Carisbrook costs up another $310,000

More payments by the Dunedin City Council totalling more than $300,000 have been linked to the sale of Carisbrook as costs from the deal continue to rise.

The revelations came as Dunedin Mayor Dave Cull yesterday moved to dampen speculation over the sale by confirming building company Calder Stewart had offered to buy the old stadium for $3.3 million, excluding GST.

The conditional offer was still to be confirmed, but Mr Cull sought Calder Stewart's permission yesterday to release the extra details after days of media questions and headlines.

However, the Otago Daily Times has also learnt the council faced extra costs associated with the deal, totalling about $310,000.

The council had been forced to find about $250,000 to pay for the removal of contaminated material from the car park at 24 Burns St, one of the neighbouring properties the council acquired with Carisbrook in 2009.

And, it emerged yesterday, the council had also agreed to make a one-off $60,000 payment to the company that bought half the car park in March last year, immediately after it was sold by the council to the company.

Council city property manager Robert Clark did not return calls yesterday, and council acting chief executive Tony Avery insisted he knew nothing about the payment and could not explain it.

Mayor Dave Cull, bristling at questions about it, also refused to comment, and neither man would say if the payment would be investigated.

Instead, Mr Cull released new figures showing the council had received only $408,000 from the sale of half the car park, not the $727,000 previously stated.

The difference reflected the cost of cleaning up the contamination, which made up the vast bulk of the reduced figure, he said.

The contamination prompted the council to grant itself a non-notified resource consent in July last year, a copy of which confirmed 808cu m of ''potentially contaminated soil'' was to be removed.

The ODT understands the cleanup has not yet occurred, but that the council paid the new owner to cover the cost of the work.

The site had been bought by Auto Court Ltd, but owner Neil Cottle declined to comment.

The council had also earned slightly more than previously thought from selling eight houses in Burns St, also bought with Carisbrook, with figures yesterday showing they had been resold for $740,000, Mr Cull said.

The revised figure included sales commission and was up slightly from the $692,000 previously reported by the council.

However, it was still only an average of $92,500 per house, which Mr Cull said reflected the poor state of the homes and the fact two were on leasehold land.

Together with the conditional Calder Stewart offer, the sums meant the council stood to receive $4.448 million back after borrowing $7 million to buy the stadium, homes and car park - a gap of $2.552 million.

That could improve when the second half of the car park was sold, Mr Cull said, although an overall loss was still expected.

However, the figures did not account for the $2 million loan from the council to the ORFU in 1997, which had been repaid to the council by the ORFU, but only by using the union's proceeds from the sale of Carisbrook to the council - money the council had borrowed in the first place.

If the sums are added together, the council could be more than $4 million out of pocket, but Mr Cull would not predict the final size of the loss yesterday.

Neither did the figures include four years of council costs accrued while owning the stadium, ranging from loan interest costs to electricity and rates, and together totalling $860,000.

On top of that was the $480,000 in rent and other costs owed by the ORFU to the council and Dunedin Venues Management Ltd, but wiped as part of the union's bail-out last year. There could be more money involved, too, as the ODT was told the deal with Calder Stewart included council involvement in its redevelopment, for an unspecified industrial use.

Details could not be confirmed yesterday and Mr Cull would not comment, citing commercial sensitivity.

Mr Cull said he was trying to be as transparent as possible, while working within a still-conditional deal, but did acknowledge the result was ''disappointing''.

''It's disappointing whenever you get less for something than you paid for it, clearly, but the choices in front of council have been to take the best prices that were available.''

However, he would not question the valuation obtained by the council at the time, saying markets and buyers could change. He would not commit to reviewing the process either.

''Council made a decision at the time. It bought the property. There's no point in rehashing it if you can't change it.

''A valuation is not a promise.''

- chris.morris@odt.co.nz

Just keeps getting worse

The ODT's estimate above of a $4m loss by the city on the Carisbrook deal seems about right

On the outgoing side of the ledger should be

  • $2m loan to ORFU
  • $7m purchase of Carisbrook
  • $860k debt servicing/upkeep
  • $400k ORFU rent that was never paid
  • $250k contamination cleanup
  • $60k refund to company that bought carpark
  • $48k commission on housing sale

total $10.62m debt

On the income side of the ledger we have:

  • $2m loan repayment
  • $3.3m sale of Carisbrook
  • $408k sale of carpark
  • $740k sale of houses

total $6.45m income

The difference is a $4.2m  loss - about what the ODT estimates above - on a transaction of $7m this is shows abysmal business acumen, I hope that there will be consequences to whoever it was that brought this deal to the council and those that voted it through without obviously doing any effective due diligence.

Personally I don't think the $2m loan to the ORFU, or its subsequent repayment don't belong here - nominally they are a wash anyway, but if you are going to include it you probably need to include the interest the city paid to borrow that money and the fact that the ORFU appears to have not been required to pay any interest on the loan for at least part of its term (FSC minutes 17/3/8) and paid a below market rate for the rest (4%pa according to the ORFU accounts for y.e. 2009).

Time for some accountability

Yes, that time is fast approaching. A good place to start would be the Carisbrook Stadium Trust and those involved with it.

So many different stories

Seems like there is a lot of variation in figures and versions of events depending on who is telling the story, perhaps it is time for a Ministerial inquiry into the past dealings of this council before they send us all broke.

Contamination responsibility?

The sorry saga of Council paying $250,000 for decontamination of the carpark bought from the ORFU in 2009 begs the question," Why was the Council not made aware of the contamination by the ORFU, and why was the ORFU not forced to pay for decontamination as a condition of sale?" Is this a foul-up by Council staff, or what? Answers please Dave Cull! You can "bristle" all you like but you have a responsibility to openly inform the taxpayers of Dunedin.  

Common sense

Would you not employ someone who has experience in contaminated soils to confirm the 'potentially contaminated area' therfore reducing the amount of material to be disposed of. You may have to spend $20,000 but simple maths (from the above figures) says that for every cubic metre of material you don't have to dispose of you save about $400.

For that kind of saving it is worth looking into.

Leroy44

ORFU

ORFU the gift that just keeps on giving.

You can't always get what you want

''It's disappointing whenever you get less for something than you paid for it, clearly, but the choices in front of council have been to take the best prices that were available.''  Property owners and people who wish they were - or weren't - know that.  If only I'd sold back when the prices rose, and I should have bought before they did, there are plenty of if-onlies.  What no property owners would do with their own money is pay vastly over the odds for land with buildings on it that they were not going to use so these would have to be demolished.  

When decisions are made that see all us property-owners' rates spent incomprehensively doing just that it is not pointless to ask why, and associated questions.  True, it's done, it's history, but unless past judgements are examined how can lessons be learned? I have had a gutsful of the "you have to move on" fashion which equates discovering what we can about responsibility and what lay behind any lapses in it, with blaming.

It seems as if the modern way is that where bad decisions cannot be undone they should be forgotten, except when they were crimes of violence or historic rip-offs of Maori.  We may indeed "move on" but I don't like our chances of moving anywhere better unless we are able to get straight "transparent" disclosure of the full story behind more recent events that turned out badly, such as who made the decisions, and what persuaded them that it was appropriate and fell within their legitimate operating brief at the time.

 

everything

Maybe we Dunedin plebs should transfer all our money to the DCC's account so they can spread it around to their deserving friends...

More than $4 million out of pocket?

Bureaucrats in business, when will it ever end?

oh so wrong Dave

''There's no point in rehashing it if you can't change it."

Dave you just don't get it do you? As this is one of many many mistakes we are now paying for as rate payers and some one needs to "pay" the price for it. These same people that have caused this mess and more are still there, it's time to take the bull by the horns and lop some heads off but it's very obvious you won't.

It's also time for a full independent investigation of the original deal on this and other matters and if you do Dave and unlike the very damning p.w.c report on the f.b.s you must act decisively as you also have done nothing about that report, who has paid the price for that? was anyone fired? removed? made to apologise?

tick tock Dave and like the sands through the hour glass.....

Carisbrook

This has got to stop the ratepayers of this city are not all investment bankers most of them work for a living a lot on minimum wage. The stupidity has to stop before we are declared the first bankrupt city in New Zealand.

[Abridged]

Look a little deeper

The ORFU and previous councils have taken us, ratepayers, for a ride . Who were the people involved? Who had links with both ORFU and DCC?  these people need to be identified and held to account in some way. For example, as ratepayers, we need to make sure they are not re-elected to positions within either organisations. These people have remained hidden for too long.

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