Labour and the Queenstown property developer

: Britain's Prince William (R) and his wife Catherine, the Duchess of Cambridge (C), chat to Te Arai developer John Darby (L), co-owner of the Amisfield Winery during a visit to the Queenstown  winery in 2014. (CRAIG BAXTER/AFP/Getty Images)
 

Questions are being asked about how a group of Labour MPs on a Select  Committee agreed to grant an exemption from the  overseas buyers  ban to a luxury Northland property development where sections are valued at up to $4.5 million each.

The exemption has now been removed for procedural reasons  but how it  got where it did raises some intriguing questions.

They are accentuated because the inclusion is so unusual, particularly for a Labour Government, to grant what in effect was a special favour to wealthy property developers.

Labour disputes that and says it was actually granting a favour to the local iwi who stood to be substantially disadvantaged if the development did not go ahead.

But POLITIK has found that the iwi have only a minority interest in the development.

On the face of it, the exemption flew in the face of everything Labour has been saying about property development since it became the Government.

For example, only 12 days ago, the Minister in charge of the Overseas Investment Amendment Bill, which implements the ban, David Parker, said this:

"We want the prices of New Zealand homes, whether it be a lakeside station, the best houses in the Bay of Islands or the modest homes in our towns and cities, to be set by local buyers, not on the international market," he said.

"It's also a matter of values. We believe New Zealand homes should not be traded on an international market and New Zealanders should not be outbid by wealthier foreign buyers."

But that is precisely what the developers of Te Arai are intending with their building lots which have rating valuations of up to $4.5 million each being offered on the international market.

Also worrying was that the exemption was granted to only one development; a point the Speaker was later to fasten on pointing out that the possibility of an exemption had not been offered to other developers.

The development

The development itself consists of 100 sites spread through a forest adjacent to a pristine east coast beach.

Its history is complex and involves two Maori entities; Te Uri o Hau and Ngati Manuhiri.

The Maori entities, beginning in 2000, reached two treaty settlements with the crown which entailed, among other things, then purchasing two crown forests totalling 1370 hectares adjacent to beachfront south of Mangawhai on the east coast of Northland.

The crown valuation for the forests was set at their “highest and best” land use, which was not forestry but included tourism and residential uses.

In a submission to Parliament's Finance and Expenditure Committee, the hapu and the iwi said:

“While they were commercial forests, the trees were low-grade third rotation pine and the lands' true economic value was based on subdividing the land into residential lots and forest rural lifestyle lots (under 5 hectares) and developing the land and recreational and tourism uses.

Initial plans for the Mangawhai North Forest were for a coastal subdivision of around 700 properties.

The Mangawhai South Forest could have delivered a larger number of properties.

This would have seen the two forests largely clear-felled and replaced with around 1500 new homes just south of Mangawhai.”

Unveiled in 2005, this would have created a town nearly twice the size of Mangawhai immediately to its south effectively setting up a new urban centre on the Northland east coast.

The proposal almost immediately ran into local objections and resource consent difficulties with the-then Rodney District Council.

Enter John Darby

So thwarted in their property development ambitions, and with little access to more capital, the following year the Maori sold 75 per cent of their holding to NZ Land Trust Holdings, a Queenstown based company for $21.8 million and the two sides formed a new company, Te Arai Coastal Lands to continue the development.

NZ Land Trust Holdings is a company associated with a Queenstown landscape architect and property developer, John Darby.

On his website he describes himself as one of the most successful investors in New Zealand, with investment interests in multiple industries.

He has near-celebrity status in Central Otago.

He has developed a string of luxury lodges and resorts including Millbrook, Blanket Bay on the shores of Lake Wakatipu near Glenorchy, the upmarket Jacks Point golf course and clubhouse, Clearwater Resort and Golf Course in Christchurch and Michael Hill's private golf course.

Darby's background is in landscape architecture and he's a HarvardUniversity-trained golf course architect and resort planner. 

He is also a high profile networker and is known to Labour’s Associate Finance Minister David Parker and he also has a connection to a public relations firm with close Labour connections.

Parker says he has kwon Darby for 20 years and the last time he encountered him was when he bumped into him, perhaps in an airport, but it was so long ago he can’t remember where or when it was.(This  sentence has been added after the Minister's comments in Parliament on June 21.)

Darby's highest profile networking came when he hosted the Duke and Duchess of Cambridge at his Amisfield winery in 2014.

He was to turn Te Arai from a proposed beachside town into a boutique upmarket luxury development aimed at the international market.

Initially the directors of Te Arai Coastal Lands were two local Maori; Rawson Wright and the late Russell Kemp and a Dunedin lawyer, Fraser Goldsmith.

Goldsmith was working at the time for Anderson Lloyd, an Otago law firm that acted for Darby and co-incidentally also employed David Parker before he entered Parliament.

Darby shared a mutual friend  with Parker.  Both worked with and were friends of the Otago entrepreneur, the late Howard Patterson.(This sentence has been reworded to more accurately reflect how Parker knew Darby)  

Darby’s relationship with Patterson saw Patterson become one of the original shareholders in the NZ Land Trust which was the vehicle Darby used to buy into Te Arai.

The golfing billionaire

Once Darby’s company had control of Te Arai, the proposal was changed several times until an application in 2009 for 180 sites was turned down by planning commissioners.

This was the point where things appear to have changed.

In 2012, a Los Angeles Billionaire and fanatical golfer, Rick Kayne bought 230 hectares of the Te Arai forest and began turning it into what is now regarded as one of the best golf courses in the world – Tara Iti.

It was where John Key played his round with Barrack Obama.

Tara Iti set the tone for what was now happening.

Te Arai now be a boutique development aimed at the world’s super-wealthy.  .

In 2014 Te Arai gifted a 400-hectare publicly-owned coastal reserve, with the vesting of the entire beach frontages and sensitive ecological areas in both forests to Auckland Council.

This created a 15km publicly owned stretch of beachfront.

But behind the reserve running along the beachfront, Te Arai obtained permission to develop 46 homesites.

The lots will sit behind at least 200 metres of reserve land on a 5.2-kilometre coastal stretch and will not be visible from the beach.

In its submission to the Select Committee Te Arai emphasised that the buyers would be overseas people.

“The time and cost to develop projects of such a high calibre and amenity value, with limited number of allowable home sites, results in these properties requiring to be sold into the high-value market," it said.

 “Purchasers of these types of sites would typically spend between two-to-three times the purchase price of the bare land on building improvements.

“For projects such as ours to be undertaken, we require a large pool of potential purchasers.

“Due to the required price point for such home sites to be economical, and the relatively small size of the New Zealand/Australian buyer pool in this price point, such a purchaser pool is necessarily going to be a wider international one. “

QV currently shows sections in the development with rating valuations of up to $4.5 million each.

NZ First objects

There have been consistent objections to the development --- not the least from New Zealand First.

In February last year NZ First Leader Winston Peters issued a press statement saying that Finance Minister Steven Joyce had signed off a change to the Te Arai beach access road without even discussing it with the community.

 “Mr Joyce said in his answers that ‘it is important to remember that this is iwi-owned land,” said Peters.

“He neglected to mention that the iwi, seriously financially challenged, have had to partner with US billionaire Ric Kayne’s company Te Arai North Ltd, to get a return on their money or lose it.”

In fact the partnership is also with John Darby and the iwi have been left with only 25 per cent of the holding company.

Even the Maori representatives on the company board are no longer there.

Instead the directors are John Darby and one of his executives, Jim Castiglione

Overplaying the iwi role

The question of the iwi role is important.

Speaker Trevor Mallard has ruled that the inclusion of the exemption for Te Arai was improper for procedural reasons.

There were other ways the exemption could probably have been granted, he said.

But even though the Committee was advised what it was doing in recommending the exemption was improper and even though the Opposition opposed it, the Committee went ahead and recommended it.

Mallard, however, appeared to excuse them.

“I appreciate that the amendment was made by the Finance and Expenditure Committee at the request of the landowner in order to preserve the value of the land purchased as commercial redress following Treaty of Waitangi settlements,” he said.

“The committee was motivated by a desire to assist and to be fair to the landowner.”

It would appear that Parliament was under the misapprehension that this development was essentially an iwi development when in fact it was a high priced luxury development 75 per cent owned by a property development company that boasts of having completed $2 billion of developments.

There is another casual link between Te Arai and the Government --- Te Arai’s public relations consultant is David Lewis, a former press secretary to Helen Clark and business partner of Gordon-John Thompson who filled in as Jacinda Ardern’s Chief of Staff when the Government was being formed.

What all this adds up to is what Parliamentary insiders would call an “untidy” process

Was it because Parliament misunderstood who really owned Te Arai that led to the exemption being granted and did Parker know what was going on.

Did he know people he knew were deeply involved in getting the exemption?

In a way, it doesn’t matter because Mallard has struck the exemption from the Bill.

But the opposition may not see it that way. they may well want to pursue this matter further.

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