A proposal to sell a hectare of council-owned land in Wellington's Shelly Bay would bring 350 new homes to an area that has sat "dormant and under-utilised" for more than a decade.

The community will be consulted on the proposed sale or lease of the land to joint-venture company, Shelly Bay Limited, Deputy Mayor Paul Eagle said.

The proposed development is a partnership between the council and Shelly Bay Limited, set up by the Wellington Company, led by Ian Cassels, and Taranaki Whanui/Port Nicholson Block Settlement Trust (PNBST).

If the project goes ahead, Shelly Bay would get 350 new homes including 280 apartments, 58 townhouses and 14 standalone houses, plus a 140-resident rest home and a boutique hotel with about 50 rooms.

Also envisaged are a ferry service, cafes, bars, retail, upgraded public areas including a village green, and possibly a brewery. The project would also retain key heritage buildings Shed 9, the Shipwrights and Officers' Mess buildings.

City councillors this week agreed to consult on the sale and long-term lease of the council's land and buildings at Shelly Bay from next month.

Eagle said the project would be a milestone in the city's progress.

"This is obviously subject to further approval and then commercial negotiation - but the project would be a true partnership with the council working with local iwi to deliver a good outcome for Wellington and that reflects our deepening relationship with PNBST," he said.

Designs show how the Shelly Bay area would look after developments were completed. Photo/supplied
Designs show how the Shelly Bay area would look after developments were completed. Photo/supplied

"This area has sat dormant and underutilised for over a decade. A number of developers have tried and been unable to produce a compelling vision for the site. A partnership with iwi will finally allow this area to be revitalised.

"The development would add another 350 homes to the city's housing stock and open up an area of Wellington that has been decaying for nearly two decades.

"This is not a situation where the council can afford to do nothing. Every year the basic upkeep of the council's land and buildings at Shelly Bay comes at a cost to Wellington ratepayers which will amount to $6.1m over 10 years and we will be no further forward," he said.

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"Alternatively, if we go ahead with the lease, sale and development, council will actually be $1.75 million better off at the end of the development due to proceeds from the sale and increases in rates, as well as a net $1.5 million increase in rates-take each year into the future. The economic benefit-to-cost ratio during the construction of the project is 20 to 1. We think that is a compelling enough case that it's worth consulting the public on."

PNBST chairman Wayne Mulligan said the iwi's aim is to develop Shelly Bay into a must-see destination to make Wellington more prosperous and enjoyable.

"We want to create a legacy for Wellington and for the region. This will be an area with real pull for tourists as well as Wellingtonians. We want to create a place where people can dine, walk, hike, live, bike, visit and stay," he said.

L-R: Wayne Mulligan Port Nicholson Settlement Trust Chairman, Diane Calvert Wellington City Councillor, Deputy Mayor Paul Eagle, Holden Hohaia Taranaki Whanui Trustee and Councillor Simon Marsh.
L-R: Wayne Mulligan Port Nicholson Settlement Trust Chairman, Diane Calvert Wellington City Councillor, Deputy Mayor Paul Eagle, Holden Hohaia Taranaki Whanui Trustee and Councillor Simon Marsh.

Wednesday's meeting agreed that councillor Diane Calvert, the council's community planning and engagement portfolio leader, should chair a working group comprised of councillors Jill Day, Eagle and Andy Foster and Eastern Ward councillors Chris Calvi-Freeman, Sarah Free and Simon Marsh, to work with officers and finalise the consultation process before consultation starts.

Calvert said it was important the public are given a full opportunity to make their views heard and that the full picture of the development is presented to them with all the information available.

The consent for the development was approved on April 18, but the sale and lease has to go through a public consultation process in compliance with the Local Government Act 2002 and gain final council approval.

The resource consent application was filed under the Housing Accords Special Housing Areas Act, which was set up in 2013 to fast-track housing projects.