Where is the Dunedin City Council with its budget and how
much the stadium is costing the council and ratepayers? The
deputy chairman of the finance committee, Cr Richard Thomson,
explains the official council view while council critic
Calvin Oaten adds up all the costs as he sees them.
Full marks to the folk at the ODT for disclosing in
greater depth the financial commitment of the ratepayers to
the cause of DVML.
This comes as a result of decisions made over time by the DCC
in response to the needs and requests of DVML, more
specifically in its report which was tabled at council last
Monday week. At that point the announcement was ''$2.1
million boost for stadium.''
But to their credit , the ODT has filled out a more
detailed position. In this it defined what was already in
place plus the new, all adding up to $9.125 million.
But is that it? Well, it seems there is more, much more.
Firstly, there is the decision by council to purchase shares
in DVML for an amount of $3.381 million. This is done by way
of reducing DVML's debt by that amount. No money actually
changes hand, but it is a cost to the ratepayers,
nonetheless. Then there is the fact that the stadium's rated
value is $1.8 million but only $134,000 is charged. A subsidy
of $1.66 million.
Further, it shows in the draft budget's contents, an item
concerning the Dunedin Centre, nearing completion. Section 2
page 19 it explains that the sole revenue of this complex is
rates at $1.050 million. It goes on to say that DVML has been
appointed to manage the complex and it will be paid $1.050
million in return for its management and operation of the
This now brings the total DVML support to $15.216m. But the
public's support doesn't stop there. If we add in the
collateral cost factors (which is reasonable) we must
consider the $480,000 of debt owed by the ORFU which was
written off. Then there are the holding costs on the owning
of Carisbrook, amounting to about $450,000 a year. So we now
have $16.146 million.
Then, if we look at DVML's position up to 30-06-12 we see in
its annual report that it has a consolidated deficit of
$6.470 million. This, of course, will be ameliorated in part
by the DCC injection of the share purchase thereby reducing
the deficit to $2.001 million. In view of this, it is
difficult to see how CEO Darren Burden can meet his claim of
moving from the red into the black with forecasts of a
$98,000 loss in 2013-14 followed by small profits of $9000
and $88,000 the following years.
It would seem that on balance, the stadium is no busier now
than it has ever been, so why would there be a turnaround in
its fortunes? Then there is the position of DVL, which
assumed ownership of the stadium. It took possession on May
31, 2012 for the sum of $225 million. In its annual report
for the year ended June 30, 2012 it showed an operation
(before subvention receipt and taxation) deficit of $12.379
million After subvention receipt, tax adjustments and the
ubiquitous interest rate swaps and hedges losses, the final
result was negative $12.891 million.
Why this result? Who knows? Obviously its revenue was below
requirements, but why? It seems that DVL's only obligations
are to service and pay down the stadium debt. This, in
return, requires $4 million in rental from DVML, plus the
$5.25 million from DCHL, plus who knows what? Private
Funding? It seems that the only revenue was $3.667 million
from DVML offset by depreciation of $7.655 million and
interest expense of $8.381 million.
On balance it seems that the whole exercise is very
precariously balanced with the additional risk of DCHL's
ability to produce annual requirements of $10.450 million to
the DCC, plus $5.25 million to DVL out of profits. This is
because DCHL stated that it was no longer prepared to
increase its borrowings in order to meet demands.
Based on last year's result showing a loss of some $5 million
it is difficult to see a turnaround of more than $20 million,
in order to meet the need. Will that vow to not borrow stand
fast?All in all, a very unsatisfactory situation, into which
the ratepayers have been coerced, with the fall-back position
fully placed on them. A shame on the mayors and councillors
who have created this abominable state.