QLDC defends new office project as 'lowest cost' option

by Kim Bowden and Peter Newport - Nov 29, 2023

The two key people running the Queenstown Lakes District Council's controversial Project Manawa today have defended the Queenstown CBD location as being the “lowest cost” option even compared to a more basic building in Frankton.

Council chief executive Mike Theelen and head of special projects Paul Speedy told Crux in an interview today that the current CBD plan involves a reduced upfront capital cost to ratepayers once all of the project features are taken into account.

Those features include a partnership with Ngāi Tahu Property (NTP) to commercially develop the large site in Queenstown’s Stanley Street linked to a matrix of council land swaps and cost/profit sharing.

Mr Speedy did concede in today’s interview that the NTP plan does have risk but says that rewards were inseparable from an element of risk.

“You don't step out of the house in the morning without a risk, right? But also you don't get the fresh air. So that's probably the key thing.

“We have a strong underlying office rental liability that we would need to pay even under our current situation. So with the JV partnership, the ability to reduce the upfront capital cost, and also that broader opportunity around unlocking land value, the delivery of a council office on that site is actually the most affordable option for QLDC.”

Answering broad based opposition from Crux readers in our current survey, Mr Theelen says the council still has a duty to deliver a “civic heart” to the community in spite of most ratepayers now managing their relationship with the council online.

“I think that Queenstown remains the key focal point of the district and I think if we look at Manawa in its totality, which is a civic as well as a council precinct, council's current position is that the Queenstown CBD remains the right centre for that to be part of.

“The council building, the council chamber and the civic functions are an important part of what the district's identity is all about.”

Mr Theelen pushes back at any suggestion the CBD is not a practical location to house many of the council's 600-plus employees, saying the argument against a Frankton Road commute is overstated.

"We're talking six kilometres in difference, aren't we? And don't forget Project Manawa includes a transport hub. Council is committed to trying to pursue a much greater use of public transport."

Mr Theelen and Mr Speedy both claim that looking at building outside the CBD is not on the cards.

“If we were to go and build an office somewhere else, or even lease an office somewhere else in Frankton, for example, that developer would throw the cost of the land into the development cost," Mr Speedy says.

“There would be our rent as well. So here (Project Manawa) we've not only got the double whammy of being able to use land at no cost to QLDC, we also have the added benefit of additional land that we can commercialise.

“For the council, depending on its risk appetite, there’s an option for the future. We can participate in that fully or sell that up front to private interests, and receive that money up front."

Presented with over 200 comments from Crux readers, 94 percent opposed to the new offices project, Mr Theelen attributed a lot of that opposition to Crux over-inflating potential costs. The Crux survey had a $100-million spend, based on money put aside in recent Long Term Plans for a council office and performing arts centre.

The reality is even the council’s own documents make it clear that actual, formal cost estimates for any new council building have still not been determined. What we do know, the QLDC will have to pay an undisclosed rent to NTP for use of the building as well as meeting the cost of the building fit out.

Also known, other council projects, such as Lakeview and the Arterial Road (stage 1), have both undergone dramatic cost overruns exceeding 100 percent in recent years.

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