National Business Review Gives Stadium Figures

Today's National Business Review has an article on the Stadium with information that I have not seen published elsewhere. Unfortunately, it is not on-line, but here is a portion:

Athol Stephens said that the effect on forecast dividends to the Council remained the same as forecast in March last year - a reduction of $5 million.
This was achieved because while the amount of debt taken on by the council-owned companies to help fund the project had increased from $92.3 million to $108.8 million, the 2% cut in interest (from 9% to 7%) would make a "material difference" to their ability to service it.
Mainly because of the reduction in interest rates, the average residential property in Dunedin would pay no more than the originally anticipated $66 a year in general rates to fund the stadium, Mr Stephens said.

By my calculations:
$92.3 million borrowed for 20 years at 9% means about $10 million a year payment.
$108.8 million borrowed for 20 years at 7% also means about $10 million a year payment.

Because interest rates have dropped, the Council can borrow the increased amount required while still making the same $10 million a year payment on the loan (includes interest and capital repayment).

Note that $5 million of the $10 million is coming from rates, the other $5 million comes from Dunedin City Holdings Ltd. Without the Stadium, the dividend to the Council could be increased by $5 million rather than being reduced by $5 million, and rates decreased by $66 a year rather increased by $66 a year. The effective of this Stadium loan is that rates will be $132 a year more than they would have been without the Stadium.

By the way, why is that the National Business Review's Dunedin correspondent, Mark Pearl, consistently providing better analysis of Dunedin issues than is found in the Otago Daily Times.