Stop the Stadium

Claims the Dunedin City Council is planning to cut core services to overcome a mountain of debt and help pay for the planned $188 million Otago Stadium have been called “deplorable” lies by Cr Richard Walls.

Stop the Stadium president Bev Butler said this week she had written to new Local Government Minister Rodney Hide, asking him to investigate the council’s stadium funding and planned cuts to core services “as a consequence of its support for the stadium”.

Her claims follow comments by DCC chief executive Jim Harland, who last week said a recent review of staff budgets included consideration of deferring some capital projects, such as the next stage of the Otago Settlers Museum upgrade, to save money.

However, he specifically ruled out cutting core services, saying staff did not have a mandate for “radical changes to service delivery”.

Cr Walls - chairman of the council’s finance and strategy committee - rejected Ms Butler’s suggestions, saying the council had “never said such a thing”.

“That’s a downright lie - a downright lie,” he said.

“It’s never even been raised. I have never even heard it discussed.”

He also criticised figures included in Ms Butler’s letter to Mr Hide, which claimed ratepayers were to be “saddled” with total debt rising to $663.255 million by 2011.

In the letter, a copy of which was provided to the ODT, Ms Butler said the council’s debt stood at $137.266 million in September, but was expected to grow to $359.155 million by 2010-11, according to the council’s 2008/09 annual plan projections.

A council guarantee to underwrite $304.1 million in debts held by Dunedin City Holdings Ltd would increase the total debt burden faced by ratepayers to $663.255 million, she said.

As well, more debt would be “piled on” if the stadium project proceeded “in what is probably the worst economic climate since the Great Depression,” Ms Butler said.

“We do not think you will find a more outrageous example of local body financial irresponsibility anywhere else in New Zealand,” the letter read.

However, Cr Walls rejected the calculations, saying DCHL debts rested with the individual companies - known as council-controlled organisations (CCOs) - not council, and were secured against each company’s assets.

Including individual CCO debts as a council debt was “taking a long bow” to the figures, and Ms Butler’s calculations appeared “confused”, Cr Walls said.

There was no formal underwriting agreement between the DCC and DCHL and, in the “unlikely event” a CCO failed, assets worth “far in excess” of their loans could be sold to cover debts, he said.

“In the unlikely event any of them fail and they didn’t get 1c for their assets, then there may be a liability on council.

“If we got to that stage, the whole of New Zealand would be broke, that’s how extreme it is,” Cr Walls said.

Spending programmes outlined in the council’s long-term council community plan (LTCCP) were also not “locked in” until included in the council’s annual plan next year, he said.

Once confirmed, loans were used to spread the cost over each generation of users, known as “inter-generational equity”, he said.

The council had a “very good record” of not needing to raise as much money as projected for its programmes, and its debt management was found to be “outstanding” by credit ratings company Standard & Poor’s, which completed an assessment last year, he said.

Detailed breakdowns of council finances were presented at each month’s finance and strategy committee meetings, and were available to the public, he said.

“I have no problem with people debating the merits of projects or anything that council does and coming up with alternatives . . . but the way they are being used in this context is mischievous and, I think, a slur on the ability of council to manage its debt, which it does very well,” Cr Walls said.

Contacted late yesterday, Ms Butler defended her letter, arguing any decision to defer certain planned capital works projects could amount to a cut in core services, and arguing DCHL loans were “still debt that the city has and that the ratepayers are responsible for”.

“If the stadium goes ahead, they will have to get the money from somewhere. They will have to put the rates up an enormous amount or they will cut back on core services,” she said.

However, Cr Walls rejected this, saying: “People are entitled to their own opinions. They are not entitled to their own facts”.

This artcile was originally printed in the Otago Daily Times p4 on the 17th December 2008

The following is an interview with RNZ 2011 Chief Executive Martin Snedden.

 The failure of Dunedin’s bid to build a new stadium would not dent the south’s chances of hosting Rugby World Cup 2011 games…

The momentum behind a new waterfront stadium in Dunedin appears to be stalling as the global credit crisis takes its toll, but Snedden told The Southland Times yesterday it was not a determining factor in which regions would get games.

A joint southern lobby group has put forward a detailed bid for games in Dunedin, Invercargill and Queenstown.

“If ‘Otago Stadium’ did not become a reality, a redeveloped Carisbrook would be a viable option”, Snedden said.

The southern lobbyists had “done themselves proud” by painting the region in the best light, with Queenstown an obvious attraction.

“I think Queenstown is well placed to do well out of this tournament,” Snedden said.

Today marks the 1000 days to go point before the 2011 tournament kicks off. The pool draw was completed in London recently and the draw and venues would be announced in mid-March.

The ticket strategy would also be finalised next year. About 60,000 visitors are expected to travel to New Zealand during the tournament.

The original article appeared in the Southland Times Saturday p B12 on the 13th December 2008

CALLS ARE mounting for the Dunedin City Council to pull the pin on a proposed new stadium, with one opponent saying the plan is “stuffed”.

Retired property investor Jeff Dickie, who has spent more than $1 million on heritage buildings in the city, told the Sunday Star-Times ratepayers would be burdened for decades if the roofed stadium went any further.

The council had spent about $50m to date developing the plans, paying consultants and buying the land needed for the Awatea St site. “It’s a terrible, terrible mistake. [Councillors] need to have the courage to kill it now and put it out of its misery. Visionaries leave legacies to their children, not liabilities.”

His comments come as public opinion against Otago Stadium mounts and a crucial funding deadline edges closer. Early results from an independent survey of 5000 Dunedin residents show almost 75% of respondents don’t want public money spent on the $188m project.

The Dunedin City Council has agreed in principle to put up $91.4m although $20m of that has to come from sources other than rates. The Otago Regional Council has agreed to conditionally contribute $37.5m and the Community Trust of Otago $10m.

But the Carisbrook Stadium Trust is struggling to secure the $45.5m private funding it needs by February. Last week it revealed it has sold just $6.3m worth of membership products, and has made a desperate plea to the 1600 individuals and businesses who registered interest to convert it into signed contracts.

Dickie said: “I think they’re absolutely stuffed.”

Events promoter and naming rights broker Murray Stott, of Auckland, doubted the trust would get any more money. “They’re daydreamers. Nothing stacks in favour of the stadium.”

He said he had approached the trust with a proposal to secure naming rights for it but it soon became apparent the project wasn’t going to be viable and would fail to attract a sponsor. He said Dunedin would never attract quality international acts for concerts. Artists only had three performance nights available in New Zealand as part of the Australasian leg of any tour and Auckland was the obvious starting point. Logistically, Dunedin would never be an option, he said.

And AMI stadium in Christchurch was always going to be preferred by corporate box holders, because it could host both rugby and cricket. “There’s no possible way [Otago] can make it.”

Other business people who spoke to the Star-Times said there was little support for the stadium as it became clear the proposal was missing vital costings and information.

One Dunedin retailer, who as a tenant of a council-owned property didn’t want to be named for fear of reprisals, didn’t believe a roofed stadium could be built for $188m, a sum Carisbrook Stadium Trust chairman Malcolm Farry has stuck with for at least two years as the maximum cost.

That’s despite a review by consultants Davis Langdon, which warned the council about a “magnitude of exclusions” in the trust’s costings and doubts cast by PriceWaterhouseCoopers about the financial viability of the stadium.

Dunedin Mayor Peter Chin and Otago Regional Council chairman Stephen Cairns have continued to back the project, saying just 10 days ago it was time “to seize the opportunity to showcase the region to the world and build a community asset of enduring value”.

This article was originally printed in the Sunday Start Times on Sunday 7th December 2008.

Wasteful spenders of public money in local government should be feeling scared. I’m sure columnist Brian Rudman would agree with that - especially in these difficult economic times, when prudence should take absolute priority over excess.

He and I generally agree with those leaders of local government in New Zealand who believe that the desire to further community wishlists should be tempered with recognition that ratepayers’ purses are not an endless money tree.

I have to say in response to the November 26 headline “Hide and local government a scary mix” that the heading was absolutely correct as it applies to rooting out those practices that lead to needless expenditure.

John Key said it well: “We want to work closely with the local government sector because, on many issues, central and local government are in the same boat. What we do matters in people’s lives.”

Both central and local government are faced with a need to prioritise carefully what we do. Central government needs to face up to the cost of the obligations it has foisted on local government over the past decade. Local government needs to look closely at the need for expenditure outside its core areas.

In difficult and volatile economic times - such as those we are now experiencing - there are always fresh schemes coming forward with a veneer of public good attached to them that can lead councils into risky areas of investment.

For example: should a ratepayer organisation be involved in any way in the financial arrangements for a visit by a US football team?

Ratepayers are rightly sensitive to increases in what they are required to pay out to councils at regional and territorial level. Too many people on fixed incomes are finding rate demands difficult to meet. The value of their property may have soared in recent boom years, but their ability to service the resulting increase in rates has not.

Central government has listened to the pleas for tax relief.

Local government must take on board that relief from rating increases above the level of inflation are over. I will not be apologising for keeping pressure on in this area.

It does mean that, at times, there will be robust debate around councils’ selection of what they wish to spend ratepayers’ money on. Without a doubt, Brian and I will have differences of view on some of these decisions.

But I must remind him that it was my support for the Public Transport Management Bill, wanted by Auckland councils, that achieved passage of the legislation. Legislation intended to foster competition for public transport subsidies and open the way to integrated electronic ticketing across bus, rail and ferry services.

I’m pleased that Brian recognises my support for the Auckland Regional Amenities Funding Act. The Act view was that there needed to be a fairer sharing of the financial burden for region-wide arts and cultural organisations and facilities.

We’re consistent in our support for “a fair go”. We’re not approaching local government with a zealous ideological approach.

Heaven knows, we’ve had enough of that from the left for the past nine years! But we are demanding higher standards of accountability, less risk-taking with ratepayers’ money and a focus on core areas of council operations.

I’ve got a quality Associate Minister in National’s John Carter. John knows local government well and understands community needs with special insights that he’s gathered from travelling thousands of kilometres around his Northland electorate.

It may be of comfort to Brian Rudman that we don’t have a scorched earth policy. But we are committed to being a voice for ratepayers in keeping council expenditure at levels communities can afford, and our policy is that core functions should take priority when it comes to spending choices.

* Act Party leader Rodney Hide is the new Local Government Minister.

Otago Daily Times, 14 Oct 2008

With its February deadline fast approaching, the Carisbrook Stadium Trust is confident it can achieve the minimum 60% of private-sector funding required to gain final approval to build the stadium.

Formal contracts were sent to interested parties last Friday, and as of yesterday, 20% had been returned, equating to $22.2 million or 49% of the target, trust chief executive Ewan Soper said.

On September 29, the Dunedin City Council set a target of 60% of public funding to be achieved before February for the project to continue….

Seating and membership products would bring in $41.5 million, and the sale of sponsorship products, $14 million….

Contrary to other media reports, donations, although welcome, were not part of the fundraising strategy.

Only $30 in donations had been received by the trust during the last financial year….

Mr Soper said the stadium would act as a “catalyst” for development in the city despite the economic conditions.

Who is paying?

The $188 million budget for the stadium is expected to be funded by:

• Otago Regional Council: $37.5million.
• Community Trust of Otago: $10 million.
• University of Otago: $10 million.
• Dunedin City Council: $85 million.
• Private sector: $45.5 million.

» Read more…

Related:
» Carisbrook stadium: Funding Row prompts rude email response
» Email embarrasses stadium trust

Otago Daily Times, 1 Oct 08

The Otago Rugby Football Union has responded to criticism it has fallen quiet on the Awatea St stadium, with chief executive Richard Reid saying the organisation is “right behind” the project.

Mr Reid said he expected no difficulty in signing an agreement with the Carisbrook Stadium Trust by late November under amended conditions put in place on Monday by the Dunedin City Council.

The council voted unanimously to place a late-November deadline for it to approve agreements between the trust and the ORFU for the sale and purchase of its assets, which include Carisbrook….

The union had to sign a commercial lease at the new stadium, something that was “well under way”, and organise the disposal and sale of Carisbrook….

Trust chairman Malcolm Farry said on Monday evening it had always been his intention to have an agreement with the union completed by the end of the year.

» Read more…

The following extract is taken from Chris Laidlaw’s column, ‘Laidlaw’s Line,’ in the Otago Daily Times, 29 August 2008, p. 21. We have sought permission to reproduce the entire article.

Once upon a time, sports stadiums were built to accommodate people of every class in society. Not any more. Every new sports arena around the world is built to maximise income from its patrons.

There are no terraces where the less well-heeled can stand and enjoy the game as much as people in the high-priced seats on halfway. Terraces simply don’t produce adequate cashflow so nobody builds them any more, even in great cities where the poorer people are the most avid supporters of the local teams….None in this country has been able to persuade the stadium-builders to provide for the poor as well as the rich, even when the councils have been part-funders of the stadium. The economic imperative always beats the social.

The cost of a seat in any of these new-generation stadiums is rising dramatically. The latest example of this is in the US….Season tickets for the best seats at the 85-year-old Yankee Stadium sold for $1000 each this season, but will jump at the new ball park to $2500; in other areas of the stadium, they will range from $135 to $500.

Carisbrook was famous for its terraces. Perhaps it still is. All that will go, however, when, or is it still if, the new roofed stadium is built. Those who complain about the seat prices at the new stadium, however, can be comforted in the knowledge that it’s the same everywhere else. 

Sunday Star Times, 10 August 2008, p. 2.

By Karen Arnold

The Auditor-General and Ombudsman’s office could both be asked to
investigate the Otago Regional Council after councillors decided to
conditionally commit $37.5 million to Dunedin’s proposed new stadium
without reading critical independent reviews.

In March, the Sunday Star-Times revealed several crucial reports to the
Dunedin City Council exposed a lack of information and significant
exclusions in the costings prepared by the Carisbrook Stadium Trust.
PriceWaterhouseCoopers found revenue predictions for the proposed stadium
were less than conservative and “fraught with uncertainty”.

But regional councillors didn’t get the PWC report or the one by
consultants Davis Langdon, according to council corporate analyst Sharon
de Vries.

She told the Ombudsman’s office “Printed private and confidential
information was given to the Otago Regional councillors by the Carisbrook
Stadium Trust. This information was not given to any council staff.”

The trust then gave council Chief Executive Graeme Martin a CD of the
information it gave to councillors she said.

“As you will see it holds no information on peer reviews.”

De Vries made the admission to the Ombudsman, who was investigating a
complaint from Stop the Stadium president Bev Butler.

She claimed the regional council had not properly answered her questions
about whether councillors had read the reports.

Butler told the Star-Times her lobby group was considering laying
complaints with both the Ombudsman’s office and auditor-general’s office.

Consultants Davis Langdon, one of the main peer reviewers, noted that much
of the requested documentation from the Carisbrook Stadium Trust had not
been received and expressed concern at the “magnitude of the exclusions”
in the CST cost estimates.

Asking HOK for advice on a new stadium is a bit like asking a barber if you need a haircut… The advice is ‘Yes’, even if you had one yesterday.

Read this illuminating article from Pittsburgh newspaper the Post-Gazette about HOK Sport’s stranglehold on that city’s stadium building projects.

HOK dominates the world of international sports architecture and has been involved with the Carisbrook Stadium Trust from an early stage. It was HOK which proposed the various options to revamp Carisbrook, as well as the proposal to build afresh at Awatea St.

There is nothing illegal about the way HOK operates, but its aggressive tactics have raised eyebrows.

HOK is both consultant and architect, leading to accusations of a conflict of interest…

HOK’s options to renovate an old stadium expensively are bypassed in favour of its new stadium proposal …

Public money is used for the investigations, but the architectural work is not put out for tender – the job goes to HOK…

Sound familiar? » Read the article