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The remaining two pairs of appellants said yesterday they still opposed the development, despite the withdrawal of their application to appeal the High Court decision in April, which upheld earlier Environment Court approval and resource consent granted by the Queenstown Lakes District Council.
Residents' spokesman James Hadley said the appellants decided to "let commonsense and the true needs of the local community ultimately determine whether or not a school will be successfully operated at the site".
Bishop Colin Campbell, Roman Catholic Bishop of the Diocese of Dunedin, said he was "gratified" to receive official word of the withdrawal.
"Our plans are ready for immediate implementation once our discussions with the Ministry of Education are completed and suitable financial arrangements put in place."
Bishop Campbell said the campus was "ideally located" to serve the Arrowtown end of the parish and it would ease pressure on St Joseph's School.
The site was zoned rural residential with town water, sewerage and waste disposal services provided, he said.
St Joseph's School, Queenstown, is a special character integrated school, which teaches 145 primary school pupils, including 5% of children from non-Catholic families.
More children are expected to enrol as they turn 5 this year.
The enrolment cap is 175 pupils.
St Joseph's School chairwoman Gigi Hollyer, of Queenstown, said yesterday she and all the board of trustees and staff were "excited" about the campus development, but knew it would be a challenge.
The first pupils to begin studying at the campus to be known simply as "Speargrass" were expected in 2014, earlier than indicated, Mrs Hollyer said.
The new school will share the same special character, the same principal, Trisch Inder, the same board of trustees and possibly the same parent-teacher association as St Joseph's School.
The recruitment of extra teachers would correspond with Speargrass enrolment growth.
Consultation with the school community will begin with notification this week and would involve a parents' evening in mid-July.