Council Guarantees Otago Rugby Debt

The Dunedin City has confirmed that it has purchased Otago Rugby's Carisbrook property for $7 million dollars. Otago Rugby will lease Carisbrook back for three years and pay for operational and debt-servicing costs. In addition, the Council has agreed to guarantee the interest on the ORFU's seasonal debt.
Mayor Peter Chin claims that:

"This is good news for the ratepayers and for the ORFU. It represents a sound investment based on a rigorous independent valuation of the current and future values across a range of land uses, all of which makes this a canny investment."

Note that there has been no proper registered valuation, as would be expected in a deal of this type, and that the valuation includes "future values". $7 million seems significantly higher than current market value taking into account the cost of demolition and the interference by the Historic Places Trust. When the lease ends after three years, the Council will be faced with servicing the $7 million debt. It is hard to see how it is a "canny investment".
The Council is relying on Otago Rugby for most of the revenue for the new Stadium. Otago Rugby has had to be bailed out of financial difficulty because the product that it is selling in not attracting enough paying customers. This hardly inspires confidence in the success of the Stadium.