Chin responds to stadium questions (part 2)

The recent meeting organised by Stop the Stadium at the Dunedin Town Hall, attended by 1800 people, raised as many questions as it answered. So, what is the council's response?

The Otago Daily Times, in the second of a two-part series, put some questions from the meeting to Dunedin Mayor Peter Chin.

His responses to council reporter David Loughrey, with additional comments from council chief executive Jim Harland, are published today.

4. The guaranteed maximum price (GMP) contract the Dunedin City Council is negotiating with main contractor Hawkins Construction has come in for a lot of criticism from people opposed to the project, even before the details have been finalised.

Cr Dave Cull told the Stop the Stadium meeting the contract offered contained exclusions that could potentially expose the council to the risk of price increases, and if those remained and something unforeseen turned up, there was a "very real possibility of cost increases".

But he told the Otago Daily Times after the meeting his knowledge of the contract was based not on the final agreement, but an earlier "iteration" of it.

Carisbrook Stadium Trust chairman Malcolm Farry indicated this week the trust had negotiated a "far superior" contract to the one it started with.

Businessman Alistair Broad said a GMP contract, as used in the construction industry, was a fixed-price agreement, with areas where the price could escalate.

"In short, a GMP contract is actually a formula whereby an unknown price can be quantified, and increased, from time to time during the life of the contract."

Q- What assurance can you offer the public the GMP will indeed allow the stadium to be built without cost increases?

A. I have been advised that any areas of risk have been identified and dealt with, and all information relating to the contract and the GMP will be available to the council for its debate on April 20.

5. People from the building industry have contacted the Otago Daily Times with varying views on whether locals will play much of a part in the stadium's construction, some suggesting there will be little work, others suggesting there will be plenty.

Q- Can you give assurances Otago firms will benefit from the construction?

A- Yes, we can give this assurance. Otago firms will benefit from construction, and contractors will draw on the local workforce.

Once construction tenders have been let, we will be able to confirm the level of participation by local firms.

The procurement process for construction tenders is in accordance with Dunedin City Council procurement guidelines (confirmed by Audit New Zealand).

The objective of the procurement process is to achieve the best outcome for the project in terms of cost, quality and expertise offered, and select contractors based on fair and impartial criteria.

The trust has requested that the main contractor use local firms wherever possible.

All of the subcontracts for the trades (a value of around $75 million) will be re-tendered during the next three to four months, with contracts expected to be confirmed by August 2009.

Otago firms that have registered their interest to supply materials to the project will be asked to submit tenders for consideration.

*Note: The council is bound by its policy regarding the letting of contracted work, but the stadium is being developed by the trust for the city.

Mr Harland said Otago firms had the opportunity to get involved in the construction, and it was up to them to do so.

6. Cr Cull said at the meeting a contract had not been finalised with the University of Otago, and an occupation and revenue agreement between Carisbrook Stadium Trust and the Otago Rugby Football Union had not been finalised.

Q- Are those claims correct, and when might those contracts be signed?

A- A draft sales and purchase agreement with the university exists, and there is delegated authority from the university council for this to be signed.

This draft contract gives effect to the heads of agreement which was signed between the trust and the university on September 20 last year.

A venues hire and licence agreement between the Otago Rugby Football Union and the trust was signed, and copies distributed to councillors by Mr Harland for their meeting on February 9.

Since then work has been undertaken to tidy up minor details.

Mr Harland said copies of "signed, binding agreements" were available to councillors at that time.

"It's a bit mischievous to say those are not finalised."

Q- Will it be before the contract with Hawkins Construction is signed?

A- It is intended that the sales and purchase agreement with the university is signed prior to the construction contract.

It should be noted that the university has provided substantial funding for the purchase of their share of the land.

*Mr Chin produced an email from university Vice-chancellor David Skegg that said the university was still "strongly committed to the stadium project".

"The university council has already approved the purchase of our share of the land, and we are actively planning for the university part of the stadium complex.

"The development agreement to cover this construction phase is still with the lawyers, but we do not envisage any problems in finalising this."

7. The nature of the Government's $15 million "underwrite" of the stadium has not been made clear.

Stadium opponents have claimed if it was a grant or a loan it would be called that.

The possibility has been raised it is merely a promise that if the trust fails to repay the $15 million borrowed, then the Government would consider stepping in.

Q- What are the conditions of the Government's $15 million contribution? Can the money be accessed, or is it an "underwrite" that can only be accessed if private-sector funding is not forthcoming?

A- On March 2, the acting Minister for the Rugby World Cup, Gerry Brownlee, wrote to the trust saying "The Crown is, in principle, willing to underwrite the construction of the Awatea St stadium up to a maximum of $15 million".

Mr Chin said the detail of the contribution was still being worked through with the appropriate government departments.

8. Dunedin City Council transportation planning manager Don Hill told the Otago Daily Times in September last year the regional land transport committee had agreed to fund 65% of the $4.5 million necessary for an alignment change to roadwork planned on State Highway 88 to allow the project to go ahead, though that was yet to be signed off.

Q- What is the status of Government funding for the SH88 realignment?

A- A decision on funding from the New Zealand Transport Agency is pending.

Mr Harland said the change of government last year had altered the situation.

Regarding the regional funding required, there was an understanding that once the plan was approved the money would be available.

Now, the council had to wait for the New Zealand Transport Agency board to approve the funding.

The project to provide strategic-corridor improvements between Frederick St and SH88 is included in the draft Otago regional land transport programme that is out for consultation.

The anticipated cost for the project is listed as $10 million, with the NZTA's share of the cost $6.5 million, and the realignment to allow the stadium is part of that project.

Council strategy and development general manger Kate Styles said the council had been advised the regional land transport committee was supportive of the project.

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