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A submission by landowner Michael Beresford on the Queenstown Lakes District Council's proposed district plan asking for part of it to be rezoned as residential was turned down last month.
However, Mr Beresford has appealed that decision to the Environment Court.
In their decision, independent commissioners Trevor Robinson, Jenny Hudson and Calum MacLeod said while there was merit in Mr Beresford's case that some urban development could take place, they felt the submission was "premature" and the "lack of certainty" on the nature and location of legal access rights to the site made it impossible for them to determine where and how urban development should be provided for.
In his notice of appeal, Mr Beresford continued to seek rezoning of part of the site as low-density residential and another part as large-lot residential, and retaining the rest for public recreational use, while shifting the outstanding natural landscape and urban growth boundaries to coincide with the edge of the large-lot zone.
In his hearing submission, he said if the proposal was not granted public access to the land would probably be restricted.
Mr Beresford's counsel, Pru Stevens, said the decision "left the appellant in a position of difficulty" as he could not pursue remedies under the Property Law Act as "reasonable access" also had to be considered.
Ms Stevens also said the commissioners erred in failing to further evaluate whether the proposed development would have adverse effects on the outstanding natural landscape zone the forest lay in.
Mr Beresford did not respond to a question about how far he was willing to take the proposal.
Environment Court hearing manager Christine McKee said the appeals on stage 1 of the proposed district plan would be referred to mediation to try to resolve as many issues as possible before the court looked at timetabling hearings.