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A land deal between the Dunedin City Council and St Margaret's Church in Green Island built on ''good faith'' was about $100,000 shy of another offer tabled but was accepted by the parish because it would create a community asset, former city councillor Colin Weatherall said.
Mr Weatherall, speaking from Picton, said that as a councillor, he was involved in negotiations when the church sold land about six years ago.
The church agreed on a price with the council because the land would be used for a public car park. That price was about $100,000 less than an offer by a property developer wanting to build flats on the land.
After the sale, the council spent about another $200,000 making the land a public car park, he said.
The purchase and improvement price cost the council about $500,000.
South Link Health Services Ltd has signalled to the council its intention to develop a medical centre on about 1880sq m of the car park.
In the offer, South Link proposed to contribute $20,000 plus GST to upgrade the unsealed car park at the corner of Shand and Church Sts and to upgrade equipment in the Shand St playground if the sale went through.
Mt Weatherall said the $20,000 offer was ''nowhere near sufficient to make good the loss to the community''.
Council city property manager Kevin Taylor said because he had not discussed the church declining a higher price with Mr Weatherall, he could not comment on it, but would discuss the matter with him this week.
South Link general manager Matthew Gilchrist said South Link considered itself a charitable organisation rather than a property developer and the centre would benefit the community.
Mr Gilchrist said he was unaware of any past deals between the church and council and the $20,000 to upgrade a car park and playground was for ''additional goodwill in the community''.
''We are certainly hoping the public in the Green Island community will see a medical centre as having huge value to the community.''