31 Jul 2011

Dunedin City Council faces $8 million shortfall

5:06 am on 31 July 2011

Dunedin Mayor Dave Cull says the city council is facing an $8 million shortfall, due to the lower than expected earnings of council-controlled companies.

Mr Cull says two reviews have revealed the shortfall, which will have a significant impact on how the council repays the debt it took on to build the Forsyth Barr Stadium.

He says the reviews showed Dunedin City Holdings Ltd, which oversees many council companies, did not tell the council soon enough about the shortfall.

Mr Cull says the organisation's reporting was neither adequate nor appropriate and reporting processes must be greatly improved.

Mr Cull says the council's budget for the current year will not be affected but work will need to begin immediately on how to make up the shortfall.

Dunedin City Holdings chairman Paul Hudson says the company has honoured a committment to provide the council with additional funds over a five-year period and that has now come to an end.

He says Dunedin City Holdings borrowed money to provide those funds and the city council had been aware for some time that situation could not continue.