The Otautahi Urban Guild development project never happened and now its $183,600 municipal loan could be forfeited.
Staff warned Christchurch councilors not to give a loan to a non-profit housing group, but they did it anyway and are now $183,600 in the red.
Christchurch City Council will decide on Thursday whether to cancel the loan it provided to the Ōtautahi Housing Guild in 2019.
The guild wanted the money to advance plans to build 150 to 220 houses on an 8,000 square meter Crown-owned site opposite Latimer Sq, bordered by Madras, Gloucester and Armagh streets.
The project fell through in late 2020 and the site has since been sold by the Crown to Mike Greer Homes, who were building around 85 homes on the site.
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In November 2019, the guild approached the board for a $450,000 loan, to move the project forward. The loan was granted, but the guild ultimately only withdrew $183,600.
At the time, council staff said they were unconvinced the guild would be able to repay the money.
They believed the loan was ‘high risk and unsecured’ and might need to be cancelled.
However, it was a risk most advisers thought was worth taking. Only three advisers – Anne Galloway, James Daniels (who stepped down in 2021) and Aaron Keown – voted against the loan.
At the time, Cr Sam MacDonald said the council should allow development in the town center and Cr Pauline Cotter said the money meant the town received a wonderful, diverse housing development.
At the same meeting, guild spokesman James Stewart urged councilors to “follow the lead” on council’s assertion that Christchurch was a city of opportunity.
Fast forward a year, and the guild announced that they were unable to purchase the land due to the financial environment.
He said he was confident he could still develop a housing complex on another, smaller site with fewer houses. He had five years to pay off the council’s loan and at that time he still intended to do so.
But a staff report, which will be considered by the board on Thursday, recommends that the board cancel the loan provided the guild agrees to give the board its development-related intellectual property, including designs.
Council money was used for design and other pre-consent costs.
If the council did not cancel the loan, it would remain on the council’s books as a bad debt and a liability, according to the report. The guild has no way to repay the loan.
Steward would not comment when approached Wednesday.
He said the staff report summarized the situation.
The land was purchased by the Crown for an alternative housing scheme, a flagship project known as the Demonstration Village, as part of the government’s post-earthquake master plan for the town.
The guild development was the site’s second collapse proposal after the Breathe Village plan, chosen in an international competition in 2013, was scrapped several years later.
The guild was made up of four groups, including the Office of Holistic Urbanism – a trust that runs community development projects, including the Collett’s Corner project in Lyttelton, which also did not happen.