The Auditor-general has cleared Queenstown's council and its chief executive Adam Feeley of wrongdoing. But Lyn Provost's report reveals some interesting background about Mr Feeley's bid for a special housing area.
Queenstown council chief executive Adam Feeley convinced a senior manager early last year that Queenstown might be appropriate for special housing areas.
In February 2014, the Building and Housing Ministry approached the council about potentially adding the district to a special schedule to speed up housing supply and affordability.
Auditor-general Lyn Provost's report into Mr Feeley's conflict of interest over special housing areas, which cleared the council and chief executive of wrongdoing, said council planning manager Marc Bretherton thought Queenstown should decline the ministry's offer.
Queenstown did not have a shortage of available land for houses, he said, and his staff had more pressing problems.
Ms Provost's report said: ''The chief executive agreed about the supply matter but said that Queenstown did have an affordability problem and that 'I think we need to stay part of this'.''
Fast-forward to November last year and Mr Feeley engaged a planning firm to prepare an expression of interest for a special housing area on his family's land, owned by the Rafa Trust.
It was this bid and the events surrounding it that prompted Ms Provost's report.
The report cleared the council and Mr Feeley, saying the conflict was dealt with appropriately.
The work-around - for Mr Feeley to step back and hand the reins to Mr Bretherton - seemed to work well, Ms Provost said.
But some things could have been done better.
Mr Provost's report revealed that in May of last year, Mr Feeley asked Queenstown Lakes Mayor Vanessa van Uden if she had an open mind about special housing areas.
She said she was not sure what a housing accord would offer Queenstown but was happy to hear from the housing minister.
That same month Mr Bretherton briefed his boss ahead of a meeting with Housing Minister Nick Smith.
After he raised the possibility of designating land west of Gorge Rd a special housing area to speed up rezoning for housing, Mr Feeley asked why the council was limiting itself to Queenstown.
His email said: ''Acknowledging that I am slightly conflicted, Arrowtown is also in need of greater high-density housing.''
He went on to say Arrowtown had significant space for development ''but has a group of generational Nimbys driving the house prices through the roof''.
Feeley would not take media calls this week about the Auditor-general's report.
But he told Provost's team it was a ''throwaway line'' - and if he intended to offer his family's land for a special housing area he would not have made the comment.
Did Mr Feeley prepare the housing accord and twist the process to his advantage?
No, Ms Provost said.
He had some involvement but no significant influence or substantive contribution.
When did Mr Feeley decide to apply for fast-tracked status?
On November 20 last year, he told Ms Provost's office.
He did not tell the mayor until November 25 - after he had worked out how the conflict could be managed.
But in the meantime he had checked with Mr Bretherton that his family's land met the special housing area criteria.
Before Mr Feeley disclosed his conflict, Mr Bretherton sent him a copy of another expression of interest - for ''a significantly larger development'' - something the planning manager would not have done if he had known his boss's intention.
The council checked its approach to the conflict with the Auditor-general's office - but then failed to follow its advice: to get legal advice; and check Feeley's employment contract.
On the day the report came out, Ms Van Uden told the Otago Daily Times she had a ''real aversion to unnecessarily spending ratepayers' money on lawyers''.
In saying that, the mayor sought legal advice after the Auditor-general's office announced its inquiry - to ensure it was still able to consider the expressions of interest, including the Rafa Trust.
Mr Feeley - a former head of the Serious Fraud Office - refused to take phone calls about the report this week.
His contract says he cannot enter contracts, relationships, business interests or activities that conflict with the council or his responsibilities, or reflect badly on the council or its public perception.
The Auditor-general says it is not clear such an exercise of judgement was made.
Mr Feeley did not sign a council form disclosing conflicts of interest because, the report says, ''he saw no point''.
That was ''unfortunate'', Ms Provost said, adding that a chief executive should lead by example and the form was not discretionary for other employees.
Despite his conflict, Mr Bretherton's fortnightly updates continued to inform Mr Feeley on progress in special housing areas.
The mayor gets credit for a couple of things.
It was her suggestion the council call for expressions of interest, as opposed to mandating certain areas be developed.
Also, it was she who stepped in to deal with senior planning staff after Feeley declared his conflict.
''She has felt like both mayor and chief executive,'' the Provost report says.
Ms Van Uden told the Auditor-general recommendations to councillors over Arrowtown's special housing areas would have been more decisive if the chief executive had not been conflicted and had overseen the issue.
The Auditor-general said the conflict affected Mr Feeley's ability to meet his responsibilities under the Local Government Act.
The chief executive and mayor did not think this through, Ms Provost's office says.
