Mayor sees red over Vandervis questions

David Cull.
David Cull.
Sparks flew as Mayor Dave Cull and Cr Lee Vandervis clashed repeatedly over debt and dividends at yesterday's Dunedin City Council meeting.

In what at times resembled a running battle, an angry Mr Cull eventually accused Cr Vandervis of giving in to his "obsession" and threatened to prevent him from speaking.

The pair found themselves at loggerheads over reports detailing Dunedin City Holdings Ltd's latest financial results and the council's annual report.

DCHL recorded a $5 million loss, but still delivered $23.2 million in dividends, interest and subvention payments to the council and Dunedin Venues Ltd.

Cr Vandervis attacked the figures at yesterday's meeting, claiming the entire $23.2 million - which helped keep council rates increases to a minimum - had been funded from loans.

That was because DCHL's distribution "pretty much" matched new borrowing recorded on the companies' books during the same period, he argued.

Without it, the council's 4.9% rates rise would actually be 25%, he claimed.

That prompted Mr Cull to interject, warning Cr Vandervis to "stick to the facts", as his claims were "not true" and impugned the integrity of those writing the reports.

Cr Vandervis persisted, prompting another retort from Mr Cull, who pointed out borrowing by DCHL or its companies did not mean the loans were used only to fund dividends.

"I warn you, you are putting falsehoods in front of the public and I won't have it," the Mayor said.

Lee Vandervis.
Lee Vandervis.
Cr Vandervis continued, saying an absence of clear information in the reports made it "extremely difficult" for ratepayers to assess the finances of the companies and the council. He appealed for help from Audit New Zealand audit director Ian Lothian, who was seated with council staff, saying the council had a "severe problem" presenting information.

Mr Lothian did not reply, but Cr Richard Thomson did, attacking Cr Vandervis' analysis as "so simplistic as to be misleading" before reading out a page in DCHL's report detailing company debt figures.

Yesterday's exchanges came two months after Cr Vandervis made similar claims DCHL was continuing to borrow for its dividend payments. The suggestion was ruled out at the time by DCHL chairman Denham Shale, who said the practice ceased on July 1, making this financial year the first without debt-funded dividends.

He reiterated that position when presenting DCHL's results to media last week, although Mr Cull yesterday conceded it was clear some of the last $23.2 million distribution was debt-funded.

He did not say how much, but described it as a "relatively insignificant amount" compared with Cr Vandervis' claims.

Councillors voted to accept the DCHL report, but the heated exchanges continued when discussion turned to the council's 2011-12 annual report. It stated consolidated council debtreached $616 million by June 30 but was to start falling from 2013-14.

Cr Vandervis labelled the claims "overly optimistic or outright blind", as debt levels would actually remain almost flat initially before declining after "two or three" years. After that, debt repayment would depend on the future decisions of councillors.

Cr Vandervis' critique continued as he turned to the rest of the report's contents, but Mr Cull appeared to have had enough. He interjected again, warning Cr Vandervis for straying off-topic and threatened to curtail his speaking rights.

"Your obsession is getting the better of you," Mr Cull said.

"Now, last chance."

Cr Vandervis instead opted to take his seat, leaving other councillors to praise the report, which Mr Cull said showed the council had confronted debt and other challenges and had a lot to be proud of.

Mr Cull concluded with one last parting shot directed at Cr Vandervis claiming a 25% rates rise had been disguised by DCHL borrowing. Any rates increase, he said, was what people ended up paying.

"They are paying 4.9%. That's it."

chris.morris@odt.co.nz

Step aside Dave

If Lee had been voted in as mayor two terms ago we wouldn't be in the mess we are in now. Please stand down and let someone who is interested in saving this city take the helm.

 

It's time

I fail to see how or why Dave Cull should retain the mayoralty.

Improper chairmanship from Mayor Cull

Mayor Cull is reported as using his powers to chair this meeting in a way which amounts to censorship, and censorship of relevant comments, comments which many ratepayers and residents of Dunedin want to hear and hear responded to. 

Mayor Cull looks as if he has something to hide and is actively trying to hide it by disrespecting and over-riding proper democratic process.

I wonder whether what Cr Vandervis manages to draw attention to in meetings is merely the tip of the iceberg.

 

New mayor for Dunedin City?

Some of us thougth that Mayor Dave Cull was the one that would have asked the hard questions, and give the rate payer the true answer, but that has not happaned. 

Do we have to wait for a new leader in our community?

Never thought the day would come! Lee Vandervis? Who knows?

[Abridged]

Economics 101

When I used to run a business in the UK sometimes it would need to borrow money. This was used to invest in new buildings, plant and equipment and to provide staff with training. At no time did we ever borrow if our own money was available to finance our needs.
If the council hadn't hobbled their companies with the need to provide large dividends then they wouldn't be needing to borrow as this money could be found from within the company's budgets.
It seems simple enough, and Councillor Vanderis is making a valid point in raising it at a meeting called to discuss the performance of the council's companies.

Debt for dividends

DCHL's dangerous habit of borrowing to pay the distributions to the DCC and to the stadium companies needs to stop, but I don't accept the assurances of the Chairman and the Mayor that it has stopped. The assurances are no more than wishful thinking because there has been no distributions paid nor profit announcement so far, this year. Also the decision by DCHL about the size of the distributions has not been made yet, nor has the DCC decided (through the Annual Plan process) how desperate they are to spend money this year.

Politics is also a factor, with the Mayor and Councilors risking becoming unpopular with a large increase in rates which would be needed if they didn't keep sucking the $millions out of DCHL. The idea of a reduction in council spending, which is what is needed, is such an unusual concept to the Mayor and most of his Councilors that they won't realize that what I am talking about is not just a decrease in the spending increase, but an actual decrease in the actual dollars of spending.

The current debt for dividends scheme is financially reckless, and must stop. Big rates increases will also not be acceptable, so the only sensible choice is a large decrease in council spending. Let's see if Mayor Cull has the skills to get this done.

 

Digging ourselves in deeper and deeper

And so we dig ourselves in deeper and deeper, to preserve an illusion of lower than expected rates.
I remember during the term of the last council we were being mentally prepared for a couple of years or so where rates might have soared into double-figures, but that was being proposed on a presumption that some serious attempt would be made to start repaying the horrendous stadium debt.
Meanwhile, each ratepayer is currently indebted to the extent of approximately $12,500, and borrowing to sugar-coat the rates pill stands only to make matters worse.
Most of us wouldn't dare to run our household budget(s) on that basis.

Cull needs to change his attitude

Dave Cull should be thankful that there is a hard working councillor prepared to put in the work and ask hard questions. Instead, he seems to continue to see him as a political threat instead of working with him to solve the city's financial woes.
Personal dislikes between councillors have to be put aside for the good of the city. Lee Vandervis might get stroppy in his manner at times, but at least his heart is in the right place.
His commitment to getting this city out of debt is unquestioned. [Abridged]

The next mayor

silentlord, I hope Lee Vandervis is running for mayor next time. The citizens of Dunedin need to be sure that their mayor works in their best interest. The next mayor also needs the courage to say no to secrecy and to the steady stream of costly and foolish ideas coming from council staff. [Abridged]

Credit merry-go-round

In some ways this is like getting a new credit card with another bank to pay the old one. It works fine but eventually the admin and interest expenses you pick up on the way begin to mount.
I think Mayor Dave Cull is not doing himself any favours by trying to shut down Lee Vandervis. Even if he is annoying, the questions he asks are the ones rate payers want answer for. I think he will give Dave Cull a good run for his money next election.
The Dunedin ratepayer is understandably suspicious of the city's civic leaders following the stadium decision. [Abridged]

Publicity hound

Just another excuse for Lee to get his name in print.  I guess he must be running for Mayor next time around...

The truth hurts

Cr Vandervis, in his demanding of details is doing no more than what he was elected to do. Namely, to preserve and to protect to the best of his ability the citizens' welfare. He is right in pointing out the anomalies abundant in the financial reports of both the DCHL accounts and the DCC report. For Mayor Dave Cull to fulminate and dispute when faced with unpalatable facts is less than what is expected of a leader. He must allow these awkward questions to be asked and then demand full explanations. Cr Vandervis seems to be the only one around that table who has done any due diligence over the reports and wants answers to seeming conflicting items of financial importance. To try to shoot the messenger is not the correct action to take and Mayor Cull must learn that lest he be seen as autocratic.

Sound like robbing Peter to pay Paul

I think I like this guy. He is asking the hard questions. The questions ratepayers want answers to. He is not joining  the yes man sycophant old boys club. I like the women on the council as well. They also ask the hard questions.

Election year next year. Now the full impact of the stadium madness is coming home to roost  I will be looking at each candidate in terms of their involvement and continued involvement in this madness. Also up for scrutiny will be any creative accounting by the council to make things seem better than they are, just like this report.

I would like to see candidates push for a royal commission about how the previous council and public were conned into building this millstone.

[Abridged]

Spill the beans, Dave

'Mr Cull yesterday conceded it was clear some of the last $23.2 million distribution was debt-funded. 

He did not say how much, but described it as a "relatively insignificant amount" compared with Cr Vandervis' claims.'

Dave Cull, in the interests of transparency, should say exactly how much of the DCHL distribution to the council was debt funded. This should not be kept secret from rate payers. We were told the practice had finished on July 1 by Denham Shale. It obviously has not finished. 

Digging deeper

Well the DCHL companies borrowed about $23m and at the same time delivered $23m to the DCC in mandatory dividends and subvention payments to pay the stadium mortgage - using that money the council was able to reduce this year's rates rise from 25% to 5%. Seems pretty cut and dried to me. Mr Shale didn't say it hadn't happened, only that they will stop doing it in this coming financial year. Of course the companies wouldn't have needed to borrow money to keep operating if they hadn't been forced to pay the council unsustainable dividends and stadium payments in a time of economic downturn.

Borrowing $23m to reduce your rates, or to fund your dividend this year is foolish, it means $23m plus interest you  must pay in a future year - if you're stuck at the bottom of a deep hole with a shovel, of course it's easy to dig the hole deeper by throwing dirt out of the hole than it is to save yourself by filling in the hole with no dirt - but you're still stuck at the bottom of an ever deepening hole, and given the world economic situation it is  the rainy season.

Hmmm

Well, I know whom I believe.

Vandervis and the councillors

When we see an article on Lee's attempt to extract some information, and reading that he is accused of being simplistic, the reality is, there was an admission by David Cull, that loans were affected to fund the lowering of rates. Perhaps we ought to be grateful we have such a councillor like Lee, to keep the rest on their toes. We feel he did well and we congratulate his stamina and resolve.

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