Ratepayers still stumping up for stadium
Greater Wellington Regional Council ratepayers will end up paying more than double the original $25m loan provided by the council to fund the construction of Westpac Stadium.
It is even worse for Wellington City Council ratepayers who, under the terms of a separate loan, have paid an extra $15m and face interest-only repayments of around $1m a year for the foreseeable future.
Ratepayers throughout the region have since 1998 been charged a targeted rate to repay the $25m regional council loan.
When the loan term expires in 2018 and is removed from regional council rates bills, ratepayers will have paid $51.9m.
Regional council chief financial officer Warren Tocker admitted it was a lot of money.
"It sounds a big number but that is just the reality of it . . . that's what happens with interest."
Interest for the first 10 years was 8.55 per cent a year, dropping to just over 6 per cent for the remainder of the term, Tocker said.
The regional council provided $25m to the Wellington Regional Stadium Trust as a non-recourse loan to help fund the stadium's construction. A non-recourse loan is essentially an interest-free gift which need never be repaid. No repayment has ever occurred.
While most regional ratepayers will have paid off the stadium in 2018 and be free of any financial obligation, that is not the case for Wellington City Council ratepayers.
The city council also provided a non recourse loan to the trust of $15m - none of which has been repaid by the trust.
The council did not take out a specific loan to raise the $15m, instead lumping it into its general borrowing programme.
Council spokesman Danny McComb said Wellington ratepayers had not been asked to repay the $15m principal, which he suggested would one day be repaid by the trust.
"Wellington ratepayers . . . will have paid annually the interest costs associated with the council borrowings to fund the loan to the stadium.
He said the annual interest was about 6.5 per cent, or $975,000 a year.
Using those figures, in the 16 years to the end of June this year Wellington ratepayers would have coughed up $15.6m on interest payments alone.
And because the original $15m loan stays on the council's books as debt, there is no interest repayment end in sight for Wellington City ratepayers.
Stadium trust chairman John Shewan said both of the council's non- recourse loans were "seed funding". It was the only contribution received from local government. No funding was received from central government.
"In the funding deed there is a requirement for the loans to be repaid only if funds are available, but taking into account the obligation of the trustees . . . to maintain the facility to world-class standards."
It was never expected that repayment on either loan would commence in the short term, he said.
"In fact, to a large degree they are considered as equity put in by the two councils. It may be that they are never repaid if the stadium continues to reinvest its profits into developing the stadium."
Westpac Stadium chief executive Shane Harmon said the stadium had "delivered an exceptionally high return to the city for the investment put into it.
"We do an economic assessment every five years. After 10 years it had provided $500 million in economic return for the region.
"My expectation is it will be over $800m by the time we complete our 15-year analysis [at the end of the year]," he said.
The stadium cost $130m to build.
The Dominion Post