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The claim came from neighbours opposed to the New Zealand Motor Caravan Association's proposed members-only caravan park at 51, 55 and 57 Woodhaugh St, in Leith Valley.
The vacant residential site was owned by the council, which had a conditional deal to sell it to the association, subject to consent for a caravan park being granted.
The association's consent application, a non-complying activity, was heard by the council's hearings committee yesterday.
However, in a late change, independent commissioner Allan Cubitt replaced Cr Colin Weatherall as chairman, while committee members Crs Andrew Noone and Teresa Stevenson assured the meeting they were impartial.
That did not appear to satisfy neighbour Rhonda Taylor, who said she had a ''serious concern'' about the process, including the council's ''vested interest''. The council planner's recommendation that consent be granted, and the presence of councillors on the hearings committee, pointed to a ''clear conflict of interest''.
''I do not believe any court in this country would endorse this decision-making process.
''What is happening here contravenes the principles of natural justice,'' she said.
She was concerned the council had opted for only limited notification of the plans, with only seven neighbours consulted. Among those not informed was Leith Valley Touring Park co-owner Terry McLaren, whose rival business was just 30m away, and who lived above the site.
He interjected at yesterday's meeting but was advised he would need to seek a judicial review through the High Court if he was unhappy.
Mr Cubitt, responding to Mrs Taylor's claims, said her concerns were ''precisely why I am here''.
''I am here to ensure that there is impartiality.''
It was also ''not unusual'' to have councillors on the hearings committee, or for council planners to report on a consent application involving another council department, he said.
The planner's report was only ''one part of the puzzle'' and carried the same weight as other evidence, including submitters' views.
Earlier, NZMCA board member Gordon Murdoch outlined plans for the park, which would be used by some of the association's 48,000 members.
Ken Foote, a Dunedin member, said the site would encourage more members to visit and spend money in Dunedin.
Opponents worried about the number of large vehicles and noise that would come with the development, as well as possible odours from the site's waste dump station. They also worried bigger caravans would be unable to negotiate the
intersection of Malvern and Woodhaugh Sts without crossing the centre line.
Council staff initially suggested vehicles longer than 8m be prohibited from using the site.
Consultant planner Don Anderson - appearing for the NZMCA - said that would make the site ''useless''.
Instead, the intersection should be modified, with one footpath narrowed to allow the road's carriageway to be widened, providing more room for vehicles of up to 13m.
Mrs Taylor said that would make the footpath too narrow. Council transportation staff agreed, saying there was a risk pedestrians could be forced on to the road during encounters at the choke-point, but Mr Anderson suggested a mirror and barrier at the corner could avoid problems.
Council planner Karen Bain concluded by maintaining consent be granted, and agreed to ease any restriction of vehicle lengths to 13m, albeit subject to a review clause.
The hearing ended yesterday but committee members will visit the site before deliberating and issuing a decision.