Two new companies could soon be added to the Dunedin City Council's group of trading organisations to own and market the planned Awatea St stadium.
One company, tentatively called Otago Venues Ltd (OVL), will buy the stadium for $188 million.
In a complex arrangement, money to acquire the stadium will be raised by the council buying $103 million of shares in OVL, and OVL borrowing $85 million from Dunedin City Treasury (DCT).
With its borrowings from DCT, OVL would pay the council $85 million, so the council could settle its borrowings during construction, leaving it debt-free.
DCT will make a profit from the deal by lending the money to OVL at a higher rate than it borrows the money from a bank.
Dunedin deputy mayor Syd Brown yesterday explained the set-up of the new companies within Dunedin City Holdings Ltd (DCHL), the council's group of trading companies, a plan first mooted in a report to the council's finance and strategy committee last month.
The idea has been suggested for some time as a Dunedin version of Vbase, a company set up by the Christchurch City Council in 2005 to manage AMI Stadium, the Christchurch Town Hall, the Christchurch Convention Centre and the Westpac Centre for Sport and Entertainment.
Cr Brown said that, in Dunedin, OVL could control facilities such as the town hall, the Edgar Centre, the Dunedin Ice Stadium and others.
‘‘The easiest way to describe it is as a blueprint of Vbase,'' he said.
‘‘In very plain language, it allows the council to put all the competing venues into a management structure which will be managed to best utilise each facility.''
The new companies could save the council money in tax payments.
The report said OVL would ‘‘enter into group loss offset arrangements'' with the DCHL group to fund interest payments due to Dunedin City Treasury.
‘‘OVL and the DCHL group wil comprise a tax group because al companies will be wholly owned by the council.''
As a council-controlled trading organisation 100% owned by the council, OVL would own the assets of the stadium and hold al its liabilities, including debt.
Its opening debt was estimated at $92 million.
The company would earn all the revenues and pay all the expenses of the stadium, and would contract the second new council-owned company, Dunedin Venues Management Ltd for marketing, promotion organisation, servicing, ticketing, event management, maintenance and any other activity directly related to events in the stadium.
Public consultation necessary to start the new companies would start soon, Cr Brown said.
