Audit NZ warns Dunedin City Council over Forsyth Barr Stadium costs
Dunedin City Council is facing having to increase its rates, raise its debt levels or cut services as a result of financial risks associated with its Forsyth Barr Stadium.
Audit New Zealand issued the warnings in two reports recently presented to the Council.
One report studied the council's draft long-term plan for the next decade, to 2022, while the other scrutinised the council's performance in the year to 30th June 2011.
In the long-term plan Audit Director Ian Lothian, said Council assumptions the stadium would cover its own costs and ensure rates were not affected remained a "high financial risk" to the council's plans.
Lothian warned Stadium revenue projections were "as yet unproven", dependent on income from rentals and sponsorships, and "still ... a big assumption."
The near-liquidation of the Otago Rugby Football Union highlighted the risks inherent in the stadium investment, Lothian added.
Lothian's report also noted the recent review of the stadium and Dunedin Venues Management Ltd, but also uncertainty over what impact potential solutions might have on the council's plans.
The warning was one of four key risks highlighted by the Audit NZ report, which also included debt levels and the need for further savings to meet self-imposed caps on rates increases of 4% in 2013/14 and 3% thereafter.
The Council's list of capital spending, coupled with tight budgets and uncertainties, meant the council was already operating at - or in one case slightly beyond - self-imposed limits, one of which restricted interest costs to less than 8% of total revenue, according to Lothian.
The Audit NZ reports were a requirement under the Local Government Act for council annual and long-term plans, and would be followed by an audit of the Council's finalised long-term plan, once adopted.
Lothian also recognised the council's "considerable" efforts to set aspirational, but realistic, targets in a "challenging" environment.
5th August 2011 - DUNEDIN’S FORSYTH BARR STADIUM OPENS
23rd October 2009 - NEW WORLD HERITAGE SITE RECOMMENDED FOR DUNEDIN CITY
