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The announcement followed an organisational review, led by former Auckland Regional Council chief executive Peter Winder, which was discussed in a public-excluded council meeting in Queenstown yesterday.
Mayor Vanessa van Uden said other than savings from the cost of boards of directors, she did not know how much money the council could expect to save, because the future structure of the council-controlled organisations (CCOs) was yet to be confirmed.
Staff from both organisations were told at 3pm yesterday.
The review, announced last December, seemed largely to be focused on Lakes Environmental. However, at the beginning of this month, Ms van Uden said it had been extended to include Lakes Leisure.
When asked by the Otago Daily Times on March 1 if the council intended to disband Lakes Leisure, Ms van Uden said: ''No.''
Lakes Environmental chief executive Hamish Dobbie and board member Mike Coburn declined to comment yesterday. Board chairwoman Anne Urlwin and members Jeff Brown and Nick Brown could not be contacted.
However, Lakes Leisure board chairman Peter Faul said he was told of the review's outcome yesterday morning.
''I'm not going to comment on whether it's the best outcome or not, [but] naturally the board is disappointed.
''A new board was formed late last year that had a lot of ambitions.''
Mr Faul said the board would have its last scheduled meeting tomorrow when it would ''resolve to co-operate with the shareholder through the transition''.
Mr Faul said there had been ''a lot of questions'' and uncertainty from Lakes Leisure staff.
''They are all wondering whether they will be directly affected, naturally. However, the council will go through an appropriate process.''
Ms van Uden said the decision was a ''reflection of changing circumstances, rather than any criticisms of the past'' but not of the staff or governing bodies of the organisations.
''The case for re-integration for both organisations was compelling ... [it] could not be overlooked by a council hellbent on finding efficiencies and improving service.
''We are the only local authority to have these core functions sitting in a CCO model. It's about the model. It's not about the people.''
The aim of bringing the functions back into the council was to make it a ''one-stop shop'', she said.
''If you want to hire a park to do something, you have to come to council for part of the approval, you might have to go to Lakes Environmental for the resource consent and you'll have to go to Lakes Leisure to get it signed off.
''If we're trying to improve things, part of that isn't just saving money. It's actually about getting efficiency by not having someone have to traipse to four or five different places.''
Ms van Uden said she and the councillors were mindful of the uncertainty for staff at both organisations.
''These sorts of processes are very stressful ... don't for a second think that we're not aware of that. We're seriously trying to make this as painless as possible.''
While the two CCOs would have their functions transferred into the council, it was anticipated staff resources within the two organisations would also ''largely'' be transferred to the council.
A draft report would be presented on April 2, followed by staff consultation. The changes are due to take effect at the end of June.
- Additional reporting Mountain Scene