Hamilton V8s promoted with wrong figures

Documents obtained by The Waikato Times reveal a haphazard decision-making process left Hamilton committed to the V8s, an event never likely to come in at the $7.9 million cost sold to the public and city councillors.

The documents, issued to the Times by several council sources, show unanswered questions remain over the $38.7m race debacle.

The paperwork paints an increasingly clear picture of the confused early days of the city's bid for the ultimately unsuccessful street race, and the figures at the centre of the pitch.

A January 2006 letter from Elephant Management Co – whose director and major shareholder was failed initial race promoter Steve Vuleta – to city general manager marketing at the time Philip Burton shows the work done by senior management weeks before elected members were first briefed on the proposal.

The letter details the first costings for the event, later shown to be dramatically underestimated. Mr Vuleta drew on an earlier failed Wellington race bid to estimate track infrastructure costs of $5.775m. He further estimated a year-one cost to the city of $10.275m, and further costs of between $2m and $2.5m in each of the contract's seven years, pushing the city's first-year cost out to at least $12.275m.

The figures appear to contradict the figure of $7.954m cost given to councillors and the public for more than two years.

Two months after the letter was written, city general manager corporate Mike Garrett wrote to Audit New Zealand seeking its endorsement that the still-secret proposal should not trigger a major public consultation, putting its upfront cost at $7m plus host fees.

Audit NZ had asked why the council was not formally consulting the public. Mr Garrett told key figures of that acceptance – again referring to a $7m "upfront cost" – in a March 8 email to chief executive Tony Marryatt, mayor Michael Redman, Mark Brougham, deputy chief Blair Bowcott and Mr Burton.

Councillors have criticised Audit NZ for not picking up on the event's exploding costs despite auditing the council annually.

Mr Vuleta said last night he could not explain the $7m figure given to city councillors and the public, and that his estimates were preliminary ones which would have increased by the time the council began commissioning contracts for track infrastructure, amid sharply rising oil and steel prices.

"My indication was ten plus another two million for them to go away and work out whether they wanted to be in the game or not. I can't answer for them why they wanted to quote a lower figure," he said.

Further documents reveal the event was discussed in confidential, informal and unrecorded discusssions and workshops, and no evidence that the contract was voted on in an official meeting of the full council.

They also show the council paid $500,000 plus GST to the initial promoters in May 2007, six weeks before any formal vote committed the city to the event.

Instead the first vote was by the contracts subcommittee on May 30, 2007, when chairman Roger Hennebry, mayor Bob Simcock and acting chief executive Graeme Fleming approved a $1.44m infrastructure contract.

An extraordinary meeting of the full council two weeks later, on June 11, backed adding "the net V8 project cost's $7.954m" to budgets.

A leaked February 2009 memo from Mr Bowcott to Mr Simcock and then-council chief executive Mr Redman details how badly the first 2008 race fared. Optimistic early indications from CSM director Dean Calvert of a $2m profit became a $360,000 loss.

"According to Dean, this [forecast profit] was steadily revised downwards as the event got closer, but unfortunately that information did not get to the HCC project control group managing our input to the event."

Waikato Times