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At a council meeting this week the Alpine Lakes Research and Education Centre asked the regional council to lease it a building it owns in Riverbank Rd.
The trust applied to rent the site for a very low or nominal fee.
The proposal was nearly lost, but the council agreed to direct chief executive Sarah Gardner to enter discussions with the trust about mutually acceptable terms such as the length of the lease and proposed outcomes.
A report will then come back to council.
The site contains one older brick building previously used for "mixing poison" and another newer shed which is not connected to water.
The council should support the centre as it would be doing a work which would help achieve council goals, she said.
Cr Lawton, speaking as the trust's chairwoman, said it was "well aware" of the need to upgrade the building, but its "bones" were great.
The group was initially pursuing a decommissioned Otago Fish and Game hatchery site in Stone St.
There were "complications" with that site, Cr Lawton said.
Cr Michael Deaker said he had "serious discomfort with the process and Cr Lawton's role in it".
"I feel I know far too little about what we're doing. It seems to be we're negotiating with a fog of cloud."
Cr Graeme Bell said the site was prime for future use by the regional council.
Cr Carmen Hope said she was worried about the precedent of other groups wanting use of council buildings, but thought the project had "fabulous potential".
Cr Gretchen Robertson said she was against the proposal, despite it being "really exciting".
"I think in the next few years we're going to need that space. We have a fairly valuable site. Do we need this for our own purposes? If not, sell it, because it's owned by ratepayers."
The centre did not feel like a "short-time proposal", she said.
Cr Michael Laws said the council would not know it had an empty building if it were not for the proposal.
"What the hell have we been doing with it for the last few years?"
He would be sad for the project to be stamped out before entering negotiations with the trust, he said.
A council report said one regional council staff member operated from the building, but they could be based in Cromwell.
GoBus has requested to pay to lease space on the north of the site to house buses. It will be required to fence it off from the rest of the site.
The centre would be run by the Lake Wanaka Trust and incorporate people and organisations dedicated to improving the health of alpine lakes.