$2.1m boost for stadium

Dave Cull
Dave Cull
The company running the Forsyth Barr Stadium is in line for a multimillion-dollar cash injection from the Dunedin City Council - including a new events fund - that seems set to drive the next rates increase up to 4%.

Councillors yesterday backed the plan to spend more than $1.7 million extra each year reducing stadium-related debt, subject to public consultation in the coming months.

That would drive rates up to the self-imposed 4% limit, but would also slash at least $25 million from interest payments over the life of the loans.

It would also help Dunedin Venues Management Ltd, which runs the stadium, to turn a profit for the first time, rather than continuing losses created by the requirement to service stadium loans from its revenue.

The company would also be backed by a new events attraction fund worth $400,000 a year, which would be used to offer incentives to lure more major international acts to the stadium, councillors indicated.

The fund would be paid for initially from within council budgets allocated to economic development and Tourism Dunedin, which were together worth about $2 million a year.

Councillors also wanted to consider a new targeted rate, perhaps focused on the city's tourism and hospitality sectors, to pay for the fund in future years.

The decisions are not final, but came as councillors yesterday completed initial debate on the council's 2013-14 pre-draft annual plan ahead of schedule.

A draft budget would be approved for public consultation at the next council meeting on February 25, after which ratepayers would have the chance to deliver their verdict on the proposals.

Council chief executive Paul Orders and his staff had earlier delivered a pre-draft budget that proposed a rates increase of just 2.8%, well below the targeted increase for 2013-14 of no more than 4%.

That left councillors to decide how best - if at all - to spend the $1.4 million of ''headroom'' available, which Mayor Dave Cull wanted invested in initiatives delivering greater savings for the city.

By yesterday afternoon, more budget tweaks - including changes to fees and charges and an adjustment of the Waipori Fund investment strategy - meant the available sum had grown by about $400,000, to $1.866 million.

That set the scene for the long-awaited report into DVML's finances - following a detailed review by Dunedin City Holdings Ltd - presented to councillors yesterday by DVML chief executive Darren Burden.

The report spelt out the options, including a do-nothing approach which Mr Burden warned would see DVML continuing to post annual losses of up to $350,000, exhausting the company's resources and eventually leading to a call for more council funding, anyway.

Mr Cull, responding to the report, recommended allocating most of the money to stadium debt repayments, spread across DVML and Dunedin Venues Ltd, which owns the stadium.

DVML would get $725,000 a year for the next four years to repay debt associated with some of the stadium's removable seating, new stadium vision technology and pitch machinery.

The money would be on top of the extra $750,000 a year given to the company last year, as part of a new service level agreement, and came after the company posted a $3.2 million loss for the 2011-12 year.

However, the extra cash would allow DVML to clear its debts within four years, meet its obligations and post small profits in the years to come.

DVL would get another $1 million a year on top of that, accelerating the repayment of more substantial stadium construction debts and saving $25 million over the life of the loans.

The exact sum available for DVL debts would depend on returns from the Waipori Fund and would be reviewed annually, councillors decided.

Of the rest of the $140,000 available, $50,000 would be used to support a new breakwater at Te Rauone Beach, on Otago Peninsula, and $90,000 would be used to continue support for projects in the heritage warehouse precinct.

The council also planned to convert $3.381 million in earlier cash advances by the council to DVML - which had covered DVML set-up costs - into paid up share capital, in a non-cash transaction, councillors decided.

The $400,000 events fund would also allow the stadium to target more headline events, boosting revenue for the company and bringing wider economic benefits to the city, councillors accepted.

The debate that followed was limited in part because Cr Lee Vandervis was prevented from speaking, on a technicality, after failing to indicate his intention to speak until it was too late.

Cr Teresa Stevenson questioned why stadium debt was being targeted, rather than debt from another project, such as the Tahuna wastewater treatment upgrade.

Mr Orders said that was because core council debt was being addressed as part of the council's long-term plan, which set a target of debt to $200 million by 2021-22.

However, the size of stadium debt held by DVML and DVL still represented a ''significant source of risk'' for the council group over the next five to 10 years, he said.

''You reduce the risk to council in general more by paying off DVL debt than by paying off Tahuna debt,'' Mr Cull added.

Councillors voted to include the spending in the draft budget, meaning the 2.8% rates rise would increase to about 4%, if left unchanged.

Cr Vandervis voted against the extra spending.

 


Extra spending plans

$1.865 million to be spent on:

• Dunedin Venues Management debt ($725,000 a year, next four years)

• Dunedin Venues Ltd stadium debt ($1 million a year*)

• $50,000 for Te Rauone Beach breakwater, 2013-14 only

• $90,000 for Warehouse Heritage Reuse Fund, 2013-14 only

• Total: $1.865 million(* Subject to Waipori Fund return and annual review)

As well

• $400,000 stadium events attraction fund

• Funded from existing council budgets in 2013-14

• Council to consider target rate to pay for fund in future years


 

 

Understanding stats

Stevesone: The economic situation is the same for everyone and the high dollar only affects international visitors.  Maybe this is why while international visitor numbers are down in fact domestic visitor numbers are up and visitors (most likely domestic) are also staying longer.

There is another possible reason you didn't suggest for the drop in numbers - the area of promotion. While you lost 22.9% visitor nights Kapit-Horowhenua and Auckland increased 14.4% and 11% respectively obviously under the same market and economic conditions. Perhaps you need to talk to someone from up there.

Your statement 'The stadium has provided my own business with 5 full nights over 12 months and so it should' says it all. Why should it? What makes you so special, I and one or two others also pay rates and what do we get for it? Surely filling up your books is your problem not the council' or is it a case that at the end of the year you will be sharing your profit with the rest of us.

As to your last couple of paragraphs I have stayed in plenty of cities around the world where tourism supplements are charged so someone must be able to make it work.

[Abridged]

Targeted taxes

Dundee boy, You are attempting to suggest I have used the NZ statistics in a way which skews the numbers to suit my argument. Elton John was here November 2011 that is why I used an annualised figure from November 2011to 2012 2012. The fact is that Dunedin occupancy from November 2011-2012 is down from 59% to 55%. By the way this includes Highlanders games and the Springbok Test Match. The facts speak for themselves. This council is raising rates at twice the rate of inflation and now wants to raise yet more taxes from a tourism sector already under pressure.

Whether visitor numbers are down due to the high kiwi dollar or because of the economic situation, they are still down. The stadium has provided my own business with 5 full nights over twelve months and so it should. This is what the city was promised when it was built, this is what we pay the high rates for. Imposing yet another tax gouge will hurt tourism operators even more and inhibit economic growth.

By the way Dundee, in terms of equity and those who are to benefit from the so called stadium windfall, are we to target taxes on cab drivers, Pack n Save, fast food restaurants and all the others who benefit from increased visitor numbers? 

Is it fair that Tourism operators, pubs and restaurants  away from the CBD should pay as much as those close to town? The whole idea is flawed, inequitable, and is nothing more than a cynical way of pumping yet more cash out of the community to support the staggering debt faced by Council.

Nice try indeed...

Stadium and rugby supporters appear to be in their own world. that thing called the RWC brought in a few, but it was a huge loss and hurt businesses and other attractions all over the city. It's common knowledge it was a financial flop, the stadium didn't even see a honeymoon period. This might have something to do with the fact the fifa has been turned down.

The breadwinners for the city are cruise ships and the other day to day visitors, that come for better reasons than rugby. It's a shame we don't do more to cater for them, by making the odd new attraction.

[Abridged]

Targeted taxes

It seems some people feel I have skewed accommodation numbers to suit my argument. Perhaps if you read the stats properly you will see I have quoted annualised figures from Nov 11 to Nov 12. The facts from Statistics NZ speak for themselves, it is clear that during this period occupancy for all accommodation providers in Dunedin dropped from 59.2 to 55.4 

It is clear from those I talk to in the industry that numbers are down and yet it is impossible to raise tariffs as the market is too competitive. In the meantime Council hikes rates at twice the rate of inflation whilst goods and services providers continue to raise their prices. 

My own rates for the Dunedin and District councils now total $22,000 and it is expected Council will raise them another 4 to 5% next time around. In addition we pay for our own rubbish collection and water. 

The imposition of targeted taxes in a falling market coupled with rate rises twice the rate of inflation can only stifle economic growth and employment opportunities. In addition all those servicing the tourism industry will be affected by the cuts these businesses will be forced to make.

 

That's good news

Hope those thinking of building a 28 storey hotel know this. Seems we don't need it at all

Targeted taxes

Stevesone you attempt to show there is no stadium windfall by the use of stats and you state the council hasn't done its homework. Perhaps you should have read your stats more carefully and done a bit more homework yourself.

The stats you have listed are in fact correct but the report you have taken them from contains a lot more and they could be deemed to prove your point further (then again they might not). It would appear the greatest drop in the figures you have listed in fact occurs in the actual comparison of the individual months of Nov2011 v Nov2012

Hotels -13.5%

Motels -20.8%

Backpackers -10.5%

Holiday Parks -22.8%

Look at those hotels and motels this looks even worse than the figures you have presented. Hmm let me think what might cause such a skew, why would so many more people stay in hotels and motels in Nov 2011. Hang on wasn't there a little fat guy singing at that rugby stadium that month wonder if that would make a difference, not likely I suppose.

You obviously didn't read the caution on the third page about comparing data when there could be events in one period and not the other.

Nice try!

Yes there was drop in occupancy rates over October/November last year, compared to 2011.

But there was this thing called the Rugby World Cup on over that time in 2011 which just happened to bring in tourists, many of whom travelled around the country before, during and after the World Cup itself, increasing occupancy rates all over the country. So these figures were always going to be skewed when large events are occuring. 

But nice try.

To quote QsRC "Long Live The Stadium"!

Does he know?

Occupancy rates of hotels/motels dropping. Says it all in my book. Does deputy mayor Staynes, who promotes the hospitality tax idea, know these stats? If he does, is it a responsible act? If not, is he fit to make these recommendations?

Reap the benefits but pay nothing?

Yes, but although you are down Stevesone57 the idea is that bringing in more events will help occupancy. The city could plod along with no events and you would be down even further. What would you prefer? All the benefits for nothing?

Plain obvious

Everyone in my workplace is for it! we are all rate payers also and all agree it's fantastic! We were all for it before construction and still are now after! And that's a stat folks that didn't get made up on the spot like 82% of the other ones.

Long live the stadium!

Selective grains of salt

Take the numbers with a grain of salt if they are supporting evidence of overwhelming opposition to the stadium, but if they are supporting a majority, then leave the salt away, according to some. Funny enough, there isn't any evidence to prove that side of things, so downplaying such figures as being invalid is the only card left to play.

Surveys

There were two surveys one asked "do you want someone to build a stadium?" which came back about 50:50 and "do you want to pay for a stadium?" which people were against by about 4:1.

They asked different questions and combined they give us a more nuanced look at what people were thinking.

What do they tell us? People were neutral on building a stadium, but did want someone else to pay for it. Mr Farry's original plan for a totally privately funded stadium is what we should have built, not the current disaster that is bankrupting the city. It says something about the wisdom of crowds, if the council had listened, kept out of the thing and let Mr Farry build his private stadium we wouldn't still be arguing.

Targeted taxes

So the tourism sector is set to pay for the events fund. Clearly the council has again failed to do its homework and assess the situation faced by tourism operators. Before they embark on their proposed tax gouge perhaps they might like to consult the latest NZ Dunedin occupancy statistics for November 2011 to November 2012. 

Despite all the fanfare re the windfall the stadium brings to us lucky tourism operators the stats make for appalling reading.

Total occupancy down

Hotels -4.7%

Motels -6.8%

Backpackers -9.1%

Holiday parks -11.7%

Total annual occupancy excluding holiday parks has fallen from 59.2 to 55.4. Meanwhile Council increase rates at twice the rate of inflation and consider even more taxes to prop up a dubious events fund. One wonders if an events fund would have been needed had the stadium been able to pay its way.

[Abridged]

Hanging your hat on questionable survey results

Anyone with even a scant knowledge of statistics/market research will know that the oft-quoted surveyed %'s "against the stadium" were based on some pretty leading questions. Take the numbers with a grain of salt.

About as reliable as the "$100k additional costs per every Stadium opening" nonsense figure which did the rounds for ages, but which has now mercifully been laid to rest.

Plain obvious

Speedfreak is correct, it's all rather obvious. The people in my workplace are from all ages and walks of life, all just realise it's a gargantuous waste of public money with less than minuscule benefit. Even without the poll results, there was plenty of other evidence to support that, as already outlined in a post, such as the meetings that were held for all, and had a huge majority opposing at both. If it is so popular, how come there wasn't a majority of supporters at such meets?

Sure things might have changed a little since it was railroaded on to us, but now that it's bleeding the city dry, it would be clear most would want it eliminated if possible, or maybe the building should get a complete change of purpose. Perhaps it's time to have another poll.

 

Statistics indicate

82% were against it. Enough said.

you prove my point

exactly Pukeko you've proved the point I was making to Speedfreak. Maybe all I know are supporters due to who I kick around with and where I work ... just as I'm saying that maybe your friends and workplace are linked to it and anti it for the same reason. Just becuase either of you say that all but one person you knowis against it that doesnt make it so. I dont know a single person that is against it, but doesn't mean that the whole of Dunedin isnt. Those bold statements are just ridiculous which just emphasises none of you have any substance to your claims.

Rebuked stats

So, Stevepf, if you have a majority of supporters in your workplace and circles you move in, maybe there was involvement in the stadium?

Not only my workplace, but outside there, every single person bar 3 I spoke to thought it was an absurd, grandiose proposal. Friends from France and England couldn't believe the mindset when there's so much better we could have been doing with such a huge amount in a small city that's got so much unused potential in its scenery and heritage status.

What on earth benefits can the stadium bring to the city when all it is doing is losing money by the unsustainable millions, I ask? It didn't even have a honeymoon period, the RWC events that the stadium spearheaders promised us that would be a huge boon to the city was a huge loss. No wonder the FIFA is off. The fallout from RWC to the company I work for, involved in tourist industry suffered badly from that.

So I dare say if that 82% survey is redundant, that is possible, the anti has surely been upped. Perhaps it should be done again to see, I'd be on for that. Yes, it should, if possible, be removed, sold and Carisbrook recomissioned, if common sense was to prevail. That's why other cities in China and South Africa decided to cut their mega losses, and stop stunting things for the rest of the city, and eliminate the stadium causing the increasing debt.

[Abridged]

Plucking stats!

Everyone in my office supported and still supports the stadium. So whats that all about ay? where's the 82%?

Redundant stat

Come on pukeko, just because all but two in your organisation were against it that doesn't mean jack. I can tell you I work with 10 others in my office and they all support it. I can also tell you my mum's friend supports it too, and my grandma and the dairy owner at the end of my street. Does those links strengthen my argument? Thought not, so neither does your workplace stat. 

Secondly, this ridiculous stat of 82% is redundant now.  I too know many pepole that were against the stadium at that stage ... but a big chunk of them have now changed their minds. They now see the benefits to the city and whilst they dont all like its costs, they certainly dont want to get rid of it.

Until another survey is done on all residents of this city, this redundant stat needs to be put to rest.  

Yep, good old stats

Not every single soul that opposed the stadium marched, all but 2 people at my work (of 50 people, all age groups) opposed it. But I was the only marcher out of ours, lots of others outside my work I know in opposition didn't march either.

But the stats are more accurate when it's considered the random household survey sent out to all parts of the city for a nice cross section, and the result was 82% against. That paints a pretty accurate picture.

Perhaps too, consider the council arranged stadium meets at Port Chalmers and South Dunedin, held for those for and against. But in both meets a show of hands had an overwhelming majority against it.

If there was an majority of supporters, then where were they, knowing of the opposition to it? It all would, of course, have been better proved if there had been a binding referendum, but democracy was somewhat lost on the DCC at the time.

 

Good old stats!

You people make them up pretty fast these days!

Yes people marched, 1500 hundred of them. Oh wow, 1500 of Dunedin's population! 1.25% of the people, now there's a stat for you! Hey should we turn that in to a percentage of Otago's population rather than Dunedin, what do you think?

Humm!

Just because you 'can' does not necessarily mean you should. When doing is done without consensus, many people are disempowered but still need to have their say so that next time, hopefully, their voices will be considered. Blind 'doing' is actually foolhardy. One has a tendency to fall over 'fiscal' cliffs.

Stadium events fund

Not only is the stadium not paying its way, but now the council is going to pay for events to come.

And I had to laugh when I read "subject to public consultation". I remember the public consultation before the thing was built.

By far the majority of submissions were against the stadium, the ORC phone poll showed over 75% were against ratepayer funding, we marched down George Street, we emailed and went to council meetings, phoned and wrote letters.

So don't waste our time with public consultation, we all know it's a sham.

Unoriginal certainly . . .

. . . but no less pertinent.

In fact, given (a) the obvious ineffectiveness of the incessant collective "online venting" by the antis, and (b) the contempt in which the "online venters" hold the city's elected representatives, perhaps it might be time for a rethink.

"Those that can, do, and those that can't, complain."

 

No democracy in Dunedin

Sorry to point out Amanda but if there truly was democracy in Dunedin, we wouldn't be commenting here on this news article.

Money talks indeed

Newbie; as the same age group as you, I think 300 odd million is too much a price to pay for the odd 2 hour concert, at times I have gone to a concert in another city, no big deal.

Many have commented on the poor sound in the stadium, largely due to the sound waves ricocheting in a sense around the glass. Many people maybe are so called ‘whiners' as you suggest, probably most would be doers if other interests like theirs were catered to.

But one mouth is constantly fed while most others are denied. Good cause to sound off, especially with the dire situation this city and many of its people are in.

 

Re: Stockholm syndrome

I somehow think there are a few more than just those commenting online against the stadium. 

 

Stadium vs core infrastructure

I just have to love all those pro stadium who think core infrastructure that provides a number of services, not to mention education for kids, should be compared to a mega debt making stadium. It's been a regular on here. The library is used daily by a lot of people, so compare that! Somehow the library never ever cost as much as the stadium. Funny enough, it actually benefits the community at large, (apart from a number of pro stadium who don't seem to go there, as they have stated). Those who think a stadium is on a par with library etc would perhaps only have a valid argument if we didn't already have a stadium before the current one was built.

But hey, who cares about core city infrastructure, libraries, buses, (latter has already been flogged off) or any other core city silver we should sell to fund the money stadium that replaced a perfectly adequate one? No amount is ever enough to satisfy the minute fiscal benefit to the few that this brings, and a huge price to us all, and other things we could have done with all the money it is wasting, and will waste. In a big city in China last year, a stadium, less than 10 years old that was creating such huge loss was demolished, and the same in Cape Town, similar is being considered to cut the ongoing losses.

So speedfreak, your ideas of it being closed do stack up. Another year or two of this sort of unsustainable loss should see some action, if common sense prevails. If the pumps are not keeping the sinking ship afloat, there's only one sensible thing you can do. [abridged]

Refunds all round then?

@ Stevepf:  Sounds great Steve. I will have that $130 back as well as I don't use it either. While we're on that, I will also like to be refunded my waste disposal and recycling costs as I pay seperately for those to another company.  Oh, and the public transport charge ( for bus service) that I also don't use.

Ahhh the bus service. Yet another entity that can't pay its way.

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