Debt-funded grants wrong, councillor says
Tweaking rules to enable theatre venues not owned by the Dunedin City Council to be developed with council debt might be "clever", but also wrong, a councillor says.
Cr Bill Acklin was not impressed with his colleagues when they changed the council's revenue and financing policy to enable a particular type of grant to be funded through borrowing, rather than rates.
The change, approved last week, meant debt-funded grants could be provided to community organisations constructing or upgrading a building.
This made it easier for the council to signal in its 2025-34 long-term plan (LTP) political will existed for spending $17.1 million on theatre space and it intended such grants to apply to redevelopment of the Playhouse Theatre and Athenaeum building, and potentially a new venue suitable for professional theatre.
"To fund professional sectors using debt is not what council's ability to borrow is for," Cr Acklin said.
He had stayed out of debates about theatre space because of a perceived conflict of interest but expressed thoughts after voting had occurred.
Using debt for grants was "very clever", he said disapprovingly.
Later in the meeting he said he believed it to be wrong.
However, he was happy to see support for the Playhouse, which has a strong children's programme.
Another councillor who did not take part in discussions, Lee Vandervis, said changing council policy "so that we can reclassify even more spending as capital" was shameless.
He was absent because of hip surgery.
He slammed colleagues for their "election-year splurge" on debt after the council added $96.9m of borrowing to the LTP during four days of discussion.
Cr Sophie Barker said the debt-funded grants issue was "a useful exploration of how to support a non-council organisation to deliver a project in a building that isn't council-owned".
"Otherwise, it would have gone directly on rates — this way it's able to be funded over a longer period of time as an 'intergenerational asset'.
"There's a lot of checks and balances around the Playhouse and Athenaeum resolutions that won't allow any funds to be released by council until stringent conditions are met."
Council debt is projected to rise by roughly $500m in the next nine years to $1.2 billion in 2034.
Much of it is aimed at replacing or upgrading key Three Waters assets and transport infrastructure.
The council included $17.1m in its 2021-31 LTP for development of theatre space, but removal of the allocation from draft budgets for its 2025-34 plan was controversial.
Reinstating the money was one call last week that added to projected debt. Inclusion of some transport projects intended to reduce carbon emissions and deciding to replace the Edgar Centre roof were others.
The council made one move late in deliberations to avoid adding to debt.
It chose to start running balanced budgets from the first year of the LTP — a year earlier than had been envisaged — rather than posting another deficit.
The council had looked as if it was headed for a rates increase of 10.1% for 2025-26, but having a balanced budget pushed the rates rise to 10.7%.
grant.miller@odt.co.nz
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