Tauranga City Venues Limited's request for $5million from the Tauranga City Council is among items to be considered today in the council's first meeting of the year.
It is revisiting the council controlled organisation's request first made at the December Ten Year Plan council meetings.
Financial woes related to the purchase of Baypark stadium have its operator, TCVL, asking the city council for $5million.
TCVL wants $5million to enable the company, which operates Baypark and the TECT Arena, to be financially sustainable.
Baypark is not making the money it was expected to, which has resulted in TCVL being unable to make a profit because of the high level of debt created by the original purchase of the Baypark stadium.
Currently TCVL has excessive debt relative to its revenue base, and hence the interest costs are unable to be funded in the short term.
This shortfall is currently being capitalised back to loans, which is further exacerbating the problem.
The options to be considered by council are: pay TCVL $5million from rates.
Provide for an equity of injection of $5m structured as uncalled capital with $2m called in the 2012/13 financial year, $2m called in the 2013/14 financial year and $1m called in the 2014/15 financial year also rate funded by council.
Five million dollars will reduce TCVL's debt, significantly improving the ability of TCVL to generate profits and begin to repay debt due to lower interest levels.
The impact on council of providing this equity injection would be a ratepayer funded loan of $5m.
This would require rates input of $525,000 in year one made up of interest payments ($325,000) and debt repayment ($200,000).
As the loan is repaid overtime the rate contribution would decrease.
Option two, the instalment scheme, will delay TCVL's return to profitability and full debt repayment.
If the council takes option three and declines the request, it will be difficult for TCVL to generate any profit in the short term, resulting in debt continuing to increase in order to cover interest costs.
The community will be consulted through the Ten Year Plan process.
23 comments
You gotta be joking
Posted on 24-01-2012 07:10 | By The Vale
You want my money to fund your under performance.... now I'm getting angry
Consider
Posted on 24-01-2012 08:21 | By wonkidonki
Quite frankly I would rather bulldoze the thing down than pay a cent towards it. TCC wont punt the venue and a good example of that was when no world cup games were hosted. Once we bail the stadium out how long will it take for us to bail it out again.
The Wanters
Posted on 24-01-2012 08:37 | By Gee Really
Lately I've read about many wants on Sunlive. TCVL wants $5 million, Tourism BOP wants additional money for promoting the Bay post Rena, and some groups want council to give the land for a new educational facility in Durham Street. There's probably a lot more wanters out there too if you count all the groups who get ratepayer funding on an annual basis. I could be forgiven for thinking that times are good and that we're living in a land flowing with the milk and honey of money. Are ratepayers somehow immune from recession and able to continue to cough?
Unbelievable
Posted on 24-01-2012 08:50 | By Jack the Lad
First Tourism B.O.P now this, and it goes on and on!!!!! When for goodness sake are we going to employ people, not on inflated salaries, but base rates with performance incentives, if we cannot attract the correct people, lets get a few locals together with experience in this feild and let them do it.
What is the CEO Doing?
Posted on 24-01-2012 09:01 | By wreck1080
Sell the stadium -- unless, anyone thinks it can make money? Tauranga is dying under debt.
White Elephant
Posted on 24-01-2012 09:25 | By bigted
When does council learn? Remember we were promised on a business plan that this stadium would be self-funding and not a drain on the taxpayer. We were indeed sold a white elephant by "You know who". If it was forecasted to make money it would have been kept in private ownership. Sucker ratepayer again!
Why revisiting?
Posted on 24-01-2012 10:17 | By nerak
If TCC had half a brain amongst them there would be no time wasted today in "revisiting" this issue. Tauranga ratepayers have very obviously had a gutsfull of the open palm syndrome, particularly when enough is never enough, and usually too much in the first instance. Perhaps a "revisit" to "you know who" in this instance, to see if he has a benevolent streak, is in order? (I am an optimist!) Agree with all comments so far. I have never set foot in this venue, probably never will, but am forced to pay for it. TCC, apply very careful consideration in your meeting today, you desperately need to start making some RESPONSIBLE decisions, which to date you have seldom done. Try listening to the people who pay you, just for a change.
Welcome to the real world
Posted on 24-01-2012 10:17 | By CC8
Yes the real world of business, where people daily put everything on the line to make a go of business, where they struggle for years to make ends meet and pay the bills, all at exorbitant rates of interest.......and a LARGE PART of all those excessive costs is public servants sitting behind desks shuffling paper and making arbitrary decisions about things they have no real knowledge of. Clipping the ticket at every opportunity, and forcing prices through the roof. Council is meant to be here to support people and business to build better communities, instead with layers and layers of ass kissing,and ass covering civil servants we have a culture of take take take , all ignorance and and no accountability. It would be a great thing if any of these fresh out of school "degreed know it alls" actually had some experience in the real world of business before they started making (bad) decisions with far reaching consequences for everyone in the community.
Where is the control
Posted on 24-01-2012 11:23 | By Openknee8ted
In Council Controlled Organisation? TCVL TCAL the toll road every projection is to break even and then every projection falls short. Why can't we have an early election for TCC as their performance falls way short and the ratepayer foots the bill for their incompetence.
Sad and sick
Posted on 24-01-2012 12:44 | By penguin
The performance of this city's councillors is a sad and sick joke. They could be likened to the Rena saga except that they manage to keep making the same mistakes - get off course, lose their way and end up wrecked on a reef of their own making! And the resulting mess is similar - others (usually we ratepayers) have to clean it up.
ask ???
Posted on 24-01-2012 13:21 | By tonyb1
The decision has already been made, this is just a formality to try and show the public that they are doing the right thing the site is worth more sold off, the $2 million from Tect went into TCVL bottom line so that they didnt show a too bigger loss
Hold TCVL Directors To Account
Posted on 24-01-2012 14:23 | By scottmss
New roads into the stadium, new roof onto the stadium, New speedway management, New Catering, New Security.... At some point the directors should be held to account for the spending. Rather than diverting blame
BayPayPayPay
Posted on 24-01-2012 14:44 | By PeteDashwood
I like The Vale's comment; succinct and right on the button. Why are we continually being asked to pay for incompetence, underperformance, and failure to do proper homework? If a projected business plan is not properly analysed and the risks clearly shown, and yet it is accepted, who is to blame? We seem to be surrounded by projects and schemes which we have been committed to and which are dismal failures, all on the basis of "It's OK, the TCC will bail us out. They have to, they approved it in the first place." It is time that Local Gevernment made it clear that we are not a bottomless pit, that, although there are some hopeful signs for the future, we are still in a very tough economic situation, and that we are going to cut our cloth according to what we can afford. I love the Hot pools and it breaks my heart to see what they have become, but I'd rather see them closed down than have the farcical performance of the current "Management" perpetuated. Same for Baypark. Although I don't frequent Baypark personally, I have friends who do and it is good to think people can indulge their penchant for noise and burning rubber if they want to. BUT, NOT if we can't AFFORD it! I don't need to go on and delineate all the pathetic failed projects which are sucking the life from our City. Clearly, the people responsible are NOT taking responsibility, and they have a track record of incompetence. They don't know a failure when it is waved in their faces. So, I reckon we should simply forbid ANY further public "investment" in ANYTHING that is a NON-ESSENTIAL service, until such time as the current debt burden is brought under control and we can AFFORD to consider some "speculative" spending. Here's my two point plan: 1. NO MORE handouts for anything that is non-essential, until the Council can show that current debt is under control and we are living "within our means". (No, if you want something, raise the funds for it yourself and stop considering that you have a God given right to other people's money. EARN your right to get help. And stop whining about nobody giving you any money.) 2. Slash and burn central administration. Cut ALL salaries across the board, remove the unnecessary jobs and sinecures, and aim for a 20% reduction in overheads and costs. ALL expense accounts to be personally authorised by the Mayor, who will be publically accountable. If you are currently employed in a failing venture that has no credible chance of breaking even or becoming profitable, look for another job and expect your current income to be reduced while you look. Don't bleat to me, you should have thought about the consequences before you squandered my money... Was that the rustle of flying pigs I heard just then...? :-)
@ PeteDashwood
Posted on 24-01-2012 15:31 | By SpeakUp
You ask a question but shy away from stating the obvious answer: the current system of local government is perverted by cronyism where appointer and the beneficiary of public funds are often basically the same body. Management of various entities like TCAL or TCVL are run by the same chums and old boys who run TCC. Double and triple dipping with already obscene salaries is accepted standard. Misappropriation and mismanagement is paid for by rate increases. Sadly, the parasitic machine is self-perpetuating. Unless the sheeple wake up the wolves will maintain their feast.
Posted on 24-01-2012 16:17 | By charob
wht can I say. if bay park was going down hill why spend millions on the events center. speedway area, ha what a joke, look at the decline in crowds since it was taken over,...TOTALLY AGREE WITH SCOTMSS and The vales. someone needs to be accountable and stop passing the buck........If your business is not performing, there are two options.........try and sell it or shut the doors............... face reality and stop trying to pass the buck
@SpeakUp
Posted on 24-01-2012 16:29 | By PeteDashwood
Actually, I don't "shy away" from anything; it has got me into a lot of trouble in my life... :-) I didn't state the conclusion you arrived at because I can't substantiate it with any actual evidence. You might be right about the corruption you allege, but I don't think it is "obvious" that such is the case. (I'd also like to think that we are not living in a banana republic where graft and corruption are the norm; incompetence is far more likely (especially given the current state of our education system :-)) but I reluctantly have to agree we can't rule that possibility out.) On the other hand, the dismal track record of failed projects IS obvious, and a matter of public record. Sadly, I don't think it is going to change and there is very little that most of us can do about it. (That's why they get away with it :-)) I did consider standing for election but I can't afford to... :-) I guess all I can do is state my position through the columns of free speech thankfully provided by Brian and his Team. Who knows... one day enough people may be moved to provide a critical mass that will topple the existing junta, but I'm not holding my breath. If you (or anybody else) can actually find evidence of what you alleged it should be made public and I'll gladly help to do that. But it must be fair and legal; we don't want people tried by Kangaroo Court, insinuation or innuendo. Facts will inevitably speak for themselves.
Directors
Posted on 24-01-2012 19:14 | By Love Tauranga
Perhaps the Directors of TCVL - Adshead. Elvin, French, Gillon and Pollock - could forgo their Directors pay and Mr McSweeney (CEO) could take a pay cut until they can prove they can get this Company back on the right side of the ledger. Bay Park/TECT Arena is an asset to Tauranga/Mount Maunganui - or it should be!!!!
@by the vale
Posted on 24-01-2012 22:01 | By The Tomahawk Kid
Im with you on this - well said. Sell it and watch a private company make it work because their own money will be at risk if it doesnt
in time
Posted on 24-01-2012 23:14 | By Capt_Kaveman
those locals will be coming up but people need to vote them in not the spongers that era there now
@ PeteDashwood
Posted on 25-01-2012 11:28 | By SpeakUp
Thanks for the reply. All commenters here, watch this space. The Citizens Monitoring Council is a grass-root ratepayers' movement that, for now in the background, watches and monitors Council operations but will flower in the upcoming months to the next local elections. You all are invited to be part of this exciting process of citizens' initiative. In time the CMC will publish and call to participate to expose and stop TCC hidden agendas, spendthrift, cronyism, mismanagement, double dipping as CEO's in council controlled entities like TCAL and TCVL, obscene salaries, financial ruin (half a BILLION dollars debt) and utter unaccountability. -Citizens Monitoring Council-
NB
Posted on 25-01-2012 11:56 | By SpeakUp
Here is the link to another good Sunlive article about Baypark's request. Some good info in the comments too: http://sunlive.co.nz/news/19476-baypark-needs-5m-bailout.html
Here we go again!
Posted on 26-01-2012 09:05 | By kiwiwayno
Route K. Hot Pools. Now Bay Park. You'd think that we (the ratepayers of TCC) were flush with surplus cash. Well sorry councilors, it's not the case and we as a city can no longer afford these continual bail outs. First things First. TCC should not (in my view) be involved in running entities like this. There are plenty of private companies out there capable of doing so profitably. Secondly, if TCC is going to get involved, a better dilligence process and business planning process needs to be adopted. They have shown that they are completely inept at this. And lastly, if the venture doesnt stand on it's own two feet - exit it. We pay our rates to subsidise our core services - not prop up someones grandiose ideas. Bring on 2013 elections. May just have to put my hand up.
@kiwiwayno
Posted on 26-01-2012 22:49 | By The Tomahawk Kid
They are just best NOT to get involved - all the consultants work on an ALL CARE NO RESPONSIBILITY CLAUSE - as is evident in predictions such as K road. Perhaps there should be a clause in their contract that says if their predictions are less than 80% correct, they must pay for their negligence or ineptitude. Just keep out of business that should be NONE OF THEIR BUSINESS. If I wanted my money gambled away I am quite capable of putting it into a slot machine myself - why must I pay for TCC to gamble it all away. They dont have to earn it - they just take it by force and threats (ie put up the rates)
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