Cull unhappy about stadium payment

Dave Cull
Dave Cull
Dunedin Mayor Dave Cull has questioned the ability of the council's group of companies to pay what it promised for the Forsyth Barr Stadium.

He said yesterday the council should have been advised earlier there was a problem, and said the issue would be the first order of business for a new group set up to liaise with council-controlled organisations (CCOs).

But his claims have been rebuffed by Dunedin City Holdings Ltd (DCHL) chairman Paul Hudson.

This week, the council was briefed by DCHL, and while the confidential meeting was warned of the implications for the companies of the level of dividends required, Cr Hudson said the only recent change was positive, with news the group would soon receive more than $3 million from carbon credits, and $1 million a year after that.

He was "quite surprised" Mr Cull was speaking about aspects of what was discussed at the meeting, as it was confidential.

Council insiders spoken to last night alluded to political pressures they felt were behind Mr Cull's comments, following criticism of his decision to back a further $5.1 million of funding for the stadium.

Mr Cull denied that last night.

During an interview with the mayor yesterday on the extra funding, the matter of DCHL's dividend payments was discussed.

The holding company is required to pay a dividend of $5 million a year to meet stadium debt.

While the company had told the council it could come up with the payment, "it would appear that is not the case", Mr Cull said.

There appeared to be a considerable gap between projected revenue and what would be needed for dividends.

"I [brought this up] before the election," he said.

"It is an unsustainable level of debt."

Asked if it was worse than the situation reported last month, when DCHL told the finance and strategy committee the effects of servicing the debt meant the company might struggle to take advantage of business opportunities that came its way, he said: "It's much more than that, apparently."

There were options to deal with the issue, Mr Cull said, including putting off projects and reducing operating costs at the council.

"We will have to look at cost-cutting options seriously."

Asked about Mr Cull's comments last night, Cr Hudson said he did "not know any of that".

"It's totally news to me."

DCHL was required to pay a dividend to the council, and was doing so, Cr Hudson said.

Despite the company paying the dividend, there was a proviso, he said.

The holding company had been paying a dividend to the council that was higher than what it was earning, and the company was having to borrow money to pay it.

"There will come a point in time when that is no longer sustainable," Cr Hudson said.

"We are having that discussion at the moment."

The company was "not running out of money tomorrow or next year", he said, but it was putting out a signal the dividend needed to come from earnings, rather than borrowings.

Acting council chief executive Athol Stephens said it would be "inappropriate" for him to comment on the matter.

Asked if there was a change to the finances of the stadium the council needed to deal with, he said that was a matter for the new CCO liaison group.

The CCO liaison group was voted into existence earlier this week.

It is made up of Mr Cull, deputy mayor Cr Chris Staynes, Mr Stephens, the chairman of the finance, strategy and development committee, Cr Syd Brown, and the committee deputy, Cr Richard Thompson.

Cr Brown said last night it was difficult to comment on information discussed in a confidential meeting.

"Therefore, I have to be very reserved in my comments," he said.

"Integrity is important to me.

"If people are going to talk out of school, they are going to have to take the consequences of talking out of school."

There was a process in place to discuss DCHL's forward projections, and Cr Brown was unaware of any document, confidential or otherwise, that advised the council the company could not meet its commitment.

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