Lakeview report: Councillors asked to trust CEO in spite of $42 million mystery

Editorial/Analysis

Let’s be clear before we even look at the release today of a report by “super-consultant” Bruce Robertson into governance of the Lakeview project – this is what has happened so far:

• 2017: Councillors give Queenstown Lakes District Council chief executive Mike Theelen control over the billion-dollar Lakeview project, being built by Australian developers.
• 2019: Mr Theelen signs the Lakeview development agreement. Instead of selling the QLDC land for $42 million, he agrees to take $75 million over 20 years – but linked to developer profits. The justification for this arrangement – so QLDC can “keep control”.
• 2020: However, as part of the $75 million “future” deal, Mr Theelen also agrees to prepare the site for the developers. This was supposed to cost approximately $19 million.
• 2021: Site development costs balloon to $55 million and rising.
• 2021: The QLDC says residential rates will have to go up by 0.25% “relative to the 10-year plan” due to the Lakeview blowout.
• 2021: It becomes clear that the QLDC is in a loss position. Mr Theelen did not sell the land for $42 million, and he spent $55 million developing it for the Australians against the hope of $75 million over 20 years.
• 2021: The Aussies decide to double the height of some of the Lakeview buildings. Councillors agree on the condition of publicly notified resource consent.
• 2022: The developers go for fast-track, non-notified consent, against the wishes of the elected councillors. Mr Theelen’s Lakeview management team say there is “no appetite” to go back to the elected members in the consent question. QLDC management effectively turn a blind eye to the developer’s fast-track decision.

So much for QLDC control.

If there was a definition of “out of control” the above events would seem to do a pretty good job. 

Chamber CEO Ruth Stokes fronted a PR/Sales event for the Lakeview developers recently - but her company has also employed Bruce Robertson on the $50 million Taranaki Stadium project.

And yet today’s report by “super consultant” Bruce Robertson makes little or no reference to any of the events we have listed. His report was commissioned because Councillor Niki Gladding was quite rightly concerned at Mr Theelen’s continuing sole authority over what has potential to be a New Zealand record-breaking loss of council money. That’s our money.

Mr Robertson’s response - delivered for an (at this point) undisclosed fee - is to recommend basically no change except for a bit more reporting to the council’s Audit, Finance and Risk Committee - the same group that completely missed the entire procurement scandal reported on by Crux.

Here, in Mr Robertson’s own words are the disadvantages of essentially 'doing nothing' or, as he puts it, the “status quo (enhanced)”:

“Any consultation with elected members over decisions may confuse who is making the decision without clarity of the purpose of the consultation.

“Elected members have to actively live with the high trust and monitor model rather than 'be in the kitchen' of a high-profile project which may be uncomfortable.”

He says an advantage of the current situation where Mike Theelen is in sole charge is:

“Stability in Council’s approach for the developer. Efficient decision-making using expert advisors as required and consistent with need of Development Agreement decision making requirements.”

So there you have it.

We, the ratepayers, just forked out $X dollars to pay Mr Robertson, a close business colleague of Lakeview fan girl Ruth Stokes, to decide that doing nothing is the best course of action, in spite of Mr Theelen’s novel Lakeview deal currently delivering a rates rise rather than $42 million much-needed dollars in the QLDC bank account.

Why Mr Theelen did not sell that $42 million piece of land could become one of NZ’s biggest council scandals.