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Proponents of a scaled-back Arrowtown residential development now hold the ball following an interim decision issued by the Environment Court.
The amended Plan Change 39 - Arrowtown South, was back before the court in April, seeking to reduce the density from more than 200 dwellings to about 40.
In the latest interim decision, Judge Jon Jackson and two commissioners have effectively asked appellants Roger Monk and Cook Adam Trustees Ltd - owners of the land south of Arrowtown, bounded by McDonnell Rd and Centennial Ave - to sign a covenant.
That would prevent them from seeking any further subdivisions for a generation - defined as 25 years. If it was signed, the Environment Court would permit three extra housing lots.
In the decision, released late last month, decades-long ''community concern over the spread of Arrowtown into the Wakatipu Basin'' was noted.
The Queenstown Lakes District Council-led Plan Change 29, which drew a tight urban growth boundary around Arrowtown, was appealed by the proponents of PC39, who wanted the boundary to include their land.
After the original PC39 proposal was turned down, the applicants asked the court if they should go for a much reduced density, to which the court said yes.
The council's resource consent manager Blair Devlin said that was the basis of the court's most recent decision: ''It's a much scaled back version than what was originally applied for.''
As amended, Plan Change 39 proposed up to 20 separate dwelling units within the Residential Activity Area (inside the new urban growth boundary) and about 20 dwelling units in the Rural Living Activity Area (outside the boundary).
Among the requests in the Environment Court's latest decision was for the appellants to do ''some work'' to the policy about trails and the requested covenant.
''At the Environment Court hearing they really wanted to give the community certainty ... that if the court approves this then another application won't come in for more,'' Mr Devlin said.
''So this interim decision is nudging them to provide ... certainty to the council ... that there's not going to be any further subdivisions for 25 years and if that's provided then they're OK with those [three] extra lots.''
When contacted, Roger Monk said there was ''still some stuff to sort through'' in the decision and declined to comment further.
The council would await the decision from the appellants.