Dunedin Mayor Dave Cull is refusing to rule out adding
another $2 million to the Dunedin City Council's bill for
losses from the sale of Carisbrook.
That was the value of a council loan to the Otago Rugby
Football Union more than a decade ago, and subsequently
repaid when the council bought Carisbrook and surrounding
properties from the union in 2009.
The Otago Daily Times reported yesterday the council
was likely to be left about $100,000 out of pocket as a
result of a conditional agreement with Calder Stewart to buy
the old stadium, in a complex deal believed to be worth about
The council had borrowed $7 million to buy the stadium and
surrounding properties from the ORFU, but had since recouped
$3.4 million, in part by selling eight Burns St homes and
half a car park in the area.
In theory, if the Calder Stewart deal worth $3.5 million was
confirmed, that would leave the council just $100,000 short
of covering its $7 million debt.
However, when contacted yesterday, neither Mr Cull nor acting
council chief executive Tony Avery would rule out adding
another $2 million to the bill for losses.
The extra cost could be considered because the ORFU only
repaid its loan from the council using the additional money
borrowed by the council to buy Carisbrook from the union.
If the ORFU had instead sold Carisbrook to a private buyer,
and used those proceeds to repay the council's loan, the
council would have received its $2 million back without
borrowing any more money, Mr Avery acknowledged.
The ODT was told yesterday that meant the true loss
faced by the council from the deal could be seen as $2.1
million, not $100,000.
Mr Cull would not comment on the calculation yesterday, but
would not rule out the numbers when pressed. Discussing
specifics would reveal the details of the conditional deal to
buy Carisbrook that was still confidential, he insisted.
Instead, he would only reiterate his belief the council would
not cover its costs as a result of the sale of all properties
associated with the deal.
''In the wash-up, we are unlikely to recoup the full prices
paid, so we will make a loss,'' he said.
The $2 million loan to the ORFU was originally drawn down in
1997 to rebuild the Railway Stand at Carisbrook, and was
covered by interest-only payments by the union.
In 2008, the council agreed to extend the term of the loan to
June 30, 2009, the same year the deal to buy Carisbrook from
the ORFU was confirmed.
By late 2008, the ORFU's then-chief executive, Richard Reid,
was publicly stating the union's intention to use proceeds
from the sale of Carisbrook to repay the council's loan.
In 2009, the council's then-chief executive, Jim Harland,
also publicly stated the council's decision to buy
Carisbrook, in part, aimed to help the ORFU clear debts and
ensure it was in a ''viable financial position'' to use
Forsyth Barr Stadium.
In the end, the purchase did not wipe all the debts of the
ORFU, which also owed $4 million to the Bank of New Zealand,
and the union narrowly avoided liquidation after being left
with a $1.2 million debt and annual losses, even after
Mr Avery said yesterday the facts behind the loan
arrangements were ''quite plain'', but also refused to be
drawn on whether the true loss faced by the council from
buying and selling Carisbrook was $2.1 million.
However, it was ''quite possible'' the council could have had
its $2 million loan repaid, without further borrowing to buy
Carisbrook, if the ORFU had sold directly to a private buyer,
''How people then view that $2 million [loan to ORFU] is
where different parties will diverge.
''It's up to people to draw their own conclusions,'' he said.