Eden Park a $40m risk to ratepayers

Photo / Richard Robinson

Eden Park's new business plan may not work, and poses a significant risk to Auckland ratepayers, says a confidential report.

City ratepayers have been exposed to a $40 million bill to complete the park's upgrade for next year's Rugby World Cup.

Auckland City Mayor John Banks - who earlier promised not to put a cent of ratepayers' money into the project - voted with councillors in May to underwrite the $40 million shortfall for the $256 million redevelopment after the Government said its $190 million contribution was final.

Now, a confidential council report - obtained by the Herald under the Official Information Act - reveals that officers warned the council it risked having to pay the guaranteed debt.

"This risk is not insignificant in the short term.

"There is a risk that Eden Park's new business model may not work, leading to a default on its debt and the requirement that council pay," senior financial officers wrote.

Officers said banks were unlikely to have the confidence to lend money to the trust, and without the guarantee, Eden Park might not be ready for the cup.

Despite the banking jitters, information received from the trust board gave officers confidence to conclude there was a sound case for providing at least short-term underwriting.

Mr Banks, who gained strong support at the 2007 local body elections for a promise not to put ratepayers' money into the Eden Park upgrade, yesterday played down the risk.

"There is no risk at all on the basis of the information to hand that there will be any default on Eden Park's obligation with the underwrite," he said.

He has instructed council officers to release more details about the trust's financial projections and business plan to back up his assertions.

The council released financial details for Eden Park at the height of the waterfront debate in 2006, when the trust undertook to raise $65 million for a $320 million design it was then promoting by way of a $17.5 million loan and $47.5 million from sponsorship sales and other sources.

"Eden Park has a sustainable business plan and will not require ongoing operating support or subsidisation from central or local government," Eden Park development committee chairman Rob Fisher said at the time.

Yesterday, trust board chairman John Waller, who is also chairman of the Bank of New Zealand, was confident about the latest business plan, although he acknowledged it contained assumptions and risks.

Revenue from events and functions at the park was the main risk.

"We hope those assumptions come off," he said. "We have tried to be prudent and conservative, but we are looking into the future and all we can do is our very best."

Auckland City councillor and Eden Park Neighbours' Association president Mark Donnelly said the figures in the business plan stacked up.

"But there are an awful amount of assumptions, and that is why the commercial world is not prepared to back the trust," he said.

Mr Donnelly feared the $40 million underwrite would be the first step to council funding for Eden Park.

Until now, the council has made loans to the trust board, which stand at $6.5 million with a principal repayment holiday until 2013.

EDEN PARK: THE COST

Redevelopment - $256m

Funded by
* Government - $190m
* NZRU - $10m
* ARC - $10m
* ASB Community Trust - $6m

Shortfall - $40m
* Shortfall underwritten by Auckland City ratepayers