minister for Local Government, Parliament Buildings, Wellington. Please do this – it is vital.

___

StS template for submission:

Submission on Draft Community Plan. (T0 DCC, Box 5045, moray Pl. Dunedin).

My name is ……………….

I live at …………………

My telephone number is …………….

Email (optional) ………………….

My submission is that the DCC remove the proposed Awatea Street Stadium from the provisional plan.

The stadium, in my opinion, constitutes an unacceptable risk to the future of Dunedin. The so-called guaranteed maximum price does not provide any meaningful protections against cost escalations – especially in the matter of the building’s foundations.

There is no convincing evidence for multi-use, meaning that the stadium is essentially for rugby. We already have a rugby stadium.

There is no convincing evidence the stadium can make a profit – and considerable evidence that it can not.

The Council has repeatedly ignored its own stipulated requirements for the stadium’s progress (so-called “lines in the sand”). This is an abuse of process, and engenders no confidence in future decisions.

Economic conditions have deteriorated seriously since the project was mooted, further threatening the project’s viability.

The private funding has not been forthcoming, leaving almost all capital costs (together with blowouts, shortfalls, and every kind of risk) to fall on the ratepayers alone.

The current project is not what was originally proposed. Almost every aspect has changed, including seat numbers, specification of materials, installed amenities, conference requisites, etc. The funding, as noted above, has altered completely – shifted from the private sector to the public. Together these changes mean that the original consultation is no longer relevant. Before any further decisions are made there must therefore be a fresh round of consultation.

Other comments………………..

I wish/do not wish (cross one out) to speak to my submission when hearings are held.

Signed.

Date.

____

UPDATED StS Rates Revolt poster:

poster-5-4-09-gif

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Filed under Economics, Geography, Hot air, Inspiration, Media, Politics, Stadiums, STS

Peter Williams: Hothead for the stadium

This morning a colleague pointed me in the direction of this item from HeraldonSunday (NZ Herald). My colleague says: “Here’s another simplistic analysis that comes to the conclusion: if the ratepayer contribution is only $66 a year, surely $1.26 a week is worth it to have a stadium to be proud of? There’s an email link to the author on the page. I will be using it! Let’s have analysis of substance.”

### HeraldonSunday 3:00AM Sunday Apr 05, 2009
Peter Williams: New stadium only hope for Dunedin

By Peter Williams

One of New Zealand’s proudest rugby provinces is witnessing the decline and fall of the national game within its borders, and is hardly raising a whimper. That’s the message beaming loud and clear out of Otago in the last week after the Highlanders hugely successful foray into Palmerston North, and the increasingly well-organised opposition to the proposed new stadium in Dunedin.

Read More Online Here…

Read more

46 Comments

Filed under Economics, Geography, Hot air, Inspiration, Media, Politics, Site, Stadiums, STS