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The Lake Wanaka Centre can seat 330 people but is not big enough to host the full Royal New Zealand Ballet, the New Zealand Symphony Orchestra or other shows with large troupes.
A charitable trust is now being formed to consult Wanaka residents in July and August.
Group chairman Michael Sidey said members were delighted the Queenstown Lakes District Council had released a draft community facilities study and the group was strongly advocating for arts facilities in that strategy.
"The extraordinary success of the Festival of Colour and Aspiring Conversations show there is strong demand for arts activities, but the size and functionality of venues clearly limits the number of participants, audiences and scale of events possible," Mr Sidey said.
The council confirmed long-term plan budgets of $51.27million (performing arts facilities) and $6.4million (open spaces/plaza).
Submissions on community facility development close on Tuesday June 22.
Mr Sidey said a performing arts centre would have widespread social, cultural, wellbeing and economic benefits.
Wanaka and Queenstown arts facilities had not kept pace with population growth, he said.
He did not know how large a budget was needed or where the community wanted to put an arts centre because the process had only begun, Mr Sidey said.
The process would be thorough and the group would share its findings with the public, he said.
QLDC community services chairman Craig Ferguson commended the group for its initiative.
A call for proportional funding for Queenstown and Wanaka had been made before on a range of capital projects and it was wise for the council to consider all options, Cr Ferguson said.
QLDC community services general manager Thunes Cloete said he had not yet received any concrete proposals for spending the $52million long-term budget.
"The development of the Manawa project includes the performing arts centre in Queenstown. At this stage, nothing has yet been developed for Wanaka," he said.
The $120million Manawa project is a partnership between the council and Ngai Tahu to develop the council’s Stanley Street site for cultural, community and commercial facilities.
Mr Cloete said he understood councillors intended to split the long-term budget between the towns.