Lakeview: Part 3. Broken Promises

Queenstown's Council CEO goes into battle against elected councillors.

Analysis.

This investigation, funded by Crux paid subscribers, examines how a $2 billion Australian luxury property development in the centre of Queenstown started life as a “risk free investment” by the Queenstown Lakes District Council. In ten parts we will tell the story of how a large piece of ratepayer owned prime real estate, valued at $42 million in 2017, was turned into a black hole that so far has cost ratepayers over $100 million, increased rates and may not get built. Crux also acknowledges the role of Google’s Pinpoint investigative journalism tools and will publish, in the public interest, each part without a paywall three days after paid subscribers receive this content.

In this third part of our ten part investigation we look at a pivotal moment in the history of the project. A moment where, arguably, democracy died.

In 2021 the Australian developers, Ninety Four Feet, made the shock announcement that they wanted to double the height of the multiple Lakeview towers. The new buildings would be twice the height of any other building in Queenstown.

• The Lakeview towers doubled in height after the initial plan was agreed.

Community reaction was strongly negative in the sense that many people took the view that the Aussies must have always known they wanted this “new” height but deliberately hid it from elected councillors until the project was signed and sealed.

Since 2017 QLDC’s CEO Mike Theelen had been operating under a controversial sole, delegated Lakeview project authority. The argument in favour of this was that he needed to be fast and nimble in his negotiations without the delays that might be caused by having to consult with the elected councillors.

It was a decision that many councillors came to regret and to this day some are still fighting, so far unsuccessfully, to get that sole delegation removed.

In 2021 things reached a crisis point at the time of the new “double the height” request from the developers.

In the end, through a series of public excluded, no records kept workshops - elected councillors agreed with Mr Theelen that they could accept the new height of the buildings as long as the entire Lakeview project went through a publicly notified resource consent process.

These terms were agreed - and then broken.

It was a very significant event in the history of the QLDC in that, for the first time, council management was to go against the explicit instructions of the elected members.

The Broken Promise.

Even though Mr Theelen, and 94 Feet, had both apparently agreed to the public resource consent deal, it then became clear that if the developers applied for Fast Track (post Covid) resource consent it would remove the community from the equation.

There would be no public consultation.

The resulting battle becomes clear from documents discovered by Crux using the Google Pinpoint investigative journalism tools.

There’s a lot of documents, but the timeline is basically that Mr Theelen threw his weight and advice to government behind the developers - in favour of Fast Track, non-public consent. This was a complete break in his promise to councillors.

At the centre of this was the then Minister for the Environment David Parker.

• Former Environment and Resource Management Minister David Parker.

Thanks to Councillor Niki Gladding the Minister was made aware of the fact that the councillors did not agree with the actions of the CEO - they wanted publicly notified consent as per their deal with Mr Theelen and the promised community consultation.

A key document that we’ve been able to access is a September 2021 briefing paper where Ministry of the Environment Staff brief the Minister on what’s really going on.

The council’s governing body (the councillors we voted for) were dead against the actions being taken (the broken promise) by the CEO that they employ. Mr Theelen’s delegated authority meant that he could do this without losing his job.

• The vital briefing paper from Ministry staff to the Minister David Parker.

A key recommendation to the Minister takes the side of Mr Theelen even though there’s a warning about the “limitations on public input” as well as “the potential high level of public interest” and a significant reference to the need for adequate sewage discharge permits (this was before the community knew about the sewage crisis) as well as the asbestos contamination referred to in Part One of this investigation. The FTCA process is the post Covid Fast Track mechanism.

An interesting clause further down the briefing document to the Minister mentioned contact with former Mayor Jim Boult on behalf of the governing body (the councillors) stressing their opposition to the non-public Fast Track process for Lakeview.

Crux asked Councillor Gladding about this and she confirmed that the councillors did ask Mayor Boult to make sure their opposition to the non-public consent process was argued at the highest possible level.

It now appears that QLDC sent two letters to the Minister - one noting the elected councillors view and one noting Mr Theelen’s view.

This was literally council staff fighting the elected members at Ministerial level.

One astonishing low point in all of this was a statement from Mr Theelen’s team that they had “no appetite” to go back to get the view of elected members.

Here’s a timeline of how all of these events unfolded.

• 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 (now $77 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 on the consent question. QLDC management effectively turn a blind eye to the developer’s fast-track decision.

Of course, now that we’ve seen no construction activity at the Lakeview site by 2025, the entire Fast Track process back in 2021 looks more and more like an attempt to avoid publicly notified consent, as promised to councillors by Mr Theelen, than any genuine attempt to get the project built on a faster timeline.

In Part 4 of this investigation we’ll look at the titanic battle by councillors to take back sole Lakeview delegation from CEO Theelen.

It’s a battle that continues to this day.