Otago stadium funding rises to $9.1m a year

By Chris Morris

Photo / Steve Wicks
Photo / Steve Wicks

The cost of Forsyth Barr Stadium for Dunedin's ratepayers will rise to more than $9.1 million a year if extra spending signalled by city councillors this week is confirmed.

Despite that, Dunedin Venues Management Ltd chief executive Darren Burden said yesterday there was no guarantee more money would not be needed in future - although he hoped that would not be the case.

Burden said extra support signalled by councillors this week would allow DVML to turn losses into small profits, while the events fund helped attract more big acts to the city.

However, he could not rule out a further call for council cash, saying there were "always going to be risks", as well as opportunities, associated with budget forecasts.

"This gives us the best opportunity to ensure we don't come back to council, but there isn't a cast-iron guarantee."

His comments came after a breakdown of existing funding arrangements for the stadium was presented to councillors during the 2013-14 pre-draft annual plan meeting, which concluded on Monday.

The breakdown showed the stadium already cost the council - and therefore the city's ratepayers - $7 million a year in reduced dividends, extra debt repayments and the cost of a service level agreement with DVML.

That included $5.25 million of annual dividends from the council's group of companies, normally used offset rates, which had been diverted to Dunedin Venues Ltd - which owned the stadium - to pay stadium debt costs.

Councillor last year also decided to spend an extra $1 million a year to accelerate the repayment of DVL's stadium debt, reducing the loans from 40 years to 23.5 years and saving $94 million in interest costs.

In addition, councillors gave DVML an extra $750,000 a year last year for a new service agreement that promoted greater community use of the stadium.

That brought the bill for ratepayers to $7 million a year by last week, when the council's 2013-14 budget meeting began.

Then, on Monday, councillors indicated a desire to spend another $1.725 million a year accelerating stadium debt repayments across DVL ($1 million a year) and DVML ($725,000 a year).

That increased the total cost of the stadium for ratepayers again, to $8.725 million a year, while also freeing up DVML cashflows and saving another $25 million in interest.

And, if the proposed $400,000 events fund was included, drawn from existing council budgets to begin with, the total cost of the stadium for ratepayers was $9.125 million a year.

Extra spending signalled this week was yet to be confirmed, but would be part of the council's 2013-14 draft budget to be released for public consultation in March.

Mayor Dave Cull said yesterday it was important to note extra spending to accelerate debt repayment meant greater savings in the longer-term, by reducing interest costs.

"The ratepayers are going to have to pay this debt sometime, and the longer we take the more interest we pay.

"I see this as an investment in savings."

Any decision to increase the repayment of DVL stadium debt by another $1 million a year, signalled on Monday, would also come in part from within operational savings identified by council staff.

Burden said the financial boost would see DVML's budgets move from the red into the black, with forecasts of a $98,000 loss for 2013-14, followed by small profits of $9,000 and $88,000 in the following two years.

- Otago Daily Times

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