Surprise over stadium debt repayment

Athol Stephens
Athol Stephens
The revelation last week the Dunedin City Council's stadium debt is being paid off over a 40-year, rather than a 20-year, period has surprised some councillors.

The council began a debate on the issue late yesterday afternoon, but it was stopped mid-stream when 5pm rang on the Municipal Chambers clock.

Cr Kate Wilson asked finance and corporate support general manager Athol Stephens how the situation, of which she was unaware, had come about.

Mr Stephens responded a report to the council in September last year had stated under the present financial situation, the debt would take 40 years to pay.

Mayor Dave Cull said he was "not sure it makes any difference".

"We're now in a position to look at the options."

A report to the meeting said to shorten the loan to 20 years would require $1.9 million extra from ratepayers, meaning a cost of about $26 a year for the average ratepayer.

Cr Syd Brown asked if it would be better to have the debate when the final cost of the stadium was clear.

Mr Stephens said that would be reported on February 9, but would make little difference to the debt situation.

Cr Brown began suggesting a motion for a way forward, but was asked by Mr Cull to bring his ideas to the meeting this morning.

 

Debt repayment

Am I right in thinking that a DCC employee is able to unilaterally double the length of stadium debt repayment period, thereby condemming the city to tens of millions in additional interest, without the knowledge or permission of the city's elected representatives?

Houston, we have a problem.

 

Stadium saga

The whole stadium saga is like watching a train-wreck in slow motion. What were the Chin council thinking when they voted for it? Did they honestly believe their own hype? Do they still believe it? If they do perhaps they could come foward and repeat just why they voted for this anachronism. Even better, perhaps they should explain to the young and unborn why they should pay for a rugby stadium than almost no-one wanted. Wake up councillors!

 

Audit commission

I'd love to know how a resolution referring the report back to staff for further work turns into an authorisation to go ahead.

Where the article says "reducing the term to 20 years", it is inaccurate.  The original plan for the stadium that Councillors signed off on was for 20 years repayments.  Not 40.  Increasing to 40, then saying it will cost more to go back to 20 is disingenuous.  The cost of 40 years of repayments is another $100 million of ratepayer money.

If we couldn't afford the repayments on the 20 year plan, then say that clearly.  Then we can get the Local Government Minister, Ombudsman and Audit commission involved, have a Commissioner appointed and run a full forensic audit of all matters relating to the stadium, SH88 realignment, Carisbrook purchase and ORFU.

When was the vote taken to approve the extension to 40 years?  It isn't in FSD Minutes for 3rd September 2011, it isn't in the minutes for November or December.  The report was not resubmitted to FSD.  The Part B items were confirmed by Council on 19th September, which confirmed the decision to refer the report back to staff.  If the acting chief executive took that Council decision to mean "go ahead and extend the term to 40 years", as on the face of it, the reports seem to indicate, then we have a very serious problem.

From the published record, which must be accurate as per LGOIMA rules, no resolution was made by Council to extend the term repayments to 40 years and no vote was taken to approve that matter. 

Shock

Methinks the heading of this story should read

'Shock over stadium debt repayment', not 'Surprise over stadium debt repayment'.

40 year payment plan

Articles in ODT in 2011 relevant to this...

4/8/11...

http://www.odt.co.nz/news/dunedin/171977/council-considers-extending-length-loans

...which includes the comment "The council would have to approve such a change, and the
suggestion would be presented to the finance, strategy and
development committee on September 5"

3/9/11...

http://www.odt.co.nz/news/dunedin/176112/stadium-debt-shackles-tighten-ratepayers

 

6/9/11...

http://www.odt.co.nz/news/dunedin/176412/stadium-debt-back-staff

 

 

 

Stadium cost

"Cr Syd Brown asked if it would be better to have the debate when the final cost of the stadium was clear".  I thought the final cost of the stadium was supposed to be clear - there was a guaranteed maximum price. Did we hear wrong? Was that in fact a guaranteed minimum price? We were promised how much it would cost on our rates bills. The stadium stands out like a sore thumb as a sunk cost - it can't even pay its own rates bill. Nobody wants a world class indoor stadium. The rugby supporters prefer to pay $20 for tickets than the $100-$200 a world class facility would cost. They'd be much better off back at Carisbrook. Council need to i)  acknowledge the stadium is a sunk cost and begin salvage. ii) start an enquiry into how it all happened. Then we can talk about raising the rates / the term of the loan.

Surprise

It comes as a surprise to me too.

I looked at the agenda items, minutes and reports for Council in September 2011.  There is no such report listed on the website, nor does it appear in the agenda items or minutes (public or non-public).  There IS a report listed for Finance and Strategy Committee on 5th September.

The outcome of the FSD Committee, as per the minutes is:

"The meeting adjourned at 2.24 pm and reconvened at 2.35 pm. Following further discussion it was moved (Thomson/Bezett): 

1.  That, subject to an agreement with Dunedin Venues Limited (DVL), the sum of $6.359m that was proposed to be borrowed in order to 

set up the Capital Maintenance Fund be deferred and reviewed in five years. 

2. That staff report back on the following options: a)  the impact of additional ratepayer funding of $1 million per annum; b) the ratepayer contribution required to repay the loan within 20 years; c)  targeted rate options to allow  the term of the loan to remain at 20 years; d)  report on ways in which the capital repayments might be structured to reduce the timeframe to less than 40 years taking into account the Council and DVL debt profile in the out years after 2025, and that these be considered  during the 2012/13-2021/22 Long Term Plan process."

So, FSD kicked it out.  It should come as a surprise to Councillors that the term has been extended to 40 years. 

So if this report has not been tabled, discussed, noted, received or adopted by Council and there is no corresponding resolution, then on whose authority have the terms of the loan repayments been made?

This is the original ODT article:

http://www.odt.co.nz/news/dunedin/171977/council-considers-extending-length-loans 

Surprised councillors

I am surprised that councillors do not keep up by reading the Otago Daily Times.  And if they had been reading this online site they would have known long ago not only about the 40-year stadium debt repayment period but would have been able to read several intelligent comments on its impact.

Taxation by functionary

The Mayor doesn't think it matters - Athol's unilateral change has committed the average ratepayer to pay an extra $1320 without a vote from the council. Sir Humphrey would be proud. Why do we even have a council if the civil servants can levy rates this way without even a vote?

I'd like to see an option that includes increasing rugby ticket prices and reducing the amount ratepayers have to pay.

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