Wellington City Council has negotiated itself a loophole to claw back its land at Shelly Bay should legal proceedings by a group within local iwi prove successful.
Councillors are voting next week on whether to sell and lease its land to make way for one of Wellington's most controversial developments.
Taranaki Whānui used about half of its $25 million Treaty of Waitangi settlement money to purchase land at Shelly Bay and has partnered with the Wellington Company to develop the site including 350 new homes.
But Mau Whenua is challenging whether iwi-owned land at Shelly Bay should have been sold to developers at all.
It says it's a group within Taranaki Whānui representing those who voted not to sell the land, those who have reconsidered their position on the sale and no longer support it, and those who say they didn't get a chance to vote in the first place.
Mau Whenua alleges the 2017 land sale failed to get the necessary support from 75 per cent of iwi members to go ahead.
It lodged a legal claim in July 2019 against the Port Nicholson Block Settlement Trust and the developer, and its associated companies, relating to sale transactions at Shelly Bay.
The legal proceedings are yet to be heard, but it's understood by Wellington City Council officers the next court hearing is due in March next year.
With this in mind, officers have ensured the Key Commercial Terms negotiated ahead of the vote to sell and lease council land will protect the city council's position going forward.
If Mau Whenua's claim is successful, or any other litigation relating to the acquisition of land by the developer for that matter, the council can get the land back.
If its land has already been sold and leased before any substantive development being done on it, then the council can require the developer to return the land at the same value it was initially paid for.
If substantive development has already occurred, but before practical completion of the development set out in the resource consent, the council can require the developer to return the land and its improvements at the then market value.
The council-owned land in question makes up about 10 per cent of the land involved in the development.
Plans for Shelly Bay could still go ahead if the councillors vote against selling and leasing its land there.
The current resource consent for the development is based off a master plan which includes the council land.
But the developer could apply for a variation of that resource consent allowing development to proceed on the privately owned land only.
The previous council has actually already voted in favour of selling and leasing its land at Shelly Bay in principle in September 2017.
It left council chief executive at the time, Kevin Lavery, with the authority to make the final transaction.
But before local body elections last year Lavery said the matter would instead go back to council for reconsideration because of the high level of public interest.
Since then, officers have negotiated the proposed Key Commercial Terms which, if approved, would form the basis of a development agreement.
Another key update since those negotiations started relates to affordable housing.
The developer has agreed to a Memorandum of Understanding for the provision of affordable housing.
The position of council officers in discussion with the developer is this should include 5 per cent of units at Shelly Bay as affordable, including a further 10 per cent of the equivalent total number of units at Shelly Bay elsewhere in Wellington City.
The Wellington Housing Affordability Model (WHAM) will be used as the measure of affordability.
WHAM takes into consideration total household incomes and living costs before it determines what money is left for housing.
If Wellington City Council doesn't sell and lease its land at Shelly Bay, it will be solely liable for infrastructure costs.
The low-cost option would come it at $9.73 million and include seawalls being repaired in the next five years, demolishing all council owned buildings, and land not being developed by council.
The high-cost option would come it at $20.05m, with the main difference being that Shed 8 and the Shipwrights building would be repaired, strengthened, and refurbished.
If the council sells and leases its land, it will still contribute to the infrastructure costs but its share will be capped at $10m.
Council officers consider the benefit of this proposal is that the proceeds from the sale and lease would be able to be redirected into paying this cost, as well as the cap providing certainty.
Councillors will vote on the deal on Wednesday, November 11.