Is it May already? Asset sales edition

It must be May. The Christchurch Press is reporting that Council is considering selling some assets to pay for the quake.

May 2, 2011: The Press wondered the same thing. I put up the general conditions under which Council should sell assets.

May 21, 2012: Another round of speculation about Council asset sales. Labour was outraged by that the City might contemplate selling dividend-paying assets. I pointed out that, unless there are really serious problems in asset markets, dividend flows get capitalised into asset prices. I'd written:

Cosgrove can only be right where the asset is more efficiently owned by local council, or where there are serious problems in IPO markets, or where the Council has a particular kind of stupidity.

If the asset is best owned by government, then the selling price will be less than the discounted value of the dividend flow. Otherwise, local Councils can do better by selling off the asset and taking the cash.

If there are serious problems in IPO markets, then things sell for less than fundamental value at IPO. But there's no particular evidence of this.

The last one might be more of a worry. Imagine a guy who has a trust fund that pays him a modest annual income. He generally is foolish in how he spends it, but he's always able to pay his bills. If he is given the investment as a lump sum, he blows it all on pop rocks and bungee jumping and has no income flow for the next year. That guy is probably better off not being able to sell off the dividend-paying asset. Is Christchurch Council that guy? Hopefully not. But post-quake, unless they're dumb enough to blow it all on stadiums, there are tons of productive ways they could be spending the money - roads, sewers, turning Red Zone into useful parks.

And, if Council is dumb enough to blow any divestiture returns on pop rocks and stadiums, are they smart enough to handle the asset properly if they own it in the first place? Note that an asset like the Lyttelton Port of Christchurch isn't like a hands-off trust fund; it requires annual decisions about asset maintenance versus dividends. Cosgrove talks about how the revenue stream from assets helped kept rate rises in check; what reports I'd heard on maintenance standards at the Port as of a few years ago suggested that Council was putting a fair bit more weight on current dividend flow than on maintaining the assets. Divestiture may be a bad idea if Council is prudent enough to manage the asset properly while they own it, but profligate if they're handed a lump sum of cash; under the current circumstances, with plenty of really pressing financial needs, I'm less worried about this one.

And here we are, May 2013. In today's Press:

A Christchurch city councillor says the city could offload non-core assets, including its own offices, to help pay its share of big-ticket rebuild projects.

Cr Tim Carter said last night that less important assets were expendable if it helped ease the council's debt burden in funding anchor projects such as the new convention centre and roofed sports stadium.

...He was against selling strategic, money-earning assets such as Christchurch International Airport, Lyttelton Port, Orion, and Enable, which is installing ultra-fast broadband in Christchurch.

His comments come as Prime Minister John Key yesterday weighed into the council asset sales debate.

Key told Firstline it was up to the council to ask whether the people of Christchurch wanted "the nice-to-haves".

"Then they'll ask how are you going to pay? That could be through rates or asset sales," he said.

The case against selling the airport isn't that it's a money-earner. A money-earning airport will sell for a LOT of money at IPO. Rather, the case is that the local monopoly airport would be tempted to set fees to maximise its own profits without considering that reduced traffic into town might have some broader costs. It might even do things like charge really high fees to taxicab companies for the right to operate from the airport, increasing the costs of Christchurch as a travel or conference destination.

I still think that Council should fully divest assets that are managed at least as well by the private sector and don't have the kind of problem that the airport could have, partially divest other assets, and use the money for roads, sewerage, overbridges, and for topping up the costs of rebuilding and repairing Council facilities. But if John Key wants Council to sell off the Port to fund a big covered stadium or a huge convention centre, well, I discussed that case last year.

SkyCity revisited

Auckland is to get a large new convention centre, to be built and run by Sky City, Auckland's casino.

I chatted with Radio New Zealand's panel about the plan this afternoon.

Really, not a lot has changed from when this was first proposed a while back.

We should think of this as two separate deals.

First, the government is auctioning off some gambling concessions. SkyCity has bought the right to have an additional 230 pokie machines, 40 gaming tables, assorted other gambling concessions, and, possibly most importantly, a guarantee that if some future government reneges on the deal by banning gambling or otherwise eroding the benefits provided to SkyCity under the deal, they'll be compensated. Now suppose that we opened that whole thing up to a general auction. People would then bid for those rights; the highest bid would approximate the expected flow of profits from having the concession.

Second, the government took bids for the right to build and operate a big convention centre. The high bidder, or rather the company willing to do it at the lowest subsidy, gets to build and run the convention centre.

In this case, SkyCity has to reckon that losses (if any) from building and running a convention centre are less than the gains from the gambling concession [NBR subscription, sorry]. And it isn't crazy to think that the bundle provides added value: convention centres near casinos tend to lose less money than those not so-situated; there are reasonable complementarities between the kind of facilities attractive to conventioneers and those that are in place in casinos.

Conditional on the government wishing that there be a big fancy convention centre in Auckland, this is likely the least bad way of doing it. I haven't gone through the accounting on it in any depth, but the bottom line has to be that SkyCity reckons it can make a go of it, since they're bearing the risk if they can't operate it profitably. And it isn't crazy to think that there could be some economic benefits from increased tourist traffic if we host more conventions. But whether those benefits are larger than the amount SkyCity might otherwise have bid in an open auction for the gambling concessions, where the revenues went into the general fund rather than into a big convention centre, that's rather less clear. It's possible, but it's far from certain.

Commenters at The Panel worried about social costs of gambling associated with the expansion. A lot there depends on how Auckland proceeds with gambling regulation. The cities that existed prior to amalgamation had a mix of gambling policies, with some imposing a "sinking lid" on the total number of pokie machines allowed. If Auckland as a whole continues with that policy, then much of the concession offered to SkyCity comes at the expense of the corner pubs who will see their licences killed more quickly than they otherwise would. That's really rather bad for those pubs. Whether that increases or decreases social costs depends on your view about which is better positioned to identify and exclude problem gamblers; I'm agnostic. But I'm not agnostic about that most of the measures of gambling social cost assume away the enjoyment that gamblers get from gambling. If we're happy to assume that every dollar spent on gambling by heavy gamblers is a total loss except where it results in a win, it's pretty easy to generate large estimates of gambling's social costs.

You could even make the case that the whole deal could, on the whole, be strongly anti-gambling. Here's the case. Given the SkyCity concession AND that SkyCity has bought itself immunity from other gambling regulations, what happens to political pressure against anti-gambling regs? The immunity clause means that it's in SkyCity's interest that we have much tighter regulations against gambling in other parts of Auckland; it strengthens their position. If you think that gambling is a bad, which I don't, then this deal makes SkyCity closer to a monopoly than it was previously, and makes every future regulation on gambling a pro-SkyCity regulation. If you hate gambling, you want it provided by a monopolist so that there's less of it.

The anti-gambling folks should give their heads a shake and think about the opportunities now available to them if SkyCity can be exempted from their wildest anti-gambling fantasies. I'm glad they haven't, as I don't like monopolies and I think it's ok for people to go and enjoy a flutter at the machines or at the tables. They should consider pushing hard on sinking lids such that SkyCity winds up being the only place left with them. SkyCity will be on their side in that fight. I don't like that outcome, but that's just me.

Stadium plans

Sam Richardson points out some problems with the proposed stadium-plus-office-towers combo for Christchurch:

It is not clear yet where exactly the funding for Christchurch's stadium plans is coming from, but it is fair to say that it will be largely funded by taxpayers - locally, regionally and nationally to some degree. As such, if my taxpayers money is going into funding a stadium, I would like to see some evidence that this amenity is going to be at least self-sustaining, and should not be detrimental to the local area. The idea that office buildings will make the stadium profitable is missing the point. If the office blocks are the profit-making parts of the venture, why not just build the office blocks? If they must be built as part of a stadium plan, we have to acknowledge that the rents earned by stadium offices will simply be transferred from other office spaces elsewhere within the city. It may well be the case that office space is at a premium in Christchurch, in which case the stadium offices may be beneficial to the city of Christchurch in that clients who were previously unable to obtain office space may now be able to do so. If, however, the offices are simply populated by clients who relocated from the suburbs, then this isn't making money (nor necessarily welfare enhancing either) at all - it is merely redistributing the rents on office space from the suburbs back into the CBD.

It is exactly the same argument as the claim that stadiums generate conference revenues too - which is only beneficial if the conferences wouldn't have been held in the city in the first place without the stadium conference spaces.

If people are willing to pay more for office space overlooking a rugby field than for office space elsewhere, then that can make a case for the stadium/office combination. And I can believe that there are plenty of tenants who would be willing to pay more for stadium office space than for regular office space - it isn't implausible that the project is feasible. But if that complementarity comes from tenants expecting to watch games from their offices for which they'd otherwise have to pay, then it's a trade-off against ticket revenues for the stadium's tenants - sports clubs would then be willing to pay less for use of the facility.

Lunchtime discussion in the economics staff room wondered whether we mightn't instead have hotel towers and a stadium including conference facilities. But that does start getting awfully close to Danyl's proposal from last year:

Christchurch Mayor Bob Parker and Earthquake Recovery Minister Gerry Brownlee provided more details of the rebuild blueprints for the earthquake-devastated city today, including plans to build a second sports stadium inside the new convention center to be constructed on Cathedral square.

‘The sports stadium will be a core attraction for visitors to the convention center,’ said Brownlee. It will be fully covered, provide seating for up to 2000 spectators, and will also contain a state-of the art convention center.

The sports stadium inside the convention center will complement the services provided by the main convention center. It will include business hotels, retail outlets and a covered sports stadium with natural fixed turf, which will also contain a convention center to attract business tourists who want to attend sports events during their stay.

‘We have one or two exciting ideas for what to include in that last convention center, but I don’t want to give too much away,’ Brownlee told reporters. ‘Let’s just say Crusaders fans will be very excited.’ City Council insiders suggest the convention center’s sports stadium’s convention center might house a sports stadium.

I still wonder whether it might be best to let the Crusaders own the stadium and to gift them the insurance payout for the AMI stadium. Tell them to make the best go of it that they can while writing legislation that the Mayor, Council, City Manager, and both the General Manager and Coach of the Crusaders will be shot in the face have something very bad happen to them if Council ever provides any other subsidy ever to the stadium or its tenants.

Long-term financing

The Christchurch Press tells us that the Canterbury Crusaders have paid half of their last year's profits to the Christchurch Stadium Trust.

It's great to see a sporting franchise willing to help fund its stadium.

The temporary AMI Stadium at Addington cost $30 million.

The Government has proposed building a much larger and more expensive permanent stadium as part of the Christchurch rebuild; nobody quite knows what that will cost. $400 million is the number currently cited. Here's John McCrone:

Time to sober up? With the proposed new convention centre and covered rugby stadium, the mutterings are that Christchurch has got rather carried away with its central-city rebuild plans.

"Why are we talking about a $300 million convention centre and $400m stadium at a time when we're broke? It's a nonsense," remarks one insider with a prominent role in the city's events industry.

"I can understand that we are trying to seize the opportunity of a blank canvas here," he continues, "but we're a very small city, only 350,000 people - in many ways just a large farming village. So with these kinds of facilities, it's hard to see how we can afford them, how they will be viable."

Another informed source - again speaking off the record, as now is not a time to be sticking your head above the parapet, he says - points out that the Government is only just now hiring someone to write the business case for the convention centre, even though it has already begun compiling a shortlist of the developers and contractors to build and run it.

"That tells you nobody's done a proper feasibility study yet," he says. It is all seat-of-the-pants, back-of-an-envelope thinking so far.

Now the Crusaders put $87,147 towards the Christchurch Stadium Trust this year in addition to the amount they paid in rent. I'm not sure what the Crusaders pay in rent or whether the figure is publicly available. But I'm pretty sure that the government fronted all of the capital costs for the temporary stadium and that the Trust is only covering operating expenses. A larger stadium would generate greater ticket revenues but would also have larger operating expenses.

Let's suppose that the Crusaders could earn a million dollars per year in profit that could be used towards a stadium above rental charges that cover operating expenditures but not depreciation. And suppose that they promised to give somebody that million dollars per year for the next 30 years if that somebody would give them cash today for building a stadium - a bond issue. If they marketed the bonds to Crusaders fans and thereby got away with paying only 5%, they'd get a bit over $15 million for the flow of future profits. We could maybe imagine, since we're only playing very rough ballpark figures anyway, that that plus other events at the stadium could hit a $30 million replacement cost target.*

The proposed stadium is on the order of $400,000,000. You're not going to get anywhere near that on a $1,000,000 stream but you could do it on a $26 million stream, if you could get people to accept a 5% interest rate.

But I am encouraged to see the $87,147 contribution. Perhaps we could have a few bake sales to help.

* I'm using this as a ballpark measure of whether the government's investment could be construed as having made sense. If the Crusaders were saving now to replace the $30m stadium in 30-year's time, and if the real costs of construction didn't change over the period, and if the Crusaders could get a 5% real return on investment, then it would take them about 19 years of putting $1 million aside to earn the $30m. It would take over 60 years to get to $400 million.

Rugby Boosterism

Breathtaking. The Ministry of Business, Innovation & Employment produced a report, "The Stadium of Four Million", on the 2011 Rugby World Cup.

The first sections of the report are pretty unabashed boosterism, lauding the successes of the event. It's a bit surprising that they talk about the benefits of enhanced stadium infrastructure in Dunedin with nary a mention of, well, this:

The stadium was pushed as a multi-purpose venue. An appendix to the "CST Feasibility Masterplan Report" of 2007 said it was important it was "perceived at a community level to be multi-purpose and cater for more than rugby". Since it opened last August, only two major non-rugby events have been held: a gig by Elton John, and the 150th birthday celebrations for Otago Daily Times publishers Allied Press. Neither paid a stadium hire fee. In June 2008, two major concert promoters had told the D-Scene newspaper what should have been self-evident: Dunedin was too small, remote and student-oriented to provide the sales base to attract big-name acts. In February this year, council-owned stadium management company Dunedin Venues Management Limited's (DVML) chief executive David Davies said concert bookings for the stadium would be "thin" in 2012. "What's thinner than one?" asks Garbutt. Cull says the council has to leverage the advantage of having a roof, guaranteeing events won't be rained off. Farry, who wanted to run the stadium for its first two years, is disappointed the council hasn't attracted more concerts.

The council envisaged DVML would return a substantial annual dividend to help defray loan repayments. Incredibly, DVML were told to borrow money, if they had to, to ensure a return. "There is no way a company could be milked like this without blowing apart at the seams," says University of Otago academic Rob Hamlin. DVML duly baulked, the board was sacked and replaced by new directors, Denham Shale and Bill Baylis, both former South Canterbury Finance board members. "A 100 per cent commonality of board membership with a company described as the biggest corporate fraud ever in this country takes real genius," laughs Hamlin. DVML predicts a $2.4m loss this year, saying it cannot cover the cost of debt-servicing on the stadium loans, and Davies cried at a press conference to announce his resignation. Cull says it was "completely unrealistic" to expect the stadium to service its own debt (it was originally predicted to make an annual profit of around $100,000); instead he's instigated a review to find the best operating model and how it can run at the lowest possible cost. Farry, meanwhile, reckons the trust would have run the stadium at a modest surplus. Pro-stadium councillor Syd Brown also says the stadium can be profitable: "It will work, it is an asset."

Hamlin argues it may never be viable: if it cost $200m in loans, that means raising $500,000 a week to cover the interest. "Every person from the child born yesterday to the octogenarian blowing bubbles down the old folks' home would have to go to that stadium once a week, without fail," he says. Garbutt believes it would be most sensible to mothball the stadium.

Some benefit. This matters more because the report does not provide any kind of Cost-Benefit Analysis. Rather, it's all economic impact and effects on GDP. They assume that all of the stadium upgrades happened because of the RWC (not that implausible); increased construction expenditure in the CGE model will turn into larger GDP. Except Dunedin could yet go bankrupt over it.

Roger Procter, MED Chief Economist, notes at pages 94-95 of the report some of the report's rather strong limitations. He writes that while CGE modelling can be an important input to a cost-benefit assessment, we still need that cost-benefit assessment to assess any net economic benefit. And as best I can tell, there's no cost-benefit analysis in this report. Maybe it'll be in a subsequent report.

Further, a lot of the benefits tallied depend on the counterfactual that's used. At page 15, they talk about overseas visitor spending being 16.2% higher in September and December 2011 compared with September and December 2010, and retail trade being up 5.7% over the same interval. But the world economy strengthened considerably from 2009 to 2010 and continued strengthening through 2011. The CGE modelling should account for that, but they are taking the increase in visitor numbers as an input. And the graph presented at p. 43 makes it look as though they're estimating excess visitor numbers in 2011 based only on actual numbers from 2010: the "But for the RWC" 2011 figures coincide with realised 2010 visitors for the period of the RWC. If we would have expected numbers to have gone up with continued American and Australian economic recovery, then this may overestimate the RWC's effect. And, again, the estimated RWC-visitor-bump is an input into the CGE model.

A final bit of fun. The boosterish early part of the report talks about the potential gains from increased international business contacts as foreigners travel to New Zealand to see rugby. And that is indeed a plausible but hard-to-quantify benefit. But the notes for the CGE modelling say that much domestic NZ RWC attendance was not displacement from other domestic tourism activities but rather displacement from international travel. That lets that domesticly diverted attendance count as a gain in the CGE modelling. But it also attenuates the benefits of "international connectedness". That bit doesn't get noted in the early boosterism.

For a future honours project, it would be rather fun to have a student check whether countries represented in the RWC, as compared to comparable matched non-RWC countries, had enhanced longer term tourist flows. The report makes a lot of surveys of visitors happily reporting that they'd recommend New Zealand to friends. If that's true and substantial, it should show up in aggregate tourist flows by country sometime over the next few years. It would also be neat to compare these effects with per capita LOTR and Hobbit box office revenues by country.

I chatted with Radio New Zealand's Eric Frykberg about some of these issues late this morning.

Stadium subsidies - a new hypothesis?

Football is for Republicans, baseball for Democrats? 

StubHub is the secondary market for sports and concert tickets in the States. Their data analyst has been playing with the numbers and finds that states that have a lot more trade in football tickets than in baseball tickets break GOP while those with a higher proportion of baseball tickets like the Democrats.

Here's the infographic from StubHub:

They also put up some evidence showing that changes in the BFR correlate with changes in polling data in the swing states in the leadup to the 2008 election. 

So do baseball or football sales really cause states to move politically? No, not really. Just because the two are correlated doesn’t mean that one action caused the other. But it shows that sports and politics may have a deeper connection than previously thought. Political pundits sometimes say “As Ohio goes, so goes the nation”. I don’t think they’ll ever say “As BFR rankings go, so goes the nation”, but they’d be right if they did.

If the culture wars are a long game, it would be fun to check whether Republican governors/mayors are more likely to throw money at football stadiums while Democrats fund baseball stadiums. We'd then expect periods of unified state/local government to coincide with greater sports stadium subsidies and divided government to hinder it. You'd have to run the latter kinds of checks because if a Democrat state were also a baseball state, it would be no surprise if Democrat governors put money into baseball stadiums. Focus on swing states and on unified vs divided government.

Economists tend to say that stadiums are an incredibly wasteful public investment; do Republicans cite economists against baseball stadiums proposed by Democrats and vice versa?

It is the time of year when I have to start thinking of honours projects to propose for next year....

The Dismal Science: Stadiums edition

The rather strong consensus of the academic literature shows that government subsidies to sports stadiums fail to deliver promised economic benefits. 

Massey's Sam Richardson, and co-blogger at The Dismal Science, has done the academic heavy lifting in New Zealand; most of the other bloggers syndicated at The Dismal Science have chimed in from time to time with our takes on things.

Close-Up highlighted some of Sam's work on stadiums; I popped up a bit but the serious work on this issue is Sam's. When Mark Sainsbury asked what Earthquake Recovery Minister Gerry Brownlee thought about the economic case for stadium subsidies, Gerry replied: 

"They say that economics is the Dismal Science. And you've found some really good exponents of that."

Indeed, Gerry. Indeed. 

I will be hitting some of the highlights of our collective prior efforts on stadium subsidies at The Dismal Science feed at SciBlogs. Enjoy the mini symposium! 

Christchurch Costs

The NBR's NZ Property Investor magazine has what may be a leak on estimated costs of some of the big ticket items in the proposed Christchurch plan. It's not online; I thank Hugh Pavletich for the tip. [Update: Hugh's been keeping track of all this kind of stuff at Cantabrians Unite].

But NBR NZPI has been supplied with figures by a reliable source who cannot be identified due to possible repercussions. The covered rugby stadium is tipped to cost  $506 million, the convention centre $460 million and the metro sports arena $227 million. Other elements of the plan make up the balance of the $1.6 billion.

By contrast the recent parallel city plan based on the "Share An Idea" programme with residents allocated about $200 million for a rugby centre, $150 million for a convention centre and $120 million for a metro arena.

According to NBR NZPI informant, the government has indicated it would come up with roughly half the money for the Rolls Royce plan. But subsequently there have been calls for the city sell assets to pay a greater share.

A community leader Reverend Mike Coleman described the scale of the plan as "bizarre."

"It's emporer's clothes stuff. To even talk seriously about a rugby stadium or convention centre at these prices is absurd. We are not a big city in the scheme of things, we are a large town of about 300,000 people. We don't want to end up stuck with millstones like the Dunedin stadium."

Pick up a copy at your local newsagent.

A city of a few more than 300,000 people is planning on building a stadium with capacity to seat about 10% of the city's population.

The Christchurch Star called last week asking for comment on how the cost for these sorts of things might be borne, and whether amalgamating the local councils might be a way of spreading the costs [yikes!]. I'd sent them this, but only got their voicemail requesting a shorter version after they'd hit the press deadline. So I'll put it here instead.

“It makes sense that Christchurch ratepayers, one way or another, contribute to the cost of enhancing facilities over what we had before the earthquake. Those costs should be met by a mix of longer term rates increases, debt issuance, and sales of existing assets that would have more value in the private sector than in the public sector. Trying to meet it all through current rate increases would unnecessarily penalize households, many of which are under reasonable fiscal distress where insurance is not enough to cover damages suffered. There are about 133,000 households in Christchurch; if Council is to be on the hook for $787 million [number the Star cited to me], the per-household cost is then just under $6,000; average rate increases on individual households would be less than that as rates paid by businesses would also increase substantially, but we should note that many of those businesses are also owned by local households.” 

“What is less clear is whether Council should really be spending large amounts of money on things like the planned Convention Centre or Stadium. The economic literature does not provide any strong support for that either kind of investment really provides any great benefit to a city, though you could make the case that that literature doesn’t typically look at cases where cities are trying to rebuild from earthquakes. I would hope that Council and the government might scale back their ambitions on both fronts. The plans for the Stadium depend on forced acquisition of property from people like the owners of Ng Gallery, who have been working very hard in their own way towards the Christchurch rebuild. When I take off my economist hat, I worry about the foundations of a city whose rebuild is based on something that’s awfully close to theft. And, when not hosting conventions, Convention Centres tend to be dead spaces. Wouldn’t it make more sense for Council to fund some overhead walkways connecting hotels that would want to be able to collaboratively host larger conferences than for Council to spend rather a large sum of money on a dedicated facility likely to be too large to meet typical future needs?” 

“I would also be very nervous about planned amalgamations of the local councils. Differences in regulations across the Councils seemed to help a lot in getting new residential construction going  after the earthquakes. Where Christchurch Council was too busy with other things to move particularly quickly to release more land for housing, Rolleston and Kaipoi were able to start expanding. Smothering that kind of ability for different areas to respond differently in the face of disasters removes some of our institutional robustness. Further, it only makes sense to spread any burden to Waimakariri and Selwyn to the extent that residents of both of those districts disproportionately make use of Christchurch-funded facilities; otherwise, any burden-spreading should come from the national government’s contribution to the rebuild. I would expect that simply having a higher fee-for-service in some of the new facilities for those not normally resident in Christchurch would make more sense than amalgamating the Councils.”

RWC losses

Such are the measures of success in hosting international sporting events: The Herald calls the 2011 Rugby World Cup a success for having lost the country only $31.3 million, "$8 million less than they expected." Alas, the article seems not to be online. But as most of the APNZ story seems to come from the IRB press release, you can probably just read that.

I'd be interested in seeing what went into that final "cost to the country" tally. Is it just the cash transfer from the government to the RWC? Local government outlays as well? Costs of diverting a substantial part of the Wellington bureaucracy to supporting the RWC? Stadium expenditures, like Dunedin's mess, where the RWC push was a pretty explicit part of the case for building it?

RWC Minister Murray McCully comments:

"Without a doubt, RWC 2011 will generate significant economic benefits for this country for many years to come."

Sam Richardson points to some different results in Manawatu:

Far from producing a windfall, predicted to be worth between $750,000 and $2.2 million to the city, economic growth actually slowed during last year's tournament.

Proponents of the city's involvement, which included two matches, were "overly optimistic", said economic policy analyst Peter Crawford, and some city councillors are asking whether hosting large events is worth it.

The estimates process got it so wrong because it did not balance the likely benefits against the costs, he said.

One of the costs was the extent to which such a major event crowded out other activities.

I'll look forward to seeing Sam's paper at the NZAE meetings.

HT: Hamish Keith

A sense of priorities

The Press surveys Christchurch residents about post-quake rebuilding priorities. I'm nosing about for the survey raw data, but here's the ranking from Paul Gorman's article. For each, I'm reporting what I think is the proportion reporting the item is at least "important" on a scale running from "Extremely unimportant" through "Extremely important", but I can't really be sure without seeing the survey report.

• Redeveloping the hospital: 97%
• Rebuilding public sports facilities: 91% 
• Tourism facilities: 88%
• New central-city police station: 88%
• Town Hall (mostly a venue for the Symphony): 87%
• Central Library: 86%
• Avon River redevelopment: 81%
• Christchurch Art Gallery: 80% said reopening is "urgent" [no clue how this fits onto the scale]
• Cycle lanes: 78%
• Car parks: 77%
• Rebuilding the rugby stadium: 67%
• Downtown sports centre: 63%
• Commuter rail: 50%

The relative rankings are awfully interesting. Culture and the arts beat Big Sport; local community sports grounds matter more than the New Zealand Rugby Union. And commuter rail is rightly recognized as being way too expensive.

I don't know where the Arts Centre fits on the scale or if it wasn't on the survey. 

It's awfully encouraging to see that most folks have their priorities in a pretty reasonable ordering.

Here, I think, are some of the survey respondents' comments about stadiums.