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The Queenstown Lakes Community Housing Trust made its submission to include the site of Arrowtown's old sewage ponds to a hearing panel considering the district council's proposed plan for the Wakatipu on Thursday.
The trust, which has been seeking an affordable housing development on the site since about 2010, recently resumed talks with the Queenstown Lakes District Council to get the council-owned land in Jopp St transferred.
Julie Scott, the trust's executive officer, told the panel the trust was "really excited about the Jopp St proposal".
"The piece of land makes complete sense to turn into residential housing."
It is calling for part of the site located outside the urban growth boundary, which includes land extending out to Centennial Ave, to be used for low density residential purposes and included within the boundary.
The site is 3.68ha in size.
If the development goes ahead, the trust intends to offer a mixture of housing for individuals, families and elderly residents.
The homes would probably be provided through rental and assisted-ownership programmes.
Planner Tim Williams, who represented the trust at the hearing, said the site could be developed without having a wider impact on Arrowtown.
The trust previously made a submission supporting changes for increased medium-density housing in all proposed areas of Queenstown, Wanaka and Arrowtown.
This earlier submission was superseded by its latest call for the site to be included within the urban growth boundary.
Ms Scott said the trust had 520 people on its list waiting for housing assistance at present - a rise of 37 since November.
Queenstown Lakes Mayor Jim Boult has previously voiced his support for the proposed development and the trust's bid to offer more affordable housing.
The trust has already built up a portfolio of affordable housing developments, including 10 homes in Suffolk St, Arrowtown, 27 homes located in the heart of Lake Hayes Estate, Queenstown, as well as two others in the district.
Council planners have recommended the changes to the proposed district plan map requested by the trust be accepted.
The council's proposed plan aims to protect rural land in the Wakatipu Basin by limiting future developments and creating two new zones - a rural amenity zone and a lifestyle precinct.
Submissions from other parties on stage 2 of the plan will continue to be heard by the four-member hearing panel on Tuesday.