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Finance and
Performance Committee
19 March 2019
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Eden
Park Trust loan guarantee
File No.: CP2019/01583
Te take mō te
pūrongo
Purpose of the report
1. To
provide an update on the 15 May 2018 Finance and Performance Committee
resolution for Auckland Council to take over the $40 million loan from ASB to
Eden Park Trust and consider providing funding to the Eden Park Trust for a
capital renewal programme.
Whakarāpopototanga matua
Executive summary
2. On
15 May 2018 the Finance and Performance Committee considered the matter of the
Eden Park Trust loan guarantee. This report updates the resolutions of 15 May
2018.
3. Eden
Park Trust has made requests to Auckland Council to take over the $40 million
loan from ASB Bank which expires on 30 September 2019, and to provide funding
for a capital renewal programme of $6.4 million per year for ten years.
4. Auckland
Council will have no option but to pay out on the guarantee or take over the
$40 million loan in due course, under the terms of the loan guarantee.
Provision has already been made in council’s budget, based on the 15 May
2018 resolution. However, Eden Park Trust has other loan facilities with ASB
Bank and a direct loan from Auckland Council.
5. Taking
over all loan facilities and consolidating them with the existing Auckland
Council loan into one facility provides the advantage of simplifying both the
loan structure, security and other terms and it would be simpler to administer.
The amount of the loan facility would be up to $53.5 million.
6. In
respect of the funding request, four options were considered:
1) Eden Park Trust’s request of
$6.4 million per year for ten years;
2) the 15 May 2018 resolution of $3.2
million per year for ten years;
3) a three-year basic capital renewal
programme of $9.8 million over three years; or
4) one-year interim funding of $3.2
million.
7. The
funding options have been considered taking into account factors such as:
· Auckland
Council’s plans and policies
· funding
arrangements in place with other organisations
· the
broader context of Eden Park Trust’s plans to expand its activities
· operational
efficiency savings that may be achieved through partnering with the council
group.
8. On
balance, noting also Eden Park Trust’s objective of being administered on
a prudent commercial basis, option three is recommended. Although less than the
$6.4 million per year requested, this option provides a limited amount of
medium-term funding that maintains an incentive for Eden Park Trust to continue
to improve its financial performance. The form of funding proposed is a limited
recourse loan, on which there is no interest payable and repayment only occurs
in the event of any significant disposal of Eden Park Trust assets or from any
surplus funds.
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Ngā tūtohunga
Recommendation/s
That the Finance and
Performance Committee:
a) authorise and delegate all necessary powers to the chief executive
to:
i) reach
an agreement with Eden Park Trust and ASB Bank for Auckland Council to take
over the $40 million loan from ASB Bank to Eden Park Trust together with
other facilities provided by ASB Bank to Eden Park Trust before 30 September
2019
ii) reach
an agreement with Eden Park Trust to consolidate the loans acquired from ASB
Bank and Auckland Council loans into one or more new facilities on commercial
terms including:
A) first-ranking
security over Eden Park Trust’s assets
B) a
term of up to ten years
C) an
interest rate set at council’s cost of funds plus a margin
b) authorise and delegate all necessary powers to the chief executive
to agree a limited recourse loan to fund capital expenditure of up to $9.8
million over a three-year period from 1 July 2019 under the following terms:
i) a
Development Funding Agreement to be prepared documenting details of the
funding to Eden Park Trust
ii) all
funding to be repayable in the event of any significant disposal of Eden Park
Trust assets or from any surplus funds
iii) continued
security over Eden Park Trust’s assets
iv) no
interest payable
c) agree
that the chief executives of Auckland Council, Eden Park Trust and Regional
Facilities Auckland jointly prepare an operational partnering proposal to be
completed by March 2020.
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Horopaki
Context
9. On
15 May 2018 the Finance and Performance Committee considered the matter of the
Eden Park Trust loan guarantee as a confidential item. Refer to attachment A.
The grounds of confidentiality no longer exist because the majority of the
information has been made public through media and there is also agreement
between the parties that these matters can be addressed in public.
10. At
the meeting on 15 May 2018 the Finance and Performance Committee resolved as
follows (Resolution number FIN/2018/1):
That the Finance and Performance Committee:
a) authorise
the Chief Executive Officer to:
i) enter
into formal discussions and reach agreement with the EPTB and the ASB to
purchase the $40 million loan and negotiate a new combined loan and cost
sharing contribution where the terms shall:
1) be
fully commercial, including first ranking security, provision for charging
interest (at a margin) and principal repayment;
2) be
for a period of up to 10 years; and
3) include
a non-cumulative cost sharing contribution for no more than $3.2 million per
year.
ii) agree
to purchase the $40 million debt of the EPTB for no more than $40 million.
iii) complete
detailed due diligence on the EPTB financial projections.
iv) provide
in the Annual Budget 2018/19 for the raising of a further debt funding to
enable the purchase of the ASB loan and providing up to $3.2 million a year for
cost sharing contributions.
Restatement
b) agree
that the report, attachments and decisions remain confidential, until reasons
for confidentiality no longer exist.
CARRIED
11. It is
noted resolution a) i) is a package of items, including both the loan
acquisition and a funding arrangement. As the funding arrangement was not able
to be satisfied, the resolution could not be executed.
12. The
current status of the matters resolved on 15 May 2018 is as follows:
· a)
i) 1) and a) i) 2) have been progressed and are consistent with the
recommendation put forward in this report
· a)
i) 3) the Minister of Sport wrote to Mayor Goff in November 2018 declining to
provide any funding to the Eden Park Trust.
· a)
ii) this has been incorporated into the recommendation put forward in this
report
· a)
iii) completed – due diligence was completed by EY and the report was
provided to committee members at a workshop on 5 December 2018.
· a)
iv) consistent with the full provision for the loan guarantee, the 2019/2020
budget was amended to reflect a repayment of the loan at the date of expiry of
the guarantee (30 September 2019). No amount for cost sharing contributions are
recorded in council’s budget.
13. This
report updates the resolutions of 15 May 2018.
14. On 12
December 2018 the chief executive received a letter from the chair of the Eden
Park Trust Board setting out a request to take over the $40 million ASB Bank
loan. Refer to attachment B.
15. On 13
February 2019 the Eden Park Trust Board and senior management presented to a
Finance and Performance Committee workshop. The Eden Park Trust representatives
confirmed their request for Auckland Council to take over the loan and made a
further request for grant funding of $6.4 million per year for ten years (total
$64 million) to fund a capital renewal programme.
Tātaritanga me ngā
tohutohu
Analysis and advice
Loan guarantee
16. Auckland
Council’s guarantee of the $40 million loan from ASB Bank to Eden Park
Trust arose from arrangements entered into to support the redevelopment of Eden
Park for the 2011 Rugby World Cup. Auckland City Council entered into the
guarantee in 2010, which subsequently came across to Auckland Council on
amalgamation.
17. The
attached report of 15 May 2018 (attachment A) considers options in relation to
Auckland Council’s guarantee of the $40 million loan from ASB Bank to
Eden Park Trust due to expire on 30 September 2019. Consistent with the
resolutions of 15 May 2018, Auckland Council advised Eden Park Trust in
September 2018 that it was not its intention to extend the loan guarantee. As a
result, ASB Bank did not extend the loan facility and it is due to expire on 30
September 2019. This situation is described in Eden Park Trust’s annual
report for the year ended 31 October 2018, where it is noted that the future of
the loan is uncertain.
18. Auckland
Council will have no option but to pay out on the guarantee or take over the
loan in due course, under the terms of the loan guarantee.
19. If the
loan were not taken over by council in an orderly manner, there is high
likelihood of the guarantee being called and council needing to try and recover
the amount owed through its guarantee security, likely to be a long and
expensive exercise.
20. Consistent
with the 15 May 2018 resolution, it is therefore recommended that Auckland
Council acts to proactively take over the $40 million loan facility.
21. Auckland
Council fully provided for the $40m guarantee in its 2017 financial statements
and has made provision for increasing borrowings in the annual budget.
22. Eden Park
Trust has other facilities with ASB Bank, including a $7 million working
capital facility and a $500k overdraft facility. Auckland Council also has a
direct loan to Eden Park Trust of $6.5 million, dating back to July 1999.
23. Eden Park
Trust, in its letter of 12 December 2018, requested that the $40 million loan
be assigned to Auckland Council from ASB Bank.
24. On
assignment of the $40 million loan, there would be a lack of clarity on the
status of the other ASB Bank facilities and the security arrangements of each
party. There is a risk that ASB Bank would no longer be willing to provide the
$7 million working capital facility. Therefore, it is further proposed that
Auckland Council also take over the $7 million working capital facility and
consolidate it, with the council’s $6.5 million loan, into one loan
facility.
25. Taking
over all facilities and consolidating them with the existing Auckland Council
loan into one facility provides the advantages of simplifying both the loan
structure, security and other terms. It provides more funding certainty for
Eden Park Trust and would be simpler to administer on an ongoing basis. The
amount of the facility would be up to $53.5 million.
26. The key
terms of the facility to be considered are the security, the length of the term
and the interest rate:
· As
the main lender, Auckland Council should expect to have first-ranking security
over the assets of Eden Park Trust.
· Eden
Park Trust has requested that the $40 million loan facility be for a term of
ten years in order to provide certainty to the Trust and its stakeholders for
the medium term. Consistent with typical loan facility arrangements, the lender
would have rights to terminate the loan early if certain conditions were not
complied with, such as financial and non-financial covenants.
· The
interest rate applied to the loan facility would be based on council’s
cost of funds plus a margin to be negotiated with Eden Park Trust. A margin on
top of council’s cost of funds would enable council to recover the costs
of providing and managing the facility and take into account the underlying
risk profile.
27. The
$500,000 overdraft facility will be part of the negotiations.
Funding request
28. The
resolution of 15 May 2018 included the provision of grant funding of up to $3.2
million per year for ten years on a non-cumulative cost-sharing basis with the
government. This was subject to completion of detailed due diligence on Eden
Park Trust’s financial projections.
29. An
independent financial review was completed by EY and the full report was provided
to committee members at a workshop on 5 December 2018.
30. The key
findings of this review, which confirm Eden Park Trust’s financial
situation as unsustainable, are as follows:
· Eden
Park Trust’s current capital structure is very materially challenged as
it does not allow for necessary capital expenditure obligations nor meaningful
debt repayment. The current ability of the Trust to meet its obligations is
only possible based on current financing arrangements with both ASB Bank and
Auckland Council
· Eden
Park continues to pay interest only on current debts and only minimal debt
repayment
· forecast
performance in the year ending 31 October 2019 will worsen based on fewer
fixtures
· cashflow
forecasts are not expected to improve
· net
deficits (financial results including interest and depreciation) continue and
have been occurring since at least 2013
· the
10-year maintenance capital expenditure plan of $62.8 million has no funding
· regulatory
settings and the operating environment are hampering opportunities to improve
Eden Park Trust’s performance.
31. Regarding
the cost-sharing resolution, officers had informal discussions with various
central government officials, however no agreement was able to be reached. On
29 October 2018 the Mayor wrote to the Minister of Sport and Recreation
advising of the resolution made by council in May 2018 and noting the intention
of council not to extend the loan guarantee.
32. On 5
November 2018 a response was received from the Minister of Sport and Recreation,
noting that current Crown policy arrangements do not provide for funding
support for regional stadium costs and his view that this would be a matter for
council to resolve.
33. Eden Park
Trust made a funding request at the Finance and Performance Committee workshop
on 13 February 2019 for an annual $6.4 million grant to fund capital renewals
over the next ten years (total $64 million) to enable the park to keep
operating at current service levels.
34. In
considering the overall funding request there are three key aspects:
council’s role in providing funding, how much to fund and what type of
funding. Each one of these aspects are considered below. The recommendation is
to provide a capital expenditure funding arrangement of up to $9.8 million over
a three-year period.
Council’s role in providing funding
35. Eden
Park Trust’s Trust Deed states:
“The Objects for which the Trust
is continued are:
(a) To promote, operate and
develop Eden Park as a high quality multi-purpose stadium for the use and
benefit of rugby and cricket (including under the organisations of ARU and ACA
respectively pursuant to their rights under this deed) as well as other
sporting codes and other recreational, musical, and cultural events for the
benefit of the public of the Region; and
(b) To administer Eden Park and
the Trust Assets on a prudent commercial basis so that Eden Park is a
successful financially autonomous community asset.”
36. Auckland
Council has no legal obligation to provide funding to Eden Park Trust, however
the stadium is a significant asset to Auckland which generates substantial
economic benefit for the region and contributes to Aucklanders’ quality
of life through the events and facilities offered. As a charitable trust which
exists to provide facilities for sporting, recreational and cultural events for
the benefit of the public, it is similar to other organisations that council
funds.
37. While
Eden Park Trust has an objective of being administered on a prudent commercial
basis, the trustees are given wide powers to achieve this. Eden Park Trust has
a need for additional funding in order to continue to operate and there are
very limited alternative sources of funding. Eden Park Trust also intends to
apply to central government for funding related to specific national events and
may also apply for charitable grant funding.
38. While
there is no single council policy that covers this particular situation, there
are a number of relevant Auckland Council plans and policies. These include:
· the
Auckland Plan – which sets the Belonging and Participation Outcome
specifically recognising “the value of arts, culture, sports and
recreation to quality of life”
· the
Draft Sports Investment Plan 2019-2039 currently being consulted on – it
has the aim of increasing participation in community sport and proposes an
approach to planning and prioritising council’s investment in sports and
sports facilities, including the use of the $120 million fund set up in the
10-year Budget 2018-2028.
· Parks
and Open Spaces Strategic Action Plan 2013 – recognises the importance of
open space not owned by Auckland Council and has an action relating to
partnership opportunities with schools, infrastructure providers and private
sports facilities.
· Facility
Partnerships Policy adopted in December 2018 – applies where
“council invests in community facilities owned or operated by others, so
Aucklanders can access more of the quality facilities they need, faster and
more cost-effectively”.
· Auckland
Sport and Recreation Strategic Action Plan 2014-2024, refreshed in 2017 – aims to get Aucklanders more active, more often and
has a priority area of excellence in recreation and sport including “fit
for purpose stadia and national venues”.
· Auckland
Sport Sector: Facility Priorities Plan 2017 – recommends each sport develops
a facility and code plan for the region.
·
Auckland Tourism, Events and Economic Development’s
(ATEED’s) Auckland Major Events Plan – the blueprint for Auckland
Council’s initiatives to attract world-class major events to the region
– events which contribute tens of millions of dollars each year, and
thousands of new visitor nights, to the regional economy. The strategy outlines
the criteria by which events are selected for funding from the Major Events
Portfolio.
39. Based on
a review of the above plans, providing a form of funding to Eden Park Trust for
essential capital renewals is consistent with the outcomes sought for the
provision of sport and recreation facilities and major events in Auckland.
40. After
taking over the loan, Auckland Council will be the primary provider of finance
to Eden Park Trust. Given Eden Park Trust’s financial situation,
providing a level of funding to support the infrastructure required for ongoing
park operations is in council’s commercial and regional interests.
Amount of funding
41. Eden Park
Trust requested $6.4 million per year for ten years to fund a capital
maintenance and renewal programme required to maintain the current standard of
the stadium. The EY report identified that the ten-year capital plan contained
some business-critical items such as turf replacement, LED advertising screens
and field light replacement.
42. The
resolution of this committee on 15 May 2018 was to fund $3.2 million per year
for ten years, being half of the $6.4 million noted above. This was on the
basis of a cost-sharing arrangement with the government.
43. To assist
in decision-making, Eden Park Trust has subsequently provided further detail on
the minimum capital programme for the next three years. Note that this excludes
other planned, non-essential items that may improve visitor experience or
create new revenue streams. It also excludes improvements that the Eden Park
Trust will have the opportunity to apply to the government for funding support,
such as to support events of national significance like the Women’s Rugby
World Cup in 2021. Such items may include video replay screens, replacement of
field lighting, CCTV upgrades and upgrades to player changing rooms.
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Eden Park
Trust capital maintenance and renewals plan
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$000
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Turf replacement
No.1 ground
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1,500
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Portafloor
turf protection
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200
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Turf
maintenance equipment
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160
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North Stand
roof replacement works
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850
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Venue
Operations Control Room monitoring equipment upgrades
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500
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Total
2019/2020
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3,210
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North Stand
lift upgrades
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2,000
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Uninterrupted
power supply upgrades and replacements
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1,000
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Turnstile
and gate entry upgrades
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450
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Total
2020/2021
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3,450
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Kitchen
upgrades and refurbishment
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2,000
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Upgrade
in-bowl PA system
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1,200
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Total
2021/2022
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3,200
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Total three
years
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9,860
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44. Another option
considered is an interim funding arrangement of $3.2 million for only one year.
This would provide council with the opportunity to re-consider funding as part
of the Annual Budget 2020/2021, but would not provide much certainty to Eden
Park Trust.
45. Four
funding options have been considered:
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Funding options
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Option 1
10 years $64m
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Option 2
10 years
$32m
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Option 3
3 years
$9.8m
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Option 4
1 year
$3.2m
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Fit with
council policies
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Low
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Low
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High
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High
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Consistency
with funding arrangements of other organisations
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Low
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Low
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High
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High
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Responsive
to future changes
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Low
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Low
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Moderate
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High
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Incentive
for Eden Park to improve financial performance
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Low
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Moderate
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High
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High
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Future
certainty for Eden Park
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High
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High
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Moderate
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Low
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|
|
|
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Recommended
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46. A balance is needed
between providing sufficient funding certainty to Eden Park Trust to ensure
effective operations, and incentives to operate efficiently and to continue to
seek other funding sources.
47. In
considering the term and amount of funding, it is relevant to note that Eden
Park Trust has indicated that it will seek a resource consent to enable six
concerts per year as a permitted activity. Additional events are expected to
significantly improve the financial performance of Eden Park Trust within a
three-year period (based on the time needed to obtain the consent and schedule
in a programme of concerts or other events). Eden Park Trust has indicated the
additional operating profit could be around $2-3 million per annum from 2021.
48. Additionally,
there is an opportunity for closer cooperation or partnership between Eden Park
Trust, Auckland Council and Regional Facilities Auckland (RFA). This may
include coordination of operations such as shared procurement to benefit from
economies of scale, shared staffing to provide operational efficiency and
better opportunities for employees. The potential cost savings are difficult to
estimate. This report recommends that a partnering proposal be developed by the
chief executives of Eden Park Trust, Auckland Council and RFA which
investigates such an arrangement. It is expected that this would take around a
year to develop.
49. The
potential for significant improvement in Eden Park Trust’s financial
performance means that the Trust may generate sufficient cash flow to fund its
own capital renewal programme in the future. A funding period of not more than
three years would provide council with the opportunity to reconsider Eden Park
Trust’s financial performance and funding needs at an appropriate future
time.
Type of funding
50. The
Facility Partnerships Policy sets out the following ways that council typically
invests in facility partnerships:
51. Further
consideration has been given to how council provides funding and support to
other community organisations. Since the formation of Auckland Council there
has primarily been grant funding for operational and capital expenditure, and a
limited number of loans and loan guarantees. Examples of other funding
arrangements include:
· MOTAT
– per statute for operational funding and a community loan in 2003
secured by way of mortgage (now held by RFA)
· ASB
Tennis Arena – grant for capital expenditure
· Bruce
Pulman Park – grants for operational and capital expenditure and an
interest-bearing loan for five years
· Hyundai
Marine Sports Centre – grant for capital expenditure
· Harbour
Hockey national centre – grant for capital expenditure (not yet taken up)
· Trusts
Stadium (Waitakere City Stadium Trust) – annual grant funding from RFA
and in-principle agreement for one-off capital expenditure grant of $2 million
for roof renovations
· Maritime
Museum – previously operational funding through the Regional Amenities
Funding Board, with a loan and capital expenditure funding from RFA; now forms
part of RFA’s operating and capital funding from council
· Vodafone
Events Centre – grant for capital expenditure for the whitewater rafting
facility and annual grant funding from RFA
· ASB
Waterfront Theatre – grant for capital expenditure in addition to
operational funding through the Auckland Regional Amenities Funding Board
· Woodhill
Sands Equestrian – loan guarantee
· North
Shore Events Centre Trust – receives annual operating and capital grants
from RFA
52. Such
funding is often provided by council through a Development Funding Agreement
which sets out what the funds are for and when the funds will be accessed by
the community facility. Accountability is ensured by monitoring the use of
funds, through regular reporting to council.
53. An
alternative to grant funding is a commercial loan facility. A loan would
provide Eden Park Trust with access to funds for capital renewals. Auckland
Council would have the benefit of receiving interest payments and the loan
being secured over the assets of Eden Park Trust. However, there is currently
no prospect of the loan being repaid from operating revenue. The additional
financial burden of interest payments on Eden Park Trust may encourage it to
find other funding sources. Eden Park Trust is therefore not in favour of this
option as it worsens its financial situation over time. Staff note it is not
consistent with how other facilities are funded.
54. Eden Park’s size and significance to the region
differentiates it from other organisations that receive council funding.
Auckland Council often has ownership of the land on which funded facilities
sit, whereas council has no control or other interest in Eden Park Trust. Eden
Park Trust has an objective to be administered on a commercially prudent basis
as set out in its trust deed, which also suggests it should seek to generate
sufficient revenue to cover both its operational and capital renewal
requirements. In addition, while the recommendations in this report provide
some certainty to Eden Park continuing operations for the next ten years, there
remains uncertainty about the long-term future of the stadium.
55. An
alternative funding option to an outright grant or loan is a hybrid
arrangement, such as a limited recourse loan. An example of this is the
Wellington City Council and Greater Wellington Regional Council loan provided
to the Wellington Regional Stadium Trust for the development of Westpac
Stadium. This form of loan is typically only repayable under certain
circumstances and no interest is payable. For example, the Westpac Stadium loan
is repayable from surplus funds after meeting costs, liabilities, debt
reductions, capital expenditure and transfers to reserves. A limited recourse
loan has some similarities to a grant with conditions that would require
repayment under certain circumstances.
56. The
advantages of a limited recourse loan would be:
· certainty
of funding to Eden Park Trust
· no
interest payable so that any improvements in Eden Park Trust’s financial
performance are not spent on increased interest costs
· council
will recoup the funding on certain future events, including any future redevelopment
of parts of Eden Park
57. A limited
recourse loan is recommended as a way to realise the benefits of both grant and
loan funding. It provides the funding certainty that Eden Park Trust needs.
With no interest payable it does not worsen the Trust’s financial
position over time. However, given the long-term uncertainties and
council’s lack of control, repayment of the funding under certain
conditions protects council’s interests. It is proposed that the
conditions of repayment are in the event of any significant disposal of Eden
Park Trust assets, or from any surplus funds generated. Surplus funds generally
refers to cash left over after all operating and capital expenditure, interest
and debt repayments and any transfers to reserves.
Conclusion
58. Based
on the analysis above, it is recommended that a maximum of $9.8 million is
funded over a three-year period by way of a limited recourse loan.
59. Other
external facility providers typically receive council funding subject to a
Development Funding Agreement being signed. This type of agreement sets out the
detailed terms of the funding arrangement, including what the funding is for,
how it will be provided, any retentions, reporting requirements etc. It is
recommended that a similar type of agreement be negotiated with Eden Park Trust
to set out what is agreed to be funded and provide an accountability mechanism
through the reporting requirements.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
Regional Facilities Auckland
60. The key
drivers of RFA’s Venue Strategy are to ensure Auckland has a
fit-for-purpose, future-proofed, and financially sustainable network of
stadiums. Until longer term decisions are made about the future of the stadiums
network, we see the financial and operational sustainability of Eden Park as an
essential element. We support the proposal and look forward to working with
Auckland Council and Eden Park Trust on the operational partnering proposal.
ATEED
61. Our view
is that it is important to have a world-class, large capacity stadium that
enables Auckland to bid for significant global sporting events, including
various rugby code matches and cricket games, which contribute substantially to
regional GDP and provide a wider opportunity to showcase the region. Until such
time as any decision is made on potential alternative options, ATEED supports
Eden Park being retained and would welcome further consideration about its
extended usage beyond current restrictions.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
62. The
Albert-Eden Local Board discussed the matter of Eden Park as an extraordinary
item at its business meeting on 27 February 2019 and resolved as follows:
Resolution number AE/2019/28
MOVED by Chairperson P Haynes, seconded
by Member J Rose:
That the Albert-Eden Local Board:
a) confirm
its support for Eden Park continuing to operate over the next ten years.
b) call on the Governing Body to confirm that it will not allow Eden
Park to cease operating.
c) request the Governing Body to respond positively to requests for
funding required to keep Eden Park operating, but do so responsibly by
carefully considering accountability, control and sustainability and balanced
against the financial investment needed for publicly owned local assets.
CARRIED
Resolution number AE/2019/29
MOVED by Chairperson P Haynes, seconded
by Member J Rose:
That the Albert-Eden Local Board:
d) support Eden Park in the process of becoming independently
financially sustainable through the limited and reasonable use of Eden Park for
public non-sporting events.
A division was called for, voting on
which was as follows:
|
For
Member L Corrick
Member G Easte
Chairperson P Haynes
Member R Langton
Member B Lee
Member J Rose
|
Against
Deputy Chairperson G Fryer
Member M Watson
|
Abstained
|
The motion was declared CARRIED by 6 votes to 2.
CARRIED
Tauākī whakaaweawe
Māori
Māori impact statement
63. The
financial decisions contained in this report do not have any particular impacts,
either positive or negative for Māori.
Ngā ritenga
ā-pūtea
Financial implications
64. Council’s
debt will increase by $40 million on taking over the ASB Bank loan. This is
already included in the 10-year Budget 2018-2028. The additional interest and
administration costs will be covered by the interest income from Eden Park
Trust. As the guarantee will no longer exist, the provision recorded in the
accounts will be reversed.
65. The
capital expenditure funding arrangement will be reflected in the Annual Budget
2019/2020.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
66. There is
a risk that the Eden Park Trust Board may not accept council’s proposed
funding arrangement. To mitigate this risk, staff have worked with Eden Park
Trust representatives to understand the Board’s views and find a workable
proposal.
67. ASB Bank
is a key stakeholder. To mitigate any risk of ASB Bank not agreeing to the
proposed course of action regarding the loan facilities, staff have discussed
the recommendation with ASB Bank representatives. ASB Bank has indicated they
are supportive of the recommendations.
68. If the
loan were not taken over by council in an orderly manner, there is high
likelihood of the guarantee being called and council needing to try and recover
the amount owed through its guarantee security, likely to be a long and
expensive exercise.
Ngā koringa ā-muri
Next steps
69. If the
recommendations are approved:
· Auckland
Council’s legal and finance teams will work with Eden Park Trust and ASB
Bank to finalise loan and funding arrangements.
· Auckland
Council’s chief executive will commence a process to develop an
operational partnering proposal with the chief executives of RFA and Eden Park
Trust.
Ngā tāpirihanga
Attachments
|
No.
|
Title
|
Page
|
|
a⇩ 
|
Report from Finance and Performance Committee, 15 May
2018
|
17
|
|
b⇩
|
Letter from Eden Park Trust, dated 12 December 2018
|
27
|
Ngā kaihaina
Signatories
|
Author
|
Nicola Berghaus - Executive Officer
|
|
Authoriser
|
Matthew Walker - Group Chief Financial Officer
|
