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The Brecon St waterfall, which has deteriorated badly in just five years of use, will be filled in to create a garden.
It was accepted by the Queenstown Lakes District Council in 2006 as part of the landscaped areas surrounding the Sofitel hotel complex but has since been deemed in poor condition and expensive to fix.
It would cost about $13,400 to keep the waterfall operating "much as it does now", parks manager Gordon Bailey said in a report to the council.
Letters had been sent to owners of surrounding businesses advising them of various options, asking for a reply by July 13. There had been no replies at the time of writing the report, but Mr Bailey said he had verbal support from Sofitel for the garden option.
The committee decided on a garden for the space, to be budgeted for next financial year.