Council cornered in Shelly Bay talks

It could be back to the drawing board for Wellington City Council, after councillors discovered they had been backed into a corner over the Shelly Bay development.

Earlier this year, Eastern ward councillor Chris Calvi-Freeman said ratepayers had negotiating strength up their sleeves – developers would have to pick up a significant amount of infrastructure costs because they needed council land for the project.

But it turns out they have no bargaining power over the developers, The Wellington Company and Port Nicholson Block Settlement Trust (PNBST) – and until recently some councillors were unaware of this.

Because the developers have non-notified consent, they can – and will – push on with the development, regardless of whether the council sells or or leases a parcel of land to them.

Yesterday, Calvi-Freeman said the council had not lost its negotiating leverage but he refused to speculate on who would pay for infrastructure upgrades if the development went ahead without the council land.

‘‘There would have to be a whole new set of negotiations between the developer and council.’’

He had known ‘‘all along’’ that the development could go ahead regardless of the council land decision, though the plans would have to be rejigged.

The situation leaves the council in a costly conundrum. Either it agrees to sell or lease its land, and pay about half of the infrastructure costs, or it keeps the land and potentially gets lumbered with more infrastructure costs.

Councillor Diane Calvert, who holds the community planning and engagement portfolio, confirmed she became aware only this month that the $500 million development could go ahead regardless of whether the council sold a parcel of its land to the developers.

‘‘I wasn’t aware of the significance of the [non-notified] resource consent.’’

Shelly Bay, beside Wellington Harbour, was designated a special housing area in 2015, meaning the 350-dwelling development went through a non-notified resource consent process.

The only aspect on which ratepayers get a say is whether the council sells or leases its land to the developers.

Deputy mayor Paul Eagle said councillors would attend a workshop today to discuss what option would be the best value for ratepayers, and would include discussions about infrastructure costs and what to do if they did not sell the land.

He confirmed the council was obliged to provide infrastructure and there was now no guarantee how much the developers would chip in if it kept its land.

‘‘Whatever decision goes ahead, the council and Shelly Bay Ltd will need to sit around the table and talk about what that decision would mean. There will still be issues to resolve.’’

If the council did not sell its sliver of land, there would be access and construction issues for it to figure out, and there would be little public space, he said.

‘‘There is an assumption that the council owns all the land, but it only owns a tiny bit along the wharf. Part of the rationale for the partnership was getting a much bigger public space as part of the development.’’

There would be considerable costs for ratepayers regardless, due to the current state of the infrastructure. ‘‘We are not a loser if we walk away – we will have to renegotiate something else.’’

PNBST chairman Wayne Mulligan said it had an agreement going back to 2009 with Greater Wellington Regional Council and Wellington City Council to work together to develop the land.

‘‘Our offer was to do it in partnership and buy that land off them.’’

That offer also meant buying the council land for $8m, which would go towards infrastructure costs and add to the $10m developers were already chipping in.

Asked if they would still chip in for infrastructure if the council did not sell its land, Mulligan said: ‘‘We are always happy to go and talk.’’