Stadium debt back with staff

Dunedin city councillors yesterday baulked at the idea of doubling the period of stadium loans to 40 years, as the council scrambled to deal with the fall-out from a $3 million annual stadium debt repayment shortfall.

But ratepayers may be looking at an increase in the rates they will pay for the Forsyth Barr Stadium, despite years of assurances that would not be the case.

Everything from asset sales to taking money from the Waipori fund was discussed yesterday, as the city's elected officials faced a $115 million increase in interest one described as "scary".

And the morality of "inter-generational debt" - getting the next generation to pay for infrastructure built today - was questioned.

At the end of the Dunedin City Council finance, strategy and development committee meeting, more work was asked of staff to find out what would be required to pay the debt within the 20-year period.

In late July, it was revealed council companies would not be able to provide $8 million in dividends annually to help pay for multimillion-dollar spending.

Part of that was $3 million the companies were required to come up with for the stadium.

A report to the committee from council financial planner Carolyn Howard suggested the period taken to pay off the loans should be doubled, from 20 to 40 years, with the matter revisited in 10 years, once private-sector debt for the stadium was paid off.

The report also suggested city ratepayers could be asked if they wanted to add about $13 a year to the average rates bill, an amount that could help pay off an extra $1 million of debt a year.

It said a capital maintenance fund of $6.3 million should be deferred for five years.

Cr Kate Wilson said the figure she read in the Otago Daily Times of a $115 million interest increase was "scary".

Cr Richard Thomson said he was concerned about the plan to defer the capital maintenance fund, and wondered whether the stadium had a "realistic" financial plan for repairs and maintenance.

Cr Neil Collins argued, not for the first time, for some of the council's almost $70 million Waipori investment fund to be used to repay debt.

But acting chief executive Athol Stephens said that would make little difference, as the interest earned from the fund would be about the same as the interest that would be saved if debt was paid off.

Cr Collins responded, in volatile economic times, it might be better to pay off debt, rather than "playing the markets" with the money.

Asked about the plan for the "average" ratepayer to pay an extra $13 a year, Mr Stephens said that would reduce the payment period to about 27 years.

"It's quite a whack," he said.

Asked to clarify that last night, Mr Stephens said the extra money would have to be paid annually over the 27-year period of the loan to bring it down to that time period.

Cr Collins moved $10 million be taken from the Waipori fund, which Cr Fliss Butcher seconded.

"The fund will grow again," she said.

The motion was lost, though Cr Andrew Noone said he would be happy to see a report on the possibility of asset sales, including the fund.

"It's only proper to look at reducing debt by selling assets."

Mayor Dave Cull said this generation built the stadium, and there was a moral question regarding who should pay for it.

"It needs to be paid for sooner rather than later."

The recommendations for further staff work on ways to keep the loans at 20 years were carried. The information requested is expected for a council meeting on September 19.


Recommendations
1. Capital maintenance fund of $6.3m to be deferred.
2. Council staff to investigate and report to the council on:a. Impact of gathering additional ratepayer funding of $1m a year.
b. Ratepayer contribution required to repay stadium loan within 20 years.
c. A targeted rate option to allow the term of the loan to remain at 20 years.
d. Ways capital repayments could be restructured to reduce the timeframe to less than 40 years, taking into account the council debt profile in the "out" years, after 2025.


- david.loughrey@odt.co.nz

 

 

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