Potential costs in ‘millions’

SHOULD the Queenstown Lakes District Council not be able to fulfil its obligations in relation to the controversial billiondollar LakeviewTaumata agreement with developers, it would be liable for cost recovery ‘‘in the order of millions of dollars’’.

Strategic projects manager Paul Speedy told yesterday’s audit, finance and risk committee that amount would represent costs incurred to date by the developer, QT Lakeview Developments.

Should that occur, there was also ‘‘some risk they could go for future costs, too’’.

In a development programme report to the committee, Mr Speedy said the developer agreement was structured so the council would progressively sell land parcels, or ‘‘super lots’’, to the developer in seven stages.

QT Lakeview Developments would pay a base land payment to the council on settlement of each super lot, together with a 50% share of any ‘‘super profit’’ that may be achieved in respect of ‘‘a stage calculated at the development contribution of each stage’’.

Before the developer could call for settlement, it must satisfy a range of conditions with the council, relating to a variety of matters, including funding and equity commitment.

The super lots must be developed in accordance with a master development plan and documentation approved by the council.

That master plan envisages more than $1 billion investment in the super lots over 12 to 15 years, delivering more than 450 residential apartments, about 96 ‘‘coliving’’ units, 600 hotel rooms and 10,000sq m of commercial/retail space.

‘‘By the end of the development, spending will generate annual economic impacts equal to regional GDP of $100 million, employment for 1800 people and household incomes of $52 million,’’ the report said.

Each stage would be progressively developed in line with a programme which outlined key milestones and dates.

‘‘While these dates can move as a result of circumstances outside the control of the developer, there are less flexible sunset dates for key milestones that, if missed, give rise to a project review and, potentially, termination rights in respect of future super lots.

‘‘This safeguards against land banking.’’

If the developer agreement was terminated, rights to acquire future super lots were lost, but the developer remained obligated to continue developing super lots it had already acquired.

However, the delivery of council works was a key prerequisite to the developer being able to advance the programme.

Under the council’s obligations, at ‘‘moderate risk’’ was the council works completion sunset date of September 30, 2023.

Infrastructure works construction contracts were in place and programmed for completion by that date, while market square works were programmed for completion on January 29, 2025.

Mr Speedy told the committee because the Alliance contract was in place, there was ‘‘very little risk’’ of the council not achieving that.

‘‘They’re on the site and they’re looking to have everything complete by the middle of next year.

‘‘At this point, there are no flags with regard to being able to complete those works.’’