Queenstown ratepayers may end up millions out of pocket from a foul-up at Frankton’s failed Five Mile development.
Queenstown Lakes District Council has spent $700,000 developing two sports fields near “Hendo’s Hole”, Five Mile’s intended underground carpark.
The council was originally going to get ownership of the 2.3ha sports fields site in a straight land swap with Five Mile developer Dave Henderson.
But his company failed to get its lender’s consent and when Five Mile went bust, receivers rejected the swap – leaving QLDC unable to secure the site.
In November last year, Aucklander Tony Gapes became the sports fields’ new owner when he bought part of Five Mile. Gapes says a “heads of agreement” between himself and QLDC requires the two parties to thrash out a deal by the end of this year for the council to buy the sports ground.
Potential elements of a deal might include land swaps, QLDC letting Gapes off development levies, or cash changing hands, he adds. But the heads of agreement is “very wide”, Gapes admits.
Gapes says he can’t put together a sports field deal until the shape of his own development is finalised.
The sports ground site’s commercial value is $6 million to $7m but Gapes says it’s “considerably less” as there are no longer any development rights attached to it.
It also acts as an emergency stormwater detention pond.
Mayor Clive Geddes says ex-QLDC boss Duncan Field worked on the Henderson deal but it wasn’t his fault $700,000 was spent developing land not legally owned.
“There was a high level of confidence in [Henderson] proceeding with the project. [But] within a few months it became evident he’d lost the confidence of his bankers.”
Geddes concedes Gapes may get a “significant” amount off development levies but securing the sports fields is worth it.
Councillor and mayoral candidate Vanessa van Uden says QLDC was “very unwise” to plough $700,000 into developing land it didn’t own.
“Until the [final] deal’s done, we actually have no idea how much cash is going to change hands.”
It’s understood nothing is budgeted in the new annual plan.
“It sounds like we could maybe end up with the most expensive sports field in New Zealand,” Van
Chamber of Commerce president Alastair Porter says it “shows a level of commercial naivete that’s unacceptable”.
“People at QLDC need to have adequate commercial expertise to undertake a transaction of this scale.”
For the record:
Development levies - Developers are charged by the Queenstown council for contributions towards reserves, water supply, sewage disposal, roading and sometimes stormwater, according to size, nature and value of their projects.
Land swap - Two parties exchange parcels of land of equal size and/or value.