MaY 2019

In my nearly three years around the Town Hall table, I don’t think I’ve ever seen a more heated discussion than the Finance and Performance committee meeting debate on Eden Park funding. To a large degree, media coverage of this has been slight due to its timing only four days following the Christchurch mosque tragedy. But it was an important debate.

First, some background. Eden Park is not owned or managed by Auckland Council. Therefore, unlike other stadia such as Western Springs, QBE (North Harbour) and Mt Smart, Eden Park does not come under the suite of facilities managed by Regional Facilities Auckland (RFA), a Council-controlled organisation tasked by the supercity legislation to manage Council-owned facilities.

However, it can’t be ignored as it’s an important stadium for Auckland — the biggest, capacity-wise, we have. It’s been this Council that has finally made the decision to collaboratively work with and include Eden Park — along with others we don’t own or manage such as Spark Arena and ASB Tennis Centre — when we get to discuss the details of what our stadium strategy should look like, for our region as a whole.

But it has come into the mix with some serious financial limitations. A longstanding debt of $40 million arose from its redevelopment for the Rugby World Cup in 2011, which the city’s former councils agreed would be great for Auckland. But when the financial ask was actually made, the councils did not contribute one dollar. It was only the former Auckland Regional

Council (ARC) who did. It’s worth noting that some of the current councillors did serve on the legacy councils.

One of the Eden Park Trust’s objectives is, as written, “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”.

The Trust was left with its Rugby World Cup debt on behalf of Auckland. It has understandably struggled with it, and as Council was the guarantor, we had no choice but to take over the debt.

In doing so we have saved Eden Park some money in interest payments, as our interest rates are more favourable. Council resolved (with my support) to continue to charge our interest rate plus a bit more, which was still better for the Trust than what they had with the bank. It’s a lot of money, and we need to be prudent too.

So why has Eden Park been unable to pay off their debt? To date, interest payments on the debt have been costly, about $15 million since 2011. Council itself hasn’t helped either. We charge them rates and these aren’t significant, and yet Wellington’s Cake Tin, the Westpac Stadium, doesn’t pay rates, nor in fact are rates charged on any of the Regional Facilities Auckland stadia.

Thanks to Unitary Plan rules, Eden Park can only hold a maximum of six concerts a year as a discretionary activity. Concerts make money for stadia, but our rules and the time around consenting for concerts is long, costly, arduous and not at all guaranteed.

This needs to change and there is work happening around that.

So why did the majority of Councillors, led by me, agree a grant and not, as the Mayor suggested, a loan to the Eden Park Trust?

First, trust and confidence. Up until less than a week before the meeting where we were to resolve the issue, our Council staff had agreed with Eden Park representatives that there would be extra money in the form of a grant. This had been worked on for many, many months, and followed a resolution passed last year. To change our mind from a grant to a loan at the ninth hour, wasn’t, in my opinion, working in good faith.

The second reason — it’s what we usually do with other organisations and community facilities that qualify under Auckland Council’s Recreational Facilities Partnership policy. These grants are supported with funding agreements which stipulate details around those grants, rules to follow, accountability etc. Previous grant examples include those to

Vodafone Events Centre, Trusts Stadium, the ASB Tennis Arena and even our Ōrākei ward’s own Hyundai Marine Sports Centre (the newly-built Royal Akarana Yacht Club building).

The third reason was advice from the Auditor-General. The Auditor-General designed a good practice guide titled, “Principles to Underpin Management by Public Entities of Funding to

Non-government Organisations.” This document clearly gives guidance for funding and talks about grants, not loans. In fact, it specifically talks about sustainability of funding — remember Eden Park already has a big debt problem, it is not therefore helpful or good practice, to add to it. And the document also refers to fairness (see second reason).

So was the grant a gift? No.

Like all grants it comes with rules and stipulations with which the chief executive, through his staff, complies. These are packaged up in a development funding agreement. The actual resolution said ‘authorise the chief executive to agree a grant

to fund capital expenditure of up to $9.8 million over a three- year period from 1 July 2019 under a Development Funding Agreement.’

It’s a grant up to $9.8 million over three years. It’s not a set amount per year, it’s a funding envelope available to be applied for specific capital spend. I know one priority is turf replacement, which is twice its ideal seven-year age limit for use.

So in conclusion what I proposed was fair, was based on months of understanding, usual Council practice, aligned with guidelines from the Auditor-General and will go a long way to getting Eden Park over its credit crunch, so it can get on with its business of running events and wiping its financial face.

It’s only for three years, and whilst adding Eden Park into our stadium portfolio, and their hosting of events potentially saves ratepayers hundreds of millions in refurbishment of our own venues — such as the upgrading work needed at Mt Smart and Western Springs — it also doesn’t preclude a bigger discussion in the future around building a new stadium somewhere else.