Queenstown Lakes District Council – Development of Lakeview land

24 March 2022

Mr Peter Newport
Managing Editor
Crux Publishing Limited

Tēnā koe Peter

QUEENSTOWN LAKES DISTRICT COUNCIL – DEVELOPMENT OF LAKEVIEW LAND

I refer to your email of 19 August 2021 outlining your concern about the decision of Queenstown Lakes District Council (the Council) to sell the block of land known as Lakeview. In your view, the financial return to the Council under the agreement is less than it should have received and is, accordingly, not good value. You requested that we inquire into the Council’s decision.

In October 2019, the Council entered into a development agreement with an Australian-based developer and an Auckland-based investment company. The 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, the Council would 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 focus of our work

As you are aware, the Auditor-General has a range of functions that help Parliament and New Zealanders hold public organisations to account for their use of public money. These functions include annual audits of public organisations, monitoring expenditure against parliamentary appropriations, and looking more closely at the appropriateness and effectiveness of spending by public organisations through performance audits and inquiries.

Our work can include examining whether a public organisation has followed an appropriate or agreed process in making a particular decision and whether it has adequate controls in place to ensure that it can account for the money it spends and deliver value for money. However, it is not our role to express a view about the merits of a particular decision or the policy sitting behind that decision.

Our view

We asked the Council for information about the matter you raised. We also reviewed the information about this development made publicly available by the Council. After considering this information, we have decided not to inquire further into the matter.

As we have outlined, it is outside the Auditor-General’s role to revisit decisions like this made by public organisations. In this case, whether to enter into the agreement with the developers was a decision for the Council.

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.

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.

Thank you for writing to us. We use information from the public to support our monitoring of the public sector. In light of the public interest in this matter, we intend to publish this letter on our website.

Nāku noa, nā

David Lemmon
Manager, Inquiries