Delta repaid by 'Feb 2024'

Hilary Calvert.
Hilary Calvert.
It could be midway through next decade before Delta retrieves $13.4 million in bad debt from a controversial Christchurch subdivision, newly released documents reveal.

The documents, released to the Otago Daily Times under the Official Information Act, shed fresh light on the decision made by the Dunedin City Council that resulted in the Yaldhurst Village subdivision being bought by Infinity Group.

A recording and transcript of the August 1 closed-door meeting where the decision was made were also released to the ODT, but technical difficulties meant only half of it was recorded.

After the sale of the subdivision, Delta received an initial debt repayment of $900,000, with the expectation it would receive the remaining $12.5 million as Infinity sold off sections.

Until now, Delta has said only it was expected to take "years'' to retrieve the bad debt, but a report tabled at the meeting said it could be 2024 before it was paid back.

"Given the history and the problems with this particular development it is still likely that it will take a number or years to realise the full value,'' former council group chief financial officer Grant McKenzie said in the report.

He goes on to say that "conservative projections'' were that the remainder of the debt, plus interest of 7% per annum, would be cleared by "progressive principal repayments ending no later than February 2024''.

Following the release of the documents, Cr Hilary Calvert, who is understood to be the only councillor who voted against the deal, slammed it as risky, saying there was still a significant chance the subdivision would fall over and Delta would not get its money back.

She was also concerned the subdivision was being bought by a subsidiary of Infinity, which meant the parent company did not have to "stand behind it'' should the subdivision fail.

Cr Calvert was also highly critical of the way the recording of the meeting was handled, saying a tried and tested method - involving having the meeting filmed by Dunedin Television - should have been used, and the transcript should have been released sooner.

Cr Richard Thomson defended the deal, saying the council was making the best of a bad situation and the deal gave it the best chance of retrieving the bad debt.

He accepted the subdivision could fall over but, like the ``vast majority'' of other councillors, he believed the Infinity deal was less risky than the alternatives.

Among the other options presented to councillors was Delta developing the subdivision itself, but Cr Thomson said this would have involved significant investment and would still have involved Delta retrieving its debt as sections sold.

"My view was that the risk to return ratio was simply not sensible from a ratepayer's perspective.''

The report also showed that Infinity bought the subdivision for $18.35 million, funded by a BNZ loan of $3.8 million, Delta's second-mortgage loan of $12.2 million and other second-mortgage loans worth $2.15 million.

It also detailed some of Infinity's previous successful developments as well its failed involvement in the Pegasus town development north of Christchurch.

Delta's debt relates to infrastructure work the council-owned company carried out for the Yaldhurst Village subdivision more than three years ago.

Since then the subdivision has been embroiled in legal disputes, which have prevented it from progressing to a point where the sections were sold.

vaughan.elder@odt.co.nz

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