It is costing Christchurch City Council $600,000 a year to own five properties purchased from now bankrupt property developer Dave Henderson in 2008.
The council confirmed Mr Henderson had failed to meet a deadline to buy back the first of five properties he sold to the council in a controversial $17 million deal two years ago, The Press reported.
Under that agreement, Mr Henderson had to settle the purchase of the property five days after title was issued.
Title was issued two weeks ago but Mr Henderson had not been able to settle on the Para North property, on the corner of Tuam and Manchester Sts.
The purchase is controversial as the council is expected to find it hard to sell central city property in the wake of the September 4 earthquake.
Council corporate services manager Paul Anderson said on Radio New Zealand that the properties were not on the market but the council has had approaches particularly on the Para North property.
The properties were purchased at market valuation and had not been revalued since.
Rents were covering costs other than interest. The holding cost of $600,000 a year has been budgeted for.
The council purchased the properties to achieve its ambitions for mixed-use development in the Central City South Master Plan.
Mr Henderson was placed in bankruptcy last week after creditors rejected a repayment plan. The bankruptcy is his second.
Mr Henderson was prominent in the 1990s when his story of a "David versus Goliath'' battle with Inland Revenue was held up as an example of bureaucracy ruining business. The book he wrote became a movie.
