The $145 million revamp of New Lynn has struck a sour note with the owners of a Chinese restaurant that is being compulsorily taken under the Public Works Act.

Wyn Lai and Julia Tan looked forward to a prosperous future in a property next to the bus station included in the "merchant quarter" planned by redevelopment partners Waitakere City Council and listed company Infratil.

Ready to share in the transformation of the rundown town centre, Mr Lai became its first major investor for 20 years.

Three years ago, he built shops and upgraded the New Hong Kong Restaurant. A year ago, he received council approval to split the property into two.

But then in September, the council sought to buy part of one section to give buses more turning space.

The council issued a Public Works Act notice of desire to acquire land, including an invitation to sell and advice of its valuation.

Mr Lai said he agreed. But then came a bolt from the blue.

In December, the council issued a notice that it wanted all their property, including the restaurant and gaming lounge.

The council's revised plan now included their site for a three-level car parking building with ground-floor shops.

Compensation offered was out of proportion to that offered for the bus station extension, said Mr Lai.

It was a third less than owners were entitled to, making no allowance for relocation expenses or loss of rental income from restaurant, shops and gaming venue.

It was also unfair, said Julia Tan, after seeing details of the partnership between the council and Infratil.

"Is this public works when the council is taking it for a commercial/retail partnership?"

Tenant Noel Callaghan has run a hairdressing shop in Totara Ave for 25 years, has a 25-year lease and wants to stay put.

The bus station was good for business, he said. "People know where to find me."

A disappointed Mr Lai wrote to Mayor Bob Harvey, who he considers an old friend and whose picture he has displayed prominently on the restaurant wall.

"For over 20 years I have been supporting the city council for festival activities and urban development and I have invested a lot in my properties to beautify the city. Now the council wants to acquire my entire properties.

"I was dismayed and hope that through my contributions to the city over the years, you could write me a letter of support or reference so that I can negotiate out of the purchase by the council in a way that both parties feel happy.

"I firmly believe that this is a good council which would like to listen to its ratepayers and good citizens."

Mr Harvey wrote back that it was personally important to him that Mr Lai continue to see a future for investment in New Lynn.

"I would like to see your operation in the new Infratil-Waitakere buildings, together with other key leaseholders or owners," said Mr Harvey.

"On behalf of my council, I want to put on record my sincere thanks for your investment in New Lynn."

However, Mr Harvey said land acquisition negotiations must be done on a commercial basis that reflected the current market.

Mr Lai said they were awaiting a date for a hearing of their objection to the Environment Court against using the act to take their land.

The council says it has about $11 million to buy 30 properties in Totara Ave, Rankin Ave, Great North Rd and Clark St.