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'Will reap dividends': An artist's impression shows what part of the Lakeview development site will look like on completion

By TRACEY ROXBURGH

Queenstown’s mayor’s bullish the deal done over the Lakeview site will, in time, reap financial dividends for the community.

In 2018, following almost 20 years of planning, consultation and investment, and a land swap, a two-stage expression of interest and request for development proposal went to market to find a development partner.

The following year, a developer agreement was executed with Melbourne-based developer Ninety-Four Feet and Auckland-based investment company Augusta Capital.

That deal technically gives City Hall $77 million.

‘‘Locked and loaded — it doesn’t matter what happens, we get $77m.’’

Jim Boult says that agreement manages programme and design flexibility, also ‘‘appropriately balancing’’ the council’s need to retain adequate control, and the developer’s
imperative to respond to market conditions and commercial drivers.

A key prerequisite was for the council’s delivery of subdivision works and, further, the timing and completion of that, for the developer being able to crack on with the job, he says.

To achieve that, the council had to spend $50m — $12m of that was related to the ‘‘disappointing’’ clean-up costs of asbestos found on the site, and $4m goes to the Queenstown Lakes Community Housing Trust.

‘‘So the net surplus is $27m.

‘‘Now, some might say, ‘well, why didn’t you just sell a site for $42m in 2017?’, which was the value then.

‘‘But to achieve the $42m, we still had to spend $20m on infrastructure costs.’’

While he accepts ‘‘we’re only $4m ahead’’ at present, selling the land outright would have meant the council, and community, would’ve had ‘‘no control’’ over the site.

‘‘Some gazillionaire would have bought it for that money and simply put a big house up there.

‘‘Where’s the social upside for the community?’’

‘No downside’: Queenstown mayor Jim Boult

Further, Boult says, as part of the deal with the developers, the council gets ‘‘50% of the upside of whatever the developer makes’’.

If, for example, the site’s worth $1 billion at the end of the development, and costs are $900m, the $100m profit’s split down the middle with the developer, netting another $50m for the council.

‘‘If the market does, in fact, tank, there’s no increase in value or it goes down, we’ve still locked in $27m.

‘‘So there’s no downside for us.

‘‘And it would be reasonable to assume there will be an appreciation in value, and that we will get a significant margin going forward.’’

Boult says the money’s ‘‘simply a surplus at this point’’ and hasn’t been tagged for anything, but may be used for debt reduction, though that’ll be a decision for the council when the money starts to come through.

The $14m stage one payment’s due after council complete the subdivision works and developers get consent.

Boult says subsequent payments will come about every two years for 10 to 12 years, ‘‘including the upside’’.

Ninety Four Feet’s applied through the government’s fast-track consent process, but Boult says it’s been made clear ‘‘we expect a high degree of local input’’.

tracey.roxburgh@scene.co.nz