Previously, Buena Vista and One Mile Ltd had sought permission from the Queenstown Lakes District Council to undertake works on the One Mile Recreation Reserve to enhance their developments, both on Thompson St.
In 2006, the council gave Buena Vista permission to undertake landscaping within the reserve, including 59cu m of excavation.
Parks manager Gordon Bailey said the development was able to be built on the site, "but to achieve a view rather than an outlook to a retaining wall".
Buena Vista wanted to excavate 15 times that amount, totalling 888cu m of material.
Mr Bailey said the "substantial shift in earthworks" would have a significant impact on the reserve and was essentially "for the benefit of the applicant's development".
Permission to excavate the additional amount was considered by the council's property subcommittee in June and was declined.
That decision was appealed and considered by the community services committee on Tuesday.
Mr Bailey said the council did have a legal jurisdiction under the Reserves Act 1977 to grant permission, but it needed to be considered pursuant to a section entitling the council to do things which may be considered "desirable or necessary for the proper and beneficial management, administration and control of the reserve".
"As an officer, I can see definite benefits for the reserve and its proper management and ongoing maintenance for the vegetation programme which [the] council has already sanctioned," Mr Bailey said.
"However I do have difficulty with the excavation proposal application as it now sits, that it is truly desirable for the proper and beneficial management, administration and control of the reserve, as described in the Reserves Act."
After extensive discussions between the committee and Buena Vista Ltd counsel Vanessa Robb, Cr Vanessa Van Uden moved the application be approved, subject to conditions and a peer review of a geotechnical report, but this was lost.
After an adjournment, QLDC chief executive Duncan Field recommended the committee consider another resolution - to receive the report and for the chief executive to aid discussions with Buena Vista, Mr Bailey and community services general manager Paul Wilson, with a view to developing a fresh proposal, addressing the committee's concerns.
"The upshot is Mrs Robb will withdraw the current application to work with [Mr Wilson and Mr Bailey] to prepare something [in response] to the issues raised."
The committee accepted the third recommendation.
