A year after buying out homeowners for $14 million, the Tauranga City Council is putting the Bella Vista subdivision on the market, seeking registrations of interest from developers willing to take it on. But one expert says it's the wrong move if the council wants to pay down the bill ratepayers are facing from the fallout.
Landbanking the Bella Vista properties would be a better option than selling them now, a property expert says.
Yesterday Tauranga City Council announced it was putting the 7500sq m Bella Vista subdivision at the Lakes on the market.
The 22 adjoining sections at 1-6 Aneta Way and 297 to 311A Lakes Boulevard will be sold as a package by tender.
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Most are from the failed Bella Vista development and one the council bought for strategic access purpose.
The five properties on Aneta Way have houses while 297 to 311A Lakes Boulevard properties will be vacant land - though two houses are still yet to be removed.
The removal and demolition process is about five months behind schedule, having been started in March with the intent to be done by winter.
The council is seeking registrations of interest from parties able to complete the development, which the council bought for $14m a year ago (partially offset by a $10.55m insurance payment) to settle with the homeowners.
Selling the properties will help pay down the remaining costs.
That included the $3.45m remaining from the buy-out, $4.7m in Bella Vista-related operational costs (to June this year), and the remediation costs.
In April, council chief executive Marty Grenfell said, all told and post-sales, he expected the total cost to ratepayers would be around $4m.
In a press release yesterday, the council said it was looking to "move forward and recover money for ratepayers".
It was aiming for the "best possible return for ratepayers on the open market".
OneRoof property commentator Ashley Church, however, said the council should not be rushing to move on from the development if its priority was making money back for ratepayers.
"The best way to do that is for them to take a long-term view."
In Church's opinion, the smarter options would be to either landbank the properties for a few years or for the council to develop the properties itself in a joint venture with a private developer.
He said holding on to the land for a few years would cost the council little and let the stigma of the failed development fade while the capital value increased in a market predicted to rise.
Church estimated the block would be worth 50 to 75 per cent more in a few years time.
If the council did sell now, there was nothing to stop the buyer doing just that, he said.
The strategy may be advantageous to a public entity such as Housing New Zealand - which has previously expressed anecdotal interest in the site - but a private development company would more likely want to move quickly.
A spokesperson for Kāinga Ora - formerly Housing New Zealand - said yesterday the public housing provider had "no current interest in this location".
Tauranga Mayor Tenby Powell said seeking registrations of interest from credible buyers did not lock the council into the path of selling the properties.
If the offers did not shape up, or another option - such as those presented by Church - was investigated and looked better, the council could still opt to pursue it.
"We want to do our very best by ratepayers.
"It's a lovely part of the city and we want to see good houses on it. We don't want a repeat of what happened."
He said the council was looking for "something special" in a developer "to turn what is a very difficult site into a really good housing development".
Church said the strength of the council's negotiating position depended on how much interest there was, the amount and complexity of work required, and the perceived risks.
One risk could be the unretained cut between Aneta Way and Lakes Boulevard. The lack of suitable retaining was one reason the council evacuated the properties in March 2018.
In its press release, the council said the subdivision was being sold as a package "so the buyer can manage the building of a retaining wall to suit their redevelopment".
The Bay of Plenty Times asked the council why it had chosen not to do the retaining work itself, along with several other questions about the plans for the subdivision.
The council referred all questions to a Local Government Official Information and Meetings Act request, which it can take until January to respond to.