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The Dunedin City Council yesterday confirmed an agreement had been signed with Kainga Ora for it to explore the potential for housing at the 658 Princes St site, before the Crown agency committed to purchasing the land.
But Go Bus chief executive Calum Haslop said he was concerned it could affect bus services and his company’s future without another suitable depot.
He said the council’s efforts to help find a new location had been "half-hearted".
The land is owned by the city council, zoned for commercial and mixed use, and is leased to Go Bus for use as a depot.
City council chief executive Sandy Graham said the potential housing development was an exciting project that would, if confirmed, deliver a significant and much-needed boost to the city’s housing supply.
It would also make best use of what was a prime central-city location.
Discussions were still at an early stage.
If the plan progressed, Kainga Ora would keep neighbours and the community informed, she said.
Ms Graham said the council was in contact with Go Bus to discuss potential options for the company to relocate to an alternative site.
She did not say where those sites were.
"Various options for the housing development at 658 Princes St are still being worked through and detailed plans are yet to be confirmed.
"If the project proceeds the normal resource consent process will follow."
The council and Kainga Ora were unable to comment further, she said.
Mr Haslop said Go Bus had made repeated efforts to try to buy the land, but was met with a "stone wall".
The company wanted to purchase the site and develop it into a modern transport site, including investing in electrical infrastructure needed for future deployment of electric buses at its own cost.
"The current depot site at Transport Pl is ideally placed for efficient operation of buses, as they are close to the start and finish of their runs, and it allows drivers to easily take their required rest breaks and to use toilet facilities."
Mr Haslop said the council had been in communication with Go Bus but had not put forward any viable alternative sites.
"The council’s efforts have been half-hearted," he said.
Go Bus, so far, had been unsuccessful after searching "tirelessly" for a suitable site.
"Without secure tenure at Transport Pl or a viable alternative option, we simply can’t guarantee future delivery of our bus services,” Mr Haslop said.
In March this year, the Government announced it would pour $3.8 billion into a scheme to accelerate the pace of new house builds.
The package included an offer of a $2billion loan to Kainga Ora to scale up land acquisition.