Council costs not recouped

The Dunedin City Council will make a loss once Carisbrook is sold, and has been hit with another bill for holding costs from the old stadium approaching $1 million, it has been revealed.

Sources yesterday confirmed the council had signed a conditional agreement to sell the old sports stadium to building company Calder Stewart, in a complex deal said to be worth about $3.5 million.

Calder Stewart staff were not commenting yesterday, referring all media questions to the council, and Dunedin Mayor Dave Cull again refused to confirm specific details of the stadium deal.

However, pressed on whether the council would cover its costs once all Carisbrook properties owned by the council were sold, he relented.

''Yes, it looks likely council will make a loss,'' he said.

He would not say by how much, insisting that risked divulging details of the conditional sale agreement signed by the council.

It was confirmed on Tuesday the council had a conditional deal to sell the stadium to an unnamed buyer for an undisclosed sum.

Mr Cull has since refused to comment on the details, saying more information would be made public only after the deal was unconditional in ''weeks or months''.

In the meantime, the council was looking after ratepayers' interests by not jeopardising the sale, he said yesterday.

However, the Otago Daily Times understands the council could be left about $100,000 short once all properties were sold.

The council bought the stadium, eight surrounding homes and car park for $7 million in 2009, but has since sold the homes for $692,000 and half the car park - to an undisclosed buyer - for $727,000.

It had also recouped a $2 million loan to the Otago Rugby Football Union, meaning about $3.6 million was outstanding before the conditional deal with Calder Stewart.

The council was also in negotiations to sell the remaining half of the car park, but Mr Cull did not hold out hope that sale would bridge the gap and cover purchase costs of $7 million.

''Even with the best case scenario, it seems likely the council will make a loss on the overall deal,'' he said.

When asked yesterday, council acting chief executive Tony Avery also refused to ''confirm or deny'' Calder Stewart was the buyer, or the $3.5 million figure, that despite national media reports of the identity of the buyer, and suggestions the council stood to lose ''millions'' in the deal - a claim Mr Avery described as ''unfortunate''.

However, he confirmed the council had accrued $860,000 in holding costs in the four years since buying Carisbrook in 2009.

That was well above the $200,000 bill made public by council city property manager Robert Clark last November. Mr Clark was not commenting yesterday, but Mr Avery could not explain the discrepancy other than to suggest a possible miscommunication.

''I'm not clear what question he was responding to.''

The bill for holding costs included rates, maintenance, insurance, water, electricity, property management and security costs, as well as ''advisory'' costs (legal fees and surveying costs) as the council prepared to sell the stadium.

Other costs had been met by the ORFU following the council's purchase of the stadium, until the union quit the site in 2011.

Mr Avery said holding costs of about $200,000 to $250,000 a year had been expected, and were covered by city property operational budgets.

There was no plan to recoup the bill, which reflected the extended time the council had ended up owning the stadium, he said.

''[The] council's been up front about wanting to pursue the sale of Carisbrook, and obviously reducing its holding costs was a factor.''

Despite repeated requests, nobody would say yesterday what was planned for Carisbrook, other than an industrial development in line with its industrial zoning.

Mr Avery said the buyer would have ''some plan, presumably'', but he could not say whether they planned to demolish everything on the site, or keep parts of it.

''What they decide to do is up to them.''

- chris.morris@odt.co.nz

And the $2m loan

I find it difficult to reconcile the fact that the DCC purchase of Carisbrook included $2 million for the ORFU to pay back the 'loan' it had with the DCC.

Why would you give someone the exact same amount they owed you so they could then pay off their debt to you?

Yet this what the DCC did to bail out the ORFU. And then the ORFU relatively soon thereafter announces it is effectively insolvent. So the DCC bails them out yet again by writing off another debt.

If you exclude the $2million loan repayment from the $7million we are left with $5million. And when you add up the DCC sale of Carisbrook,(half the) carpark and the houses it rounds nicely to $5million. So how does the DCC expect to get back the remaining $2million?

In my view the total amount the Carisbrook purchase truly cost the ratepayer is $9 million; $7million plus the $2million yet to be properly repaid by the ORFU. [abridged]

 

 

 

Who voted for it?

At the DCC Council meeting on 17 March, 2008 a vote was made whether to proceed with a Stadium. For: Acklin, Bezett, Brown, Collins, Guest, Noone, Staynes, Weatherall, Wilson, Walls, Chin. Against: Butcher, Stevenson. 

Finances

"It had also recouped a $2 million loan to the Otago Rugby Football Union, meaning about $3.6 million was outstanding before the conditional deal with Calder Stewart."  The fact that the ORFU paid off most of its loans when it sold Carisbrook, and the fact that one of its creditors was the DCC, doesn't mean that the sale price was $5m. The DCC paid $7m. The sale of Burns St houses and carpark has offset that price by $1.5m This leaves $5.5m to be recouped, not $3.6m. In addition, maintenance of the grounds in the interim - maintenance not offset by rental from the ORFU - has increased Council's costs of owning Carisbrook by a couple of hundred thousand a year. [abridged - today's story here should help to clarify - Ed]

Bumble bee habitat discovered

Waynewhoever, we've all heard of spelling bees, looks like you've identified a bumble bee whose habitat is in the very centre of Dunedin.  On the theme of school lessons, I can honestly boast that I was a champ at maths in my class.  Somehow over the years this aptitude has evaporated, which leaves me with this problem: counting on my fingers and toes and some ballpoint pens of which approximately half still work (never the ones I pick up to make a note in a hurry) I figure our rates money managers of the Council really lost $3m in this $7m Carisbrook deal.  How did I get this figure?  By pulling together the shreds of information available online including in the ODT's articles.  I do wish there was a clearer - as in the Greater Dunedin's pre-election position on more transparency - source where all the ins and outs were on the "same page".

Clarfication and questions

It is a matter of record that the ORFU one way or another controlled the ground, the carpark and the houses in Burns Street.  The total price the DCC paid for the package was $7m and of this, $1m went to a trust called The Property Charitable Trust.  This trust seems therefore to have received $1m for the houses and then the DCC subsequently sold them for $692k or a loss of $308,000.  Readers will recall that despite a lot of questions being asked at the time, no-one within the ORFU could tell anyone about this trust.  Maybe it is time for someone within the DCC to tell us just who received this third of a million windfall?

DCC Elections are coming

Thank God that we have the opportunity to vote. We still live in a democracy.

I know I will vote for every councillor who is prepared to cut DCC spending, day on day, week on week, month on month and year on year.

We have clearly overspent on all the wrong things and sadly this Council has made things even worse than the last Council.

I will vote and I encourage everyone who gets voting papers to use them wisely.

Bumbling comes to mind

The Dunedin City Council will make a loss once Carisbrook is sold? The word bumbling comes to mind. When will it ever end?

Local body elections

It's a good thing there are local body elections this year.

Very hard to find historical information about who voted for the stadium.

Cheap housing for lucky buyer

"The council bought ... eight surrounding homes ... in 2009, but has since sold the homes for $692,000" which looks weird to me.  Fully serviced sections, with houses that were occupied (I know one family who lived in one of them and assume the others were tenanted too) so cannot have been in unlivable condition, sold for $86,500 average each, must have been the bargain of the decade.  Was this really the best price the council could get, on the ratepayers' behalf, or was it a bulk deal in a hurry without the ordinary-joe househunter getting a chance to make an offer on one for his family to live in ?  This may have been covered before, if so I'd appreciate a reminder of how - and why - it occurred.

Stadium type accounting

Given that the $2 million repaid by the ORFU to the DCC was given to the ORFU by the DCC as part of the purchase price, why is this being touted as a positive? The DCC financed its own debt repayment and went $2 million further into debt. ORFU contributed nothing except to increase the size of the city debt.

Carisbrook shortfall is $2m bigger?

I believe the $2m loan from the DCC to the ORFU made in 2007 was a cash advance?  So $2m out of DCC bank.  This was then repaid in 2009 when the DCC bought Carisbrook, so $7m out of DCC bank and $2m back in as repayment of loan.  Which leaves a net $7m paid out of the DCC bank after these transactions.  Therefore the shortfall on the DCC sale of Carisbrook based on the figures in your graphic this morning needs to be increased by $2m.  Can someone from DCC please correct me if I have misunderstood anything?   [Our story here today should help to clarify - Ed]

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