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

http://www.odt.co.nz/news/dunedin/35751/desperate-plea-sell-stadium-seats

by David Loughrey, Otago Daily Times, 12 December 2008

Carisbrook Stadium Trust chairman Malcolm Farry has made another call for stadium supporters to buy seating packages if they want the stadium to go ahead, as the deadline for the trust to raise private sector funding closes in.

The trust has 50 days to sell 500 lounge memberships - for $1500 plus GST a year - that chairman Malcolm Farry yesterday said would take it to its private sector fundraising target of $28 million by February next year.

The original lounge membership agreements had been rejigged, with a shorter commitment term of five years and an automatic right of renewal, plus a later date for the first payment.

The idea was to make it easier for businesses and individuals to sign up before February, Mr Farry said.

Under the new option, the first payment would not be due until just before the planned opening of the stadium in 2011.

Asked why agreements were changed, Mr Farry said it was hard to get people interested in paying before the stadium was built.

People paying for seats at Carisbrook under the original arrangement would have had to pay for two years’ seating packages at the same time.

“We tested it on a few people - they said it makes a difference.”

Those who had already signed could exchange for the new contract.

“That should provide the reassurance businesses need to commit in a period of some economic uncertainty.”

Mr Farry put the trust’s private sector funding tally so far at $19.8 million, though not all of that was signed.

The amount came from $6.8 million of signed commitments for lounge memberships, corporate suites and open club reserves, up from $6.3 million on November 26.

To that, Mr Farry added $3.5 million for corporate suites, which, though not signed, were “pending finalisation” and $9.5 million in sponsorship funding “in advanced discussions”.

Asked about the figures, he said only the $6.8 million was actually signed, but “it would be inappropriate to leave that as a bald figure” because the trust was in the process of finalising contracts.

“I would expect that all to be signed up by January, if not sooner.”

Mr Farry said many stadium supporters appeared not to realise the importance of the February target, and needed to understand they had to commit to memberships before then or they would put at risk funding from the Dunedin City Council and Otago Regional Council.

“It is up to the community, individuals and businesses, to seize this opportunity and commit now to purchasing memberships.

“Only then can we ensure construction can start next year in time for the stadium to be ready for 2011 Rugby World Cup.”

He urged people to commit now, rather than “leave it till the 11th hour and give us all a nervous breakdown”.

The trust is working to the council-set target of raising 60% of $45.5 million, although it also needs to find about $10 million on top of that for bridging finance.

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.

http://www.radiosport.co.nz/SportsNews/spspo/Detail.aspx?id=148884

2/12/2008 7:16 a.m.

The financial crisis could prove the downfall for Dunedin’s proposed new stadium with private funding harder to find

Funding for the new stadium in Dunedin is in doubt but the Carisbrook Stadium Trust is still ruling out a refit of the House of Pain as an option.

The financial crisis is making private funding harder to find and there is now doubt over an application for $10 million with the Community Trust of Otago, with the Trust losing 18 million dollars in six months on overseas investments.

Carisbrook Stadium Trust chief executive Ewan Soper says a refit of Carisbrook is not an option and they can not bring down the cost of construction by 10 to 15 million dollars.

Soper says they are now confident they can build the stadium for the cost they have outlined and they now need to work on the funding options.

The Trust needs to confirm 60 percent of 55.5 million in private funding by February 2 to go ahead with the project. Soper says they are less confident they will meet that funding deadline. He says the councils have made it clear that the Community Trust support is pivotal and there has been some talk within the city and regional councils about suspending the project until the economic conditions are more friendly.

http://www.odt.co.nz/news/dunedin/34078/stadium-funding-doubt

Otago Daily Times: Stadium funding in doubt

By Chris Morris on Monday, 1 December 2008

Uncertainty surrounds a major funding stream for Dunedin’s planned Otago Stadium after $18 million was wiped from the value of the Community Trust of Otago’s overseas investments in just six months.

Continuing global economic turmoil was to blame for the decline, which saw the trust’s capital reserves drop from $190 million on March 31 to $168 million on October 31, trust chairman Bill Thomson confirmed yesterday.

The $22 million drop in value - including about $4 million in grants distributed since March, plus administration costs - meant trust members were now “running the ruler” more closely over each funding application, he said.

It was “inevitable” the trust’s $7 million annual grants budget would be reduced next year, and a reluctance to reduce support for smaller community groups meant the trust’s attitude towards capital projects might need to change, Mr Thomson said.

“We have got to be mindful of our financial position. It’s inevitable we are going to have trim our donations budget back for the coming year.

“We are confident there will be a recovery . . . and we will restore our reserve position in the fullness of time, but it would be irresponsible for us not to put in place strategies to address that shortfall,” he said.

Those strategies would be discussed in meetings early next year, and the debate would “inevitably” include Otago Stadium funding, he said.

He confirmed the Dunedin City Council’s application for a $10 million grant, to help pay for the planned $188 million stadium, had been received and was being assessed as part of the trust’s valuation process.

He said it would be “inappropriate” to comment on the likely outcome ahead of board discussions but added: “We can’t look at the stadium application in isolation of the state of the markets at the present time.

“It [the $10 million DCC application] is something like five times the size of any grant we have made before,” he said.

Carisbrook Stadium Trust (CST) chief executive Ewan Soper said, when contacted, the $10 million grant was “one of the fundamental components” in the stadium funding package, and questioned whether the stadium could proceed without it.

“Obviously, if there are difficulties with the trust’s contribution, it could mean there are difficulties with the project,” he said.

It was not the only financial hurdle facing the project, with private-sector fundraising proving “more difficult than anticipated”, he said.

The trust was required to raise $55.5 million privately, with 60% to be confirmed by February 2, but had so far found only “around $12 million to $14 million”, Mr Soper said.

“I guess the same financial environment impacting the trust is also impacting those who may contribute through private sector funding.”

It was expected the majority of the outstanding money would need to be confirmed in the next few weeks, before Christmas, as January was expected to be a “pretty dead” time for fundraising, he said.

The thought of losing the Community Trust’s $10 million grant was not one Mr Soper wanted to contemplate yesterday.

“We have a lot of work to do to get the private-sector funding over the line. The way the response has been to date, it would be pretty hard to contemplate a greater challenge for private sector funding.”

Dunedin Mayor Peter Chin said, when contacted, the trust’s decision - whatever it might be - was “something we will have to take into account once the decision of the Community Trust is made”.

“With all of these things that happen, they are all challenges to the whole project. That will be a matter council will have to decide come that time. I’m not going to second-guess that at all.”

The Community Trust books are not the only ones under pressure, with Southern Trust chief executive Karen Shea, of Dunedin, yesterday confirming income from the trust’s 1200 gaming machines had dropped by $7 million, to about $47 million, this year.

The result was a $3 million reduction in grants this year, down to $18 million, and it was likely reduced funding would continue next year, with consequences for “hundreds” of Dunedin groups and organisations, big and small, she said.

“We will still continue to try and fund as many organisations as we can, but we won’t be able to continue to fund them at the levels we have in previous years.”

Gaming trusts had already decided not to support the stadium “to the detriment of all other smaller projects” and she doubted the Community Trust board would opt to approve the $10 million grant.

“They [the council] can’t have expectations that they are going to get millions and millions of dollars, because they are just not - not by a long chalk.”

Mr Thomson said he was surprised at the speed with which financial fortunes had turned in the past six months, saying the downturn was “a [financial] storm that is unprecedented in size”.

However, he was confident the trust’s diversified portfolio, including a mix of international and domestic fixed-interest and equity investments, was strong enough to weather the storm “in the fullness of time”.

“It’s just a case of how much time that will take,” he said.

• The latest Carisbrook Stadium Trust report will be debated by the city council at a finance and strategy meeting today.

http://www.odt.co.nz/news/dunedin/33258/survey-shows-big-swing-against-stadium