KEY POINTS:
Bank of New Zealand is defending its decision to loan the biggest amount of cash to the failed $450 million Kensington Park at Orewa.
Diane Maxwell, BNZ external relations manager, said the bank was careful before it loaned $41 million to the park which is now in receivership.
The bank considered it was adequately covered, she said. Three financiers loaned a total of $57 million.
Receivers Brendon Gibson and Grant Graham at KordaMentha are in charge of the ruined venture which defaulted on its huge loans, sparking action from BNZ as first mortgagee.
Mr Gibson said the other lenders, Fidelity Finance and NZ Funds Management, contributed $16 million to the company run by developer Patrick Fontein.
But the Australian-owned retail bank was most exposed to the project where about 1500 people were eventually meant to live.
Instead, only about 60 houses are up, just 120 people live there and much of the 15ha site is littered with earthworks and incomplete buildings.
Diane Maxwell said the bank had clear criteria to assess risk at the park.
"In this instance, the development element was entirely covered by pre-sales. The project had strong presales rates, sites sold well, and continued to sell well until the project was put into receivership. Our assessment was that the principles of the development were sound. It's a high-quality development," she said.
Mr Gibson said the receivers' main priority was to finish as many of the apartments and houses as possible. A large number were close to completion and he said he wanted to maximise value and get the places sold.
"This is a reasonably big staged development which is in the early stages. We have some partly completed units which we're focusing on to see if we can get them complete to ensure pre-sales happen, then the bigger picture which is realising the value of the whole development.
"We are seriously looking at where we can complete parts of it to optimise the value," he said.
Mr Gibson is worried about many issues on the site, including deterioration of buildings with untreated timbers exposed to the elements.
"This is a time-critical project," he said, adding that the bank was funding the services of a number of security guards who are prowling the site.
Theft of equipment and materials, vandalism and rapid deterioration of the site all pose issues for the receivers as they call in property experts, including valuers, to get information for their first report due on November 23.
Lack of sales are not said to be the main cause of the park's failure.
The high cost of providing the extensive infrastructure - sewage, roads, high-speed internet access to all houses and apartments, is being blamed, real estate experts say.
Mr Fontein is a qualified engineer but he is being blamed for not keeping a close enough eye on the accounts and attempting Orewa and Taupo intensive housing projects simultaneously.
"All storm-water will be treated on the site via a lake and weir system which separates sediments. Grey wastewater will also be recycled and used to irrigate gardens in public areas," Kensington promised buyers.
It also laid an extensive connection of walkways through the property which was once a camping ground but subcontractors on the site this week said ground movement near the waterfront meant large stretches of tarmac had to be ripped up and re-laid.
Kitchens in some houses were also torn out for not meeting standards.
Sub-contractors confirmed sales were strong, forcing them to stop work on Saturday afternoons and Sundays because of buyer interest.
Mr Gibson said building business Kensington Construction was not in receivership.
THE STORY SO FAR
* 2006: Developer buys land
* Mid-2006: Plans launched
* This winter: Work slows down
* September 12: Receivers appointed
* November 23: First report due
