Part 1: Introduction

Queenstown Lakes District Council: Managing a conflict of interest in a proposed special housing area.

1.1
In this Part, we discuss:

Background

1.2
On 3 June 2015, Queenstown Lakes District Council (the Council) met to consider 13 expressions of interest for areas of land in the Wakatipu Basin to become special housing areas under the Housing Accords and Special Housing Areas Act 2013 (the Act). Becoming a special housing area under the Act allows some streamlining of resource consent processes and can save landowners time and money.

1.3
The matter aroused considerable local interest. The Council considered comments on the expressions of interest from people in the Queenstown Lakes District at and before the Council meeting on 3 June 2015.

1.4
Four of the expressions of interest were for sites in or near Arrowtown. One of the expressions of interest was from the Rafa Trust for a residential development of 20 dwellings on the southern side of McDonnell Road, Arrowtown, on land owned by the family of the Council’s chief executive.

1.5
The chief executive’s family bought the land shortly before he took up his role with the Council in October 2012.

1.6
In November 2014, the chief executive told the Mayor of his family’s intention to submit an expression of interest and how he proposed the Council could manage his interest in the matter. The Mayor informed councillors and us of this at the time. The Mayor sought our views on what additional steps were needed to manage the conflict. The chief executive provided further information in response to our comments, and, in late December 2014, we said that we were comfortable with the proposed approach.

1.7
In May 2015, when the Council got closer to deciding on the expressions of interest for special housing areas, we received several requests from people living in the Queenstown Lakes District to inquire into the chief executive’s interest in this matter.

1.8
Some of those people had seen our November and December 2014 correspondence with the Mayor and the chief executive about the chief executive’s disclosure of interest and proposed mitigation steps. In that correspondence, we focused on how the conflict of interest would be managed.

1.9
The people who had seen our correspondence suggested that we needed to look at whether the chief executive was involved in preparing the housing accord and the Council’s related policy before he declared an interest, to see whether he had influenced the process to his advantage.

Type of conflict of interest

1.10
The type of interest involved is a private financial interest. People who contacted us were concerned that the chief executive’s private financial interest in his family land becoming a special housing area conflicted with his role as the local authority’s chief executive. They said it was inappropriate for a local authority chief executive to seek a property development opportunity, because this created an inherent conflict between a private interest and the chief executive’s obligations to the Council.

Why we decided to inquire

1.11
On 28 May 2015, we said we would inquire into how the Council and its chief executive had managed the chief executive’s interest in land owned by his family being considered for a special housing area and whether the chief executive had been involved in developing the related policy.

1.12
We said we would carry out an inquiry because the requests raised matters of trust and confidence in the Council’s processes and about how a chief executive can participate in one of those processes. Some of those who contacted us hoped that we would intervene in the process and prevent the Council from considering the chief executive’s expression of interest. The Mayor got legal advice that the Council could proceed to consider the expressions of interest, including the one from the chief executive’s family.

1.13
When we announced our inquiry on 28 May 2015, we said that we would consider:

  • the nature and extent of any involvement of the chief executive in developing the Council’s housing accord and related policy for special housing areas;
  • how the Council and chief executive:
    • managed the chief executive’s interest in land owned by his family being considered for a special housing area;
    • should manage matters if the land owned by the chief executive’s family is approved as a special housing area;
  • and any other matters that we considered it desirable to report on.

1.14
The Appendix sets out our terms of reference for this inquiry.

How we carried out our inquiry

1.15
The Council provided us with comprehensive records about how it developed the housing accord and the related “lead policy” for special housing areas (see Part 2). These records included email messages to and from all involved, and minutes and reports of relevant meetings before and after the chief executive’s disclosure of interest.

1.16
We considered the Council’s policy on managing conflicts of interest and its interests register. We also got records from the Ministry of Business, Innovation and Employment (the Ministry) about its involvement.

1.17
We looked at events that took place between February 2014 and June 2015.

1.18
We met:

  • the Mayor of the Queenstown Lakes District, Vanessa Van Uden;
  • the chief executive, Adam Feeley;
  • two elected members who were closely involved in the policy development process (Councillor Cath Gilmour, the Council’s portfolio leader for planning, and Councillor Ella Lawton, the deputy portfolio leader for planning);
  • staff members closely involved in the policy development and consideration process for special housing areas (the General Manager, Planning and Development, and the District Plan Manager);
  • officials from the Ministry who worked with the Council to prepare the housing accord;
  • other Council staff members involved in managing the Council’s information systems, the chief executive’s office, and legal matters;
  • the former General Manager, Legal and Regulatory;
  • the environmental consulting firm that prepared the chief executive’s expression of interest, Mitchell Partnerships; and
  • the acting chairperson of the Arrowtown Village Association.

1.19
We also met or spoke with some of the people who had contacted us with concerns and information.

We have not considered how the chief executive’s interest should be managed in the future

1.20
At its meeting on 3 June 2015, the Council instructed Council officers to do some more work on four of the expressions of interest so that the Council could recommend them to the Minister for Building and Housing. None of the Arrowtown proposals, including for the land owned by the chief executive’s family, were recommended for further consideration.

1.21
Because the Council did not recommend the chief executive’s expression of interest for further consideration, we did not need to consider how the Council should manage matters if it had approved the land owned by the chief executive’s family as a special housing area. However, we briefly comment on this matter in Part 5.

1: The General Manager, Planning and Development resigned from the Council in September 2015. This was outside the period of our inquiry.