The school, in Tenby St, was originally offered to the tribe as part of the standard disposal process for Crown-owned property: transfer the property to another government department or territorial local authority if required for another public work; offer it back to the previous owner (or benefiting successors); assess for any Treaty of Waitangi claims; then sell it on the open market if the property clears the first three steps.
Ngai Tahu turned down the offer, so the school was placed on the open market, but failed to sell.
A Ministry of Education spokesman said the property was now being offered back to Ngai Tahu because the Ngai Tahu Claims Settlement Act 1998 did not allow the Crown to sell it on more favourable terms than the original offer.
The spokesman said the school was marketed for general sale twice, once by tender, with two tenders received, and once by fixed price, with two offers received.
"On both occasions the outcome of due diligence exercises by potential purchasers resulted in settlement not proceeding," the spokesman said.
The ministry had sought valuation advice on what a fair market value would be for the property today, which revealed the market demand for development sites had dropped since the property was offered to Ngai Tahu.
"Therefore, as the value was below the benchmark price previously offered to Ngai Tahu, the Crown has to re-offer the property to Ngai Tahu at the revised valuation before the property can be offered for sale on the open market again."
The ministry said in August the properties were on the open market at $3.6 million plus GST for the main school block, and $300,000 plus GST for the other smaller site. However, the main block was subsequently reduced in price to $3.25 million plus GST, while the other remained $300,000 plus GST.
Last week, a ministry spokeswoman declined to provide a detailed valuation of the school property, saying the matter was "commercially sensitive".