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The owners of the failed development known as ''Hendo's Hole'' could be required to sell land to the Queenstown Lakes District Council to start the long-awaited $6.02 million construction of a bypass across the Frankton Flats.
The council triggered compulsory acquisition proceedings to force Queenstown Central Ltd to release 5700sq m of land so the council can build a key stage of the critical eastern access road.
The project involves a new roundabout on State Highway 6, built by the New Zealand Transport Agency, and ancillary roading, which is the responsibility of the council.
The council wants to build a new southeast road on Queenstown Central land to connect with the agency's roundabout, the dead-ended Glenda Dr and on to the corridor around Queenstown Airport's runway end safety area, to connect with the growing Remarkables Park Town Centre.
The council needs land beyond the area it already owns to build its roads. It entered into land swap agreements with Shotover Park Ltd, Remarkables Park Ltd, Queenstown Airport Corporation, Diversified NZ Property Fund Ltd and Kenton Investments Ltd.
However, transport manager Denis Mander said yesterday the council had not been able to negotiate the acquisition of land from Queenstown Central, land which was ''fundamental'' to the eastern access road being built.
Queenstown Central is believed to own 23.4ha of land to the northeast of Grant Rd and to be associated with Auckland developer Tony Gapes' Queenstown Gateway (5M) Ltd, which owns Five Mile, the abandoned adjacent excavated site known by residents as ''Hendo's hole''.
Remarkables Park lodged a High Court appeal last month against planning approval for Queenstown Gateway's proposed $120 million retail complex on the Five Mile site. The appeal named the council as a defendant.
Mr Gapes did not reply yesterday to a request for comment by the Otago Daily Times.
''There's been no agreement reached, so we are essentially going to the compulsory acquisition procedure of the Public Works Act,'' Mr Mander said.
''We reported this to the council's infrastructure meeting on November 27 and what we are currently doing is evaluating what that process will do to the timing of this project.''
Mr Mander said there were opportunities for appeal, so it was not a case of the council ''walking in and taking land''.
Ultimately there could be an appeal to the Environment Court.
The council notified Queenstown Central by letter in early November, as did the transport agency, but there had not been a response, Mr Mander said.
''We have to keep moving. The important milestone we had earlier in the year was the notice of requirement was confirmed, so all the parties, including Queenstown Central, signed off consent orders for that.
''We're wanting to move it on. Council had funding in last year's annual plan and it has in this year's annual plan. It's the only block in construction.
''I understand Queenstown Central has three months to respond to the letter and our hope is that it will be a favourable response, so we can get on with acquiring land and building.''