Future of the Lakeview site
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Lakeview discussion document [PDF 4MB]
Lakeview Site: District Plan structure - indicative subdivision
The tenure debate
Sitting above Queenstown is the Lakeview site, an exciting piece of Council owned and administered property comprising some 10.4 ha.
The Council has taken a fresh look at the potential for this significant piece of community-owned land.
Within the Lakeview land-holding is approximately 4.4 ha of freehold land; part of the Council’s commercial portfolio. The Council has previously been in a position to ‘sell’ the commercial land but this was shelved due to the Global Financial Crisis and risk that the land-holding benefit would not be optimised. One part of the land was also the preferred location of a proposed convention centre. The success of a convention centre on the site was predicated on ensuring that funding of the project did not fall to ratepayers. The proposal has therefore been set to one side.
Current market conditions combined with recently re-zoning (Plan Change 50) the site, means that now is considered an optimal time to consider taking the commercial land to market and achieve best value for ratepayers.
Why go to market?
Given this context the Council is also mindful that there is a major investment challenge ahead in terms of the potential development opportunities, both presented by the Queenstown Town Centre Master Plan and the required investment in infrastructure to meet growth. The Lakeview commercial land potentially unlocks an important contribution and also forms an important part of the development of the wider town centre.
While it is critical that the Council holds in reserve community-owned land for future generations, the Lakeview site is a key central site that remains underutilised.
In accordance with Plan Change 50 the commercial land may be developed as a range of small commercial, residential, and visitor accommodation activities. The Council proposes to retain community ownership of parks and reserves on the site including a proposed market square. Including roading corridors this will amount to approximately 6ha of land held by the community in perpetuity. The purpose of this discussion relates to the basis on which the Council will enable the remaining commercial land (circa 4.4ha) to be developed by the market.
The pre-paid challenge
In addition to potentially having an impact on the price the Council will receive for the land there could be other challenges associated with prepaid leasehold tenure.
The terms of expiry of a prepaid lease can be negotiated but commonly the lease expires and any improvements revert to the landowner. In theory this sounds attractive but the legacy could carry a significant risk. As the expiry date approaches owners are incentivised to underinvest in the improvements on the land.
The second challenge, is that the asset being run down is cheap and therefore treated as second-rate housing. The community may find itself taking over ownership of large scale residential apartments that have been completely run down. It may also be faced with significant cost in terms of upgrade or removal. Removal could be potentially problematic faced with a large number of low wage or fixed income tenants and a social dilemma in terms of large-scale displacement.
In general, property advisors estimate underinvestment and deterioration of the area can generally commence some 30 or more years out from the expiry date. Lease conditions may be able to be invoked but are generally considered unenforceable in these circumstances.
With this context the question then becomes one of legacy either way and this needs to be well understood before heading down the prepaid lease route.
The freehold counter
The counter argument is that freehold tenure is more likely to ensure that the value of the property is retained if not increased and therefore investment in the amenity of the property continues to be a desirable prospect. The private sector is most effective and efficient at doing this.
The Council would need to continue to invest in the amenity of the reserve and roading infrastructure on an ongoing basis, regardless of the tenure decision, but the freehold option does ensure that ongoing investment on the remaining property sits firmly with private parties.
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