Audit Ordered by Orders

Audit Ordered by Orders

Stadium Drain Still Unexplained

A pre-election report from the Dunedin City Council (DCC) has confirmed that council workers have been tasked with calculating a new, higher figure for the construction of the Forsyth Barr stadium, believed to be at least $260 million. The DCC’s CEO Paul Orders included the announcement in his report on the state of the Council’s finances last Monday. This latest effort to add up costs comes more than a year after an accounting firm produced a comprehensive report detailing the costs and funding of the indoor sports field.

The cost of building Forsyth Barr Stadium has long been a matter of contention. When the idea of building a new stadium in time for the 2011 Rugby World Cup was first mooted by the Carisbrook Stadium Charitable Trust in 2006, an estimate of $150-$180 million was produced by the group. By 2007, the DCC estimated that the stadium would cost $188 million to build, and the price tag for the sports ground has been growing ever since. In 2009, then-Mayor Peter Chin was telling the media he was confident that no more than $198 million would be needed to construct the covered pitch.

In May 2012, PricewaterhouseCoopers’ Eric Lucas and Steven Drain produced a report detailing the cost of the stadium and how it had been funded. They stated that building Forsyth Barr Stadium had cost $224.4 million, due in part to numerous cost overruns in equipping the stadium. The DCC had contributed $162.7 million to the project – far more than the $91.4 million for which it had planned. This was largely due to the DCC’s optimistic expectations of private funding for the venture not materialising.

The result of these budget blowouts has been a drastic increase in council debt. Orders’ report states that the DCC’s core debt now totals $227 million (with an additional $144 million of debt outstanding on the stadium) as well as $249 million of debt attributed to Dunedin City Holdings Limited. Orders says that this will severely constrain the DCC’s ability to engage in major capital expenditure projects for the foreseeable future.

Despite these major financial blunders, Orders says no council staff will be fired. Orders said that legal advice he had obtained suggested that blame could not be laid with any individual staff member. Nonetheless, he was confident that such mistakes could be avoided in future, telling the Otago Daily Times that “lessons have been learnt and will be implemented in any future projects.”

Mayor Dave Cull says the new stadium cost estimate will include the cost of purchasing Carisbrook Stadium (which the DCC recently sold at a $2.3 million loss), the $0.4 million debt write-off given to the struggling Otago Rugby Football Union in March, and the cost of rerouting State Highway 88. He said the public should decide whether such costs should be counted in the stadium bill.

Critic speculates that the latest totting up of the stadium bill may have some political motivation. An unknown source has suggested to the ODT that the estimate will top $260 million. This total is higher than any before seen, and is set to be released at a date closer to this year’s local body elections. Of the Councillors who voted for the stadium expenditure, John Bezett and Andrew Noone have confirmed that they will stand again. Three others are understood to be standing down, while Crs Bill Acklin and Paul Hudson are yet to confirm their intentions.
This article first appeared in Issue 19, 2013.
Posted 2:29pm Sunday 11th August 2013 by Jack Montgomerie.