Lakeview construction starts - but major financial questions remain

Main Image: At today’s Lakeview sod turning ceremony (L - R): Outgoing QLDC Chief Executive Mike Theelen, Dom Fleischl General Manager CMP Construction, QLDC Mayor John Glover and Dean Rzechta, Managing Director of Ninety Four Feet Melbourne.

It was all smiles and bright sunshine today at the previously abandoned Lakeview site above central Queenstown.

The land has stood empty, surrounded by delays and profound financial uncertainty, since 2016 when the Lakeview project first came to life.

The plan to was bring Queenstown a vibrant mixed development of apartments, affordable accomodation and a “community hub”, but over the years Lakeview has morphed into something much more upmarket and less helpful to the local worker accomodation crisis. Now it’s a $2 billion luxury project with apartments costing up to $20 million each as well as luxury hotels and restaurants.

Lakeview- a $2 billion project - but is it what Queenstown actually wants or needs?

More seriously, the council’s efforts to keep the project “under local control” have been derailed by a massive overrun in land preparation costs, at the ratepayers expense, from $19 million to somewhere between $70 million and $130 million - depending on the method used to calculate costs. The calculations needs to factor in a 20 year repayment period extended to the Australia developers (Ninety Four Feet of Melbourne) for the land that was initially valued at $42 million - plus some mysterious sharing of “super profits” which remain secret due to “commercial sensitivity.”

Even today councillors at the sod turning ceremony could not agree if the project would be loss making for QLDC - break even - or perhaps make a small surplus.

Mayor John Glover decided today that it was a situation where diplomacy and a positive attitude were expected.

In an exit interview today with the council-funded Mountain Scene community newspaper, outgoing council CEO Mike Theelen, who has controversially run the Lakeview project under sole delegated authority since 2017, said “Lakeview will be very good for the district but the council never set out to make a lot of money on this deal.” Tomorrow (Friday February 13) is Mr Theelen’s last day at the council.

Lakeview developer, Ninety Four Feet, was also in the mood the celebrate the sunshine and a new beginning.

Dom Fleischl General Manager CMP Construction, who have the contract for the first stage of Lakeview, told Crux at today’s ceremony that there’s at least another nine months of site preparation ahead and than another two years of construction before the first three towers are built - one being a luxury hotel and the other two being apartments and some co-working space.

One of the most happy people at the ceremony this morning was Julie Scott of the Queenstown Lakes Community Housing Trust - she’s just received the first $400,000 of a 5% net cash contribution from the Lakeview project.

The ceremony was attended by an invited audience of construction teams, developers, councillors and council staff.

Ninety Four Feet paid their first substantial payment to the QLDC just two months ago, $8 million. It’s expected that another $67 million will follow - totalling $75 million all up - potentially with some “super profit” revenue share on top. The land itself is worth an estimated $60 - $80 million in 2026 money and the council spent at least $75 million on land preparation costs - so getting just $75 million back over 20 years sees Ninety Four Feet very happy indeed and QLDC, in particular Mr Theelen’s successor and our new councillors/mayor, with some explaining to do.

That’s also where the councillors today struggled to explain how local ratepayers will come out of the Lakeview project with anything other than more debt.