Developer buys former post office

The former chief post office in Dunedin's Exchange has been bought by an Invercargill businessman for yet another attempt at a hotel development.

The purchase means the end of plans to use the building as a new home for the Dunedin Public Library and as Otago Regional Council headquarters.

The building is to be developed by Distinction Hotels owner Geoffrey Thomson, who owns hotels in Queenstown, Te Anau and Rotorua.

He said yesterday, through a council press release, he hoped to have the building ready for the Rugby World Cup next year.

"I think this is the most appropriate use of the building," he said.

"Not only will it bring new construction jobs during the conversion to a hotel and then deliver dozens of permanent new jobs when complete, it will also grow the tourism market in Dunedin, Otago and Southland."

Mr Thomson did not return calls yesterday.

This is his second attempt at developing the nine-storey, 19,000sq m building as a hotel.

In 2003, he announced plans for a 182-room, four-star hotel but the project was delayed because builders were busy on the Otago prison project near Milton.

Dan McEwan, of the McEwan Group, was next to buy the building, but his plan for a five-star hotel and apartments faltered with the global credit crunch, and in 2008 Otago Finance, owned by South Canterbury Finance, forced a mortgagee sale to recoup $7.5 million in loans and penalties owed.

Mr Thomson appears to face the same difficulties as before, with the construction industry dealing with developments like the Forsyth Barr Stadium, Ryman Healthcare's Highgate building and the council's town hall redevelopment.

The council last year signed a joint venture feasibility agreement with then building owner South Canterbury Finance to investigate the CPO's potential for a library.

"The council has been unable to negotiate an extension after a firm offer to develop the building as a hotel was received by its owners," Dunedin Mayor Peter Chin said.

The news was "bitter-sweet", he said.

"We're disappointed our plans for the library have come to nothing.

But the city will benefit from the development of a new hotel, which, like our library plans, will revitalise an iconic heritage inner-city precinct."

Mr Chin said the council had made no financial commitment to the development of the CPO, and the costs of the analysis had been absorbed by the generosity of consultants wishing to see the landmark building put to good use.

Asked if another plan for a hotel seemed viable, Mr Chin said it was more viable than it had been because of developments like the Forsyth Barr Stadium, which would attract events to Dunedin.

The cost of the building is not known; in 2006 it was valued at $3 million, although Mr McEwan has said he paid $7 million.

Council resource consents manager Alan Worthington said most of the hard work for getting consent for the development had been done.

A change to the development would have to be approved under the Resource Management Act, but would not necessarily require a public hearing.

Consents remained active for five years, and extensions could be sought.

The New Zealand Companies Office website showed Distinction Dunedin Ltd, with Mr Thomson sole director, was incorporated as a company yesterday.

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