$10 million debt 'a fantastic outcome'

The Otago Regional Council will borrow money for the first time, to fund its final contribution to the Forsyth Barr Stadium.

•  Meeting result 'positive'

It had originally planned to borrow all its $37.5 million contribution to the stadium, but had been able to fund the two previous payments internally while it waited for a ruling on whether its contributions were tax deductable.

Last November, the Commissioner for Inland Revenue issued a ruling that the council was entitled to a deduction for the amount of gifts it made to the stadium trust in the 2010, 2011 and 2012 years.

As a result, the council had agreed the final instalment of $10 million, due on July 1, be funded through external borrowing.

At a council meeting yesterday, chairman Stephen Woodhead said it was the first time the regional council had borrowed money since its inception in 1989, but the way the funding had been handled was "a fantastic outcome for ratepayers".

Council corporate services director Wayne Scott said modelling, taking into account the tax deductions, rate funding and internal reserves, had shown the term of the $10 million loan to cover the final payment would be just three years, instead of the 10 or 12 proposed originally.

The interest rates, fees, margins and conditions were still to be confirmed and the borrowing would be repaid through the targeted rate on ratepayers.

"The council is not used to externally funding," Mr Scott said.

Cr Duncan Butcher said it meant that regional ratepayers did not have to pay as much as was originally thought, easing the long-term burden.

Councillors yesterday were asked to approve nine recommendations covering the final payment, including that it endorse the conditions the council imposed as part of its agreement to part-fund the stadium.

All agreed to do so except Cr Gerry Eckhoff, who disagreed with the council position that all conditions had been met and asked for the recommendation to be dropped.

Cr Eckhoff said the agreed $165.4 million cost was not the final cost, as extra funding had been agreed to by the Dunedin City Council.

Chief executive Graeme Martin said the condition had been achieved and he had a signed letter from the Dunedin City Council confirming it. The additional costs were extras and it had always been intended to be so, he said.

No-one supported Cr Eckhoff's motion and it lapsed, but he asked for his vote against the recommendation to be recorded.

rebecca.fox@odt.co.nz

 

 

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