Developer to miss settlement deadline, TDHL grants extension

Wednesday, 11 October 2023

The developer of a large retail centre in Timaru was due to settle this week on two of three remaining lots still owned by the council’s holdings company - but that will not happen.

According to the Sale and Purchase Agreement between Timaru District Holdings Limited (TDHL) and the developer, signed in October 2020, the agreed settlement date for Lots 8 and 9 was to be October 12, 2023.

However, TDHL has confirmed it has given the developer, Tony Gapes of Timaru Mega Centre Limited, an eight-and-a-half month extension, with the new settlement date agreed as June 30, 2024.

TDHL general manager Frazer Munro said it could have cancelled the settlement on the two lots, but decided to allow an extension, saying “we just want to see him finish it off”.

“The settlement dates being later than expected, when the S&P was drafted several years ago, is not surprising.”

Munro said the additional delay was also “consistent with TDHL’s objective of delaying impacts” of the new development on the CBD.

He said the title for the allotments had not been raised, so settlement could not occur, but it had not required any change to the Sale and Purchase agreement.

Under the Sale and Purchase Agreement, Lots 7-9 were designated as Stage 2 of the development, and were still owned by TDHL. They sat at the southeastern corner of the development, just above Taitarakihi Creek.

Lot 8 was originally planned to accommodate a tavern, food and beverage businesses and a large format retail store, and Lot 9 a car park. Lot 7 was 9242m², and sat at the bottom corner, and had an original settlement date subject to clause 32.14. It was not known what that clause states, or how much the developer would pay for the remaining lots as that information was fully redacted in a copy of the agreement released to The Timaru Herald under the Local Government Official Information and Meetings Act.

When TDHL sold the land to the developer for $6.4 million in 2019, a number of clauses were included in the Sale and Purchase Agreement, which aimed to give some protection to Timaru’s CBD. Those included a limit on the number and minimum size of retailers in the first stage. They also prevented banks, cinemas, offices and accommodation from opening at the development, and the sale and supply of alcohol from a tavern until after April 2025.

On Tuesday, Munro said TDHL had not negotiated any additional conditions for the extension, and was trying not to “double-up” on clauses already in place.

Asked specifically about the large pile of excavated materials on the site, referred to as “Hudson’s Hill” by Gapes, Munro said they had not made any demands in relation to that.

“Nothing has changed and all other existing clauses around the number of retail outlets and District Plan provisions around land use apply.”

Asked whether any contractors had raised concerns with TDHL about being paid for work at the site, Munro said there had been no formal communications of that nature.

“TDHL is not contractually involved in the site works, so does not have visibility over payments.”

The Timaru Herald had contacted some of the contractors involved in the project, and none had been willing to respond on the record.

The original subdivision plans for the development were approved by the Timaru District Council under one scheme, which was given consent on December 11, 2020.

Since then, the developer had sought variations to consents, which included the relocation of businesses from the second to the first stage of the development, the addition of a second storey for a building which would now intrude into the 5m setback for Waka Kotahi’s road widening limit on SH1, and increased signage.

Last month, council planning consultant John Cook responded to the latest application to change the consent conditions, saying the council wanted “financial assurance” a large pile of excavated materials would be remedied.

Cook said he understood “for financial reasons the applicant company” was seeking the changes that would allow new Records of Title to be issued for Lots 1-9 and questioned how infrastructure would be managed should any lots be on-sold.

“Should such a situation arise where there could potentially be a number of new allotment owners, how would potential future management matters pertaining to this large material stockpile be dealt with as long as it continues to exist?”

TDHL chairperson Mark Rogers confirmed ‘Hudson’s Hill’ sat on land owned by the developer.

Responding to those concerns last week, Gapes was quite clear the changes would give greater financial flexibility.

“Having the buildings sitting on separate lots is common for developments of this nature, and provides us with some additional flexibility on funding.

“For example, if we look to have different banks involved, we can use the different lots as collateral.”

At the time, he said there were two main consents issued for the development – a land use and a subdivision consent. He explained the land use consent required a staged development which prevented completion of the project until July 2027, and the subdivision consent which did not allow for staging.

“We have asked council to vary the subdivision consent to allow for two stages, so we can get the first four titles issued.”

He also gave an assurance that “Hudson’s Hill”, named after the company’s development manager Paul Hudson, would be gone by May.

In September, Gapes said the liquidation of three of his companies would not impact work at The Showgrounds, or a business park he has proposed for a neighbouring site.

Gapes was listed as the sole director and shareholder of Gorge H Development Ltd, East Link Ltd, and Mico Development Ltd – all of which had been put in liquidation in the past seven months.

At the time, he said work was continuing at The Showgrounds with the construction of building 1, a double storey complex at the site, which would be anchored by a national gym chain.

“We are making good progress with our tenants for stage two, which we hope to start early next year.’’

In August, Gapes announced plans for the business park which would see 36 freehold units between 40m² and 70m² built at 3-7 Eversley St.

He said that development was aimed at trade retail users and small business owners who would like to own their own premises.