Wānaka reporter Ruairi O’Shea takes a look at the deal.
The Queenstown Lakes District Council has agreed to remove a land covenant, delivering a $5.425 million benefit to the Mount Aspiring College Foundation, which previously owned the land but could not profit from any sale.
This arrangement has inhibited the foundation’s ability to attain a mortgage for further development, while leaving the council unlikely to ever realise a financial return from the land.
To solve this problem, the foundation sought the surrender of the land covenant, a move which would would transfer the meaningful value of the land from the council to the foundation.
In exchange, the foundation proposed subdividing the 9231sqm section -known as Lot 9 -and returning a 3241sqm subdivision, including the old music classrooms and an existing dwelling, to full council ownership, a council report shows.
The foundation would retain the remaining 5990sqm subdivision -which contains the existing hostel buildings -under a simpler ownership structure.
In effect, the deal would result in the MAC Foundation receiving a financial benefit of $5.425m in land value and improvements.
The market value of the section to be returned to the council was estimated to be $3m, the report said.
Under the new agreement, the Queenstown Lakes District Council would retain the right of first refusal in the event the MAC Foundation agreed to sale of the land.
Further, a new land covenant would apply to the land retained by the MAC Foundation which would restrict land use to its current use of student accommodation.
In a joint media release from the Queenstown Lakes District Council and the MAC Foundation, foundation chairman Matt Williams welcomed the deal.
‘‘This is a fantastic result for both the school and the wider Wānaka community,’’ Mr Williams said.
‘‘Not only does it clarify ownership, but it also removes long-standing legal hurdles and gives MAC Foundation the freedom to reinvest in the hostel.
‘‘Both the Mount Aspiring College Foundation and Queenstown Lakes District Council entered this agreement with a desire to find a solution that would benefit the school and the wider district.
‘‘We truly appreciate Queenstown Lakes District Council’s proactive partnership and their strong support for local education,’’ Mr Williams said.
Wānaka-Upper Clutha Community Board chairman Simon Telfer said the agreement represented the best use of community assets.
‘‘This is a prime example of how community partnerships can work well.
‘‘The Mount Aspiring College Foundation retains the land it needs to support students, and the community regains use of surplus land. The community board is pleased to have championed a solution, along with Mount Aspiring College Foundation, that delivers positive outcomes for the Upper Clutha,’’ Mr Telfer said.
In a report prepared for the Queenstown Lakes District Council’s full council meeting on March 19, the council’s property and infrastructure team recommended the council approve the surrender of the existing land covenant.
The report identified a series of advantages and disadvantages for both approving and declining the surrender of the covenant.
In favour of the surrender, the property and infrastructure team identified that surrendering the covenant would benefit the school while allowing the council to generate a partial return on the land’s value.
In favour of the status quo, the property and infrastructure team wrote maintaining the covenant would allow the council to recover the full land value of Lot 9 if it was ever sold.
However, with the foundation in control of whether the land is sold, but the council in line to receive the proceeds, the report’s authors wrote ‘‘this outcome does not seem likely to ever transpire’’.
In addition to the recommendations of the council’s property and infrastructure team, the matter was brought before the Wānaka-Upper Clutha Community Board for its consideration on February 12, last year, the board confirming its support for the foundation’s proposal to remove the covenant and subdivide the land.
The MAC Foundation will take full responsibility for the subdivision development, including all associated costs.
The land in question has a complicated history.
In the mid-1990s, the Department of Conservation and the council revoked the reserve status of what was then the Totara Terrace Recreation Reserve, an area of just under 16,000sqm.
About 6000sqm of the reserve was subdivided into eight residential lots, which were sold by the council.
The remaining 9231sqm (known as Lot 9) was to be retained by the council but used by the MAC Foundation to build student apartments.
In 1997, this ownership structure became a barrier to the foundation obtaining a mortgage to finance development, and ownership was transferred to the foundation for $1.
To protect the council’s financial interest in the land, a covenant was agreed which would ensure the land value (minus improvements) would be repaid to the council if the land was ever sold.
Almost 30 years later, with the foundation seeking another mortgage, the land’s ownership structure had once again been identified as a barrier.
