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The existence of a secret letter from Dunedin Mayor Peter Chin to the Government, seeking money for the proposed Otago stadium, has been leaked to the Otago Daily Times.
Cr Teresa Stevenson raised the issue, questioning Mr Chin's right to send a letter to the Government without first having it approved by the full council.
In a letter to the editor yesterday she asked: "Does the Mayor have the authority to write to Central Government requesting funding from the new proposed Government grant to fund infrastructure that will boost local economies, for a project of his choosing?
Can he do this without the agreement of the whole council?
Can he suggest gifting city assets in return for such a grant?"
It is understood councillors were told about the letter at a meeting last week and were also told the matter was to remain confidential.
Mayor Peter Chin last night declined to comment.
Otago Regional Council chairman Stephen Cairns confirmed last night that he had co-signed a letter with Mr Chin.
"There is a letter. I did sign a letter. I co-signed a letter. Absolutely."
Mr Cairns would not discuss the contents of the letter.
"While I have agreed the contents of the letter, and co-signed it, I would prefer that Peter had the chance to talk to you first."
Cr Stevenson would also not discuss the contents of the letter but has, in the past, been a vocal opponent of any suggestion that the council sell off social housing.
During annual plan hearings in 2007, one councillor said "he had heard" that if the Government bought 49% of the asset, the council could keep control, yet raise almost half the equity in the housing, which has an estimated value of $71 million.
Auckland city sold its social housing to the Government and Wellington city was paid $220 million in an arrangement with the Government over its social housing.
Asked if his council was aware that he had signed the letter, Mr Cairns said: "They were certainly aware after the fact and . . . I have a strong belief that they were aware before I signed it."
He said he would check today.
The city council has made no secret of the fact that it is "in dialogue" with the Government over stadium funding.
It was unclear last night when the letter had been sent and if the mayor was entitled to write to the Government without a prior resolution from the council.
Asked to comment on Cr Stevenson's actions, Cr Fliss Butcher said discussion about the letter was in confidence.
"She is totally out of line and hopefully this will finish her off. And you can report that, as far as I'm concerned."