Call for Carisbrook losses to be investigated
Critics of Dunedin City Council say more losses of millions of dollars for city ratepayers from the sale of Carisbrook should be included in a current Auditor General's investigation.
The Office of the Auditor-General is investigating other property deals by the council's companies.
Russell Garbutt and Bev Butler, both critics of financial arrangements between the council and the Otago Rugby Football Union (ORFU), say the millions of dollars in losses incurred by city ratepayers in the sale of Carisbrook require explanation.
The council has entered a conditional sale agreement to unload Carisbrook, which it bought from the financially ailing ORFU for $6 million in 2009. It paid $1 million for adjacent housing owned by an ORFU trust resulting in the council borrowing the $7 million total package price.
The council is releasing few other details about the sale agreement but it is being widely reported that construction company Calder Stewart is the buyer, for $3.5 million.
Council had reportedly already sold half the car parking for $727,000 and the housing was sold some time ago for $692,000.
Ms Butler believed an investigation should be included in one under way by the Office of the Auditor-General into council-owned company land deals in the Lakes District. ''Obviously there are some questions that still need to be answered in terms of the actual value of the Carisbrook property.''
Mr Garbutt described the Carisbrook deals as extraordinary.
"Only an independent and transparent investigation would reveal the facts behind why the (council) paid a total of $7 million for the Carisbrook package when the market has revealed that the value of the package was about half that," Mr Garbutt said.
"And why did the DCC pay $1 million for the houses and, very soon after, sell for a sum which resulted in a loss of $308,000. While a small disparity can be explained by market movements, these are major losses, which the council seems reluctant to explain to the people who have sustained them".
The council voted to buy Carisbrook in 2009 on a recommendation from its former chief executive Jim Harland. In the report Mr Harland cited the need for the ORFU to be financially viable because it was to be the anchor tenant for the Forsyth Barr Stadium.
The union had a $2 million debt to the council and about a $4 million debt to the Bank of New Zealand.
After the Carisbrook purchase, former Dunedin mayor Peter Chin said the $7 million paid was supported by a registered valuation.
An independent valuer at the time gave Carisbrook a valuation of around $3 million.