Saturday, June 15, 2024

OAG finds no issue with Queenstown council $75m ‘Lakeview’ land sale

The Office of the Auditor-General (OAG) has found no issue with Queenstown Lakes District Council’s sale of land for $75 million to an Australian developer.

The OAG received a letter from complainant, Peter Newport, in August last year regarding the sale of a 10-hectare block of land known as ‘Lakeview’ and his belief that the sale agreement was less than the land value.

In October 2019, Council entered into a development agreement with an Australian-based developer and an Auckland-based investment company.

Council described the development in its 2021-31 long-term plan as offering residential buildings, hotels, co-working and co-living spaces, hospitality and retail, and open space between areas.

Construction will be phased over seven stages and is estimated to take more than 10 years to complete. To facilitate the development, Council plans to carry out the necessary subdivisional works, including the removal of historic asbestos, rockfall mitigation, and reserve development.

“The Council told us that the agreement with the main developer (QT Lakeview Queenstown Limited) has a base payment of $75 million for the land, plus a profit share payment that is structured to provide the Council with an opportunity to participate in any uplift in land value and the success of the development over time,” the OAG response to Mr Newport stated.

The Office said it reviewed information about the development made publicly available by the Council and found no reason to inquire further into the land sale decision.

“In the documents we have reviewed, it appears that when making its decision the Council considered its position, its options, and what it was trying achieve from the arrangement.”

This process included:

  • receiving and considering advice about the potential benefits to the community from the development, including benefits to the economy of the area, employment and household incomes in the short and long term, and other benefits such as assistance for workers affected by Covid-19, access to open spaces and shopping, and accommodation;
  • carrying out a competitive procurement process to select a partner for the development;
  • considering the value of the land and the return to the Council over time (including net value of the financial payments from the developers, the infrastructure costs it would need to incur, and how it might share in an increase in the value of the land over time); and
  • consulting with the community about the development, including through its 2021-2031 long-term plan.

“Based on the information we reviewed, we have not identified issues with the Council’s processes that warrant further inquiry by us,” the OAG said.

“We also note that the Council has made information about the development and its decision-making process publicly available on its website. That includes the Council’s objectives for the development; Council reports, papers, and updates; and information about why the Council did not sell the land outright and about the value of the land.”

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