Dunedin Mayor Dave Cull discusses the cost of the
Carisbrook deal yesterday, watched by (from left) council
chief executive Paul Orders and council city property
manager Robert Clark. Photo by Gerard O'Brien.
The Dunedin City Council made a bad call for the wrong
reasons when it bought Carisbrook, and the nearly $3.5 million
cost to ratepayers is regretted, Mayor Dave Cull says.
The size of the total losses to the council was finally
confirmed by Mr Cull at a packed media conference yesterday,
days after the deal to sell the ground to Calder Stewart went
New details of the sale agreement with Calder Stewart were
also revealed. The company has been given up to three years
to pay for Carisbrook, as and when parts of it are subdivided
The $3.3 million sale to Calder Stewart meant the council
would recoup $4.7 million of the $7 million it spent buying
Carisbrook and surrounding properties from the Otago Rugby
Football Union in 2009.
That left a $2.3 million cash loss for the council, which
would rise to about $3.5 million if other bills - including
maintenance, interest and other holding costs accrued while
it was the owner of Carisbrook - were included, Mr Cull
However, he refused to point the
finger of blame over the loss yesterday and defended the deal
with Calder Stewart, insisting the council had no choice but
to ''cut our losses''.
The result was ''not ideal'', but, faced with annual holding
costs of $270,000 a year from owning Carisbrook, the sale
would at least stop the council ''haemorrhaging'' money, Mr
Cull said yesterday.
''We went out and got the best deal we could on the market
... We had to cut our losses.
''We were losing money all the way through. Now we have
stopped losing money. That's a good thing.''
Council city property manager Robert Clark said the result
reflected the ''huge impact'' of the global financial crisis,
which had knocked buyer confidence around the world,
including in Dunedin.
Despite that, council chief executive Paul Orders said the
council could not afford to wait for a better market.
''The reality is we were carrying, as a council, a stadium
which was surplus to requirements. In other words, that's a
liability,'' Mr Orders said.
Mr Cull said he voted against the Carisbrook purchase when a
city councillor in 2009, but was outvoted in a bid to ensure
the Otago Rugby Football Union was a viable tenant of the new
Forsyth Barr Stadium.
The decision was made after two independent reports valued
the stadium and surrounding properties well above $7 million.
Copies released yesterday showed Chapman Consultancy had, in
April 2008, put the package's value at $9.02 million, while
DTZ had, in February 2009, estimated its value at $8.345
A third valuation more than two years later in December 2011,
also by Chapman Consultancy, put the value of the stadium
alone - excluding the other properties - at $7.5 million.
In the end, the council received less than half that for
Carisbrook, and just over half the original valuation for the
Despite that, Mr Cull was reluctant to criticise the
valuations, saying they were ''valuations ... not promises''.
The estimates had ''clearly'' been proven wrong, but there
were ''a whole lot of decisions here that led us into that
situation'', he said.
''That's politics,'' he said.
As part of Calder Stewart's purchase deal, the company paid a
$200,000 bond to the council, to be repaid if the site was
largely cleared within six months.
That was designed to encourage development of the site.
The company would have up to three years to pay the $3.3
million sale price to the council.
The company was expected to subdivide and sell the property
for industrial use, and would give 60% of the proceeds from
each sale to the council, together with 5.5% interest each
year, Mr Cull said.
Any shortfall after three years would be made up by the
company, meaning the council's sale proceeds were guaranteed,
Mr Cull said.
The deal gave the council a better result than an earlier
offer by Calder Stewart to pay $3 million cash up front, and
would also put an end to holding costs, he said.
The $3.46 million cost of the deal included the council's
$2.3 million cash loss, as well as $815,000 in holding costs
and $347,000 owed to the council by the ORFU from the union's
time as a Carisbrook tenant, and later wiped.
The figures do not include an earlier $2 million loan from
the council to the ORFU in 1997. Mr Cull said the loan had
been accounted for.
It had been repaid by the ORFU at the time the council bought
Carisbrook in August 2009, and the cash was then used by the
council as part of the financing to buy the stadium from the
union, he said.
That meant the council only had to borrow $5 million to fund
the $7 million purchase, he said.