More On Otago Rugby's Bailout

Following on from the letter from Calvin Oaten last week, this week's Dscene has a story saying Carisbrook will be sold to the Dunedin City Council for $7 million.

Dscene asked an experienced property valuer for an estimate of Carisbrook's worth and was given an off-the-cuff figure of "ballpark $4 million".

But $7 million will enable Otago Rugby to pay off it's debts. DCC chief executive , Jim Harland, has said:

The council’s concern is to ensure the ORFU is in a viable financial position looking into the future.

If Dscene's $4 million is correct, then Dunedin rate-payers are bailing out Otago Rugby to the tune of $3 million.
Today the ODT, also has a story: "Carisbrook Deal believed to be $7 m" (but does not acknowledge Dscene's scoop).

Mr Harland said the sale price was not included in the $198 million cost of the new Forsyth Barr Stadium, and was "based on" a market value agreed after the council sought "valuation advice".
Mr Harland would not say whether the price was inflated beyond market value to help the ORFU clear its debts. "I can't comment on that question. I'm not saying no, and I'm not saying yes."

Note that it is "valuation advice", not a valuation.
Factors which have reduced the market value of Carisbrook include:

• The currently depressed property market, particularly for development land
• The difficulty of obtaining finance
• Rising interest rates due to world-wide Government deficits
  
• The cost of demolishing the existing structures
• The involvement of the Historic Places Trust
• The industrial zoning of the site
• The two-year wait for Otago Rugby to vacate the site

There are still many questions to be answered:

• How will the Council fund the purchase?
• Will the rent paid by Otago Rugby cover the operating and holding costs?

Watch this space.