Hamilton Residents and Ratepayers Association has complained to the Serious Fraud Office over the council spending $2 million more than market valuation for riverside properties.

Hamilton City Council confirmed last week it had paid $6.49m for five properties between 242 - 266 Victoria St - spending up to 56 per cent more than the recommended market valuation for most of them.

Hamilton Residents and Ratepayers Association president Mischele Rhodes said on behalf of the group she had today approached the Serious Fraud Office about the purchases.

"The question remains is how and why HCC paid $2m well over market rates using hard-earned public (ratepayer) money?," she said.

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The council paid $3.75m, or 56 per cent over market valuation, for 242-254 Victoria St; $1.95m, 56 per cent over market valuation, for 266 Victoria St; and $790,00, 21 per cent over market valuation, for 260 Victoria St.

In a statement at the weekend, Rhodes said the decision was hard to fathom when council had recently approved a massive 9.7 per cent rates increase this year followed by a 3.8 per cent rise for the next eight years and people were struggling to make ends meet.

"All councils should seek to get the best possible rate when purchasing properties with ratepayers funds. This was also a deal that was substantially submitted against at the recent consultation on the 10-year-plan."

Hamilton City Council chief executive Richard Briggs has defended the purchases. The council went through a robust process to purchase the properties, which started more than 12 months ago and was confirmed through council meetings and resolutions, he said.

"I don't know what further information the residents and ratepayers association may be seeking, but I invite them to contact me and request it."

The criteria the SFO uses to determine whether it wil investigate, according to its website, includes looking at the number of people affected, whether it undermines public confidence in New Zealand as a safe place to invest or the integrity of the financial markets, the complexity of the case and the level of public interest and whether prosecution would have a preventative impact.

Hamilton mayor Andrew King last week defended paying well above the market valuation provided to the council by independent property valuer Telfor Young because they were premium properties that would help progress his dream of opening up the central city to the river.

As part of the council's 10-year-plan in June, the council approved spending $7m towards strategic properties, but no further provisions were made or plans adopted. With $6.49m already spent within two months of the funding being approved, the council on has just $510,000 left to buy any other properties in the designated strip.

Earlier this year and prior to the property purchases being made, an Audit NZ report found there had been no material advantage given to developers and property owners Matt Stark and Leonard Gardner when it gave them the heads-up about a proposal to buy and bowl the buildings between central city park Victoria on the River and Embassy Park.

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