Wanaka's residential versus visitor accommodation needs were weighed up at a Queenstown Lakes District Council resource consent hearing this week.
Stuart and Melanie Pinfold, of Satomi Holdings Ltd, want to subdivide their 2.5ha site on Cardrona Valley Rd into 21 residential lots with dwellings, 10 of which could be further subdivided.
The land is zoned rural lifestyle with a visitor accommodation sub-zone overlay.
The Satomi proposal is for a higher residential density than the zone allows and is a non-complying activity.
The Pinfolds bought the land in 2010 after the nearby Oakridge Resort was placed in receivership.
Rather than proceed with Oakridge's already consented 36 visitor accommodation units on the land - which the resort's new owners did not need - the Pinfolds considered a residential development the best and most viable option.
Mr Pinfold said the area was already oversupplied with visitor accommodation by Oakridge and a yet-to-be-developed motel on the corner of Cardrona Valley Rd and West Meadows Dr.
The motel consent was obtained by Allan Dippie's company, Willowridge Developments Ltd.
Mr Dippie is also a director of Base Camp Properties Ltd, which owns the commercial building next to the Pinfolds' land and has objected to their proposal.
Base Camp Properties wants the site retained for visitor accommodation and considers the restaurant and cinema businesses housed within its building - operated by another of Mr Dippie's companies - incompatible with residential living.
Mr Dippie said people staying in visitor accommodation had a far greater tolerance than permanent residents for commercial activities on a neighbouring site.
While his businesses operated within their consents, it was ''impossible'' to negate all the effects and complaints from neighbours were inevitable.
''We can't keep everyone happy ... people are sensitive to the most surprising things.''
Providing sufficient visitor accommodation was ''one of the biggest challenges Wanaka faces'' and the Cardrona Valley Rd sub-zone was perfectly located to do so.
''This is the main road to our biggest tourist neighbours.''
Willowridge Developments Ltd had people ''queuing up'' to buy the 35-year lease for its motel development and accommodation providers were best located together so they could ''feed off each other'', as in Queenstown.
Satomi's planner Dan Curley said it appeared the council had overlaid the visitor accommodation sub-zone in 1998 to allow the continued operation of an existing business, Diamond Lodge, which was later demolished.
That seemed the ''only rationale for why the sub-zone exists ... as opposed to a response to a detailed visitor accommodation demand and location assessment'', Mr Curley said.
Commissioner Denis Nugent asked why Satomi had not applied for a private plan change to alter the zoning.
''What it's [proposal] doing is saying that the zonings in Wanaka are irrelevant. Just apply for what you want to do, isn't it?
''And isn't that a continuation of a very poor trend that has been occurring and that then means there is a precedent effect?''
Satomi lawyer Vanessa Robb said the proposed activity was not ''completely at odds'' with the anticipated activities of the existing zone.
It was consistent with district plan objectives and policies and the anticipated uses of the zone - visitor accommodation and residential - were not prevented by the application.
The residential component had just been ''intensified''.
If resource consent was granted, Base Camp Properties requested conditions including a no-complaints covenant in favour of Base Camp over the two proposed lots closest to the shared boundary.
Mr Pinfold agreed, providing Base Camp was lawfully operating within its consent parameters, but Mr Nugent said such a covenant required a private arrangement.
Mr Pinfold also agreed to landscaping for screening purposes and a 10m building setback, but would not agree to height restriction and no further subdivision conditions.
Commissioners Nugent and Leigh Overton have 15 working days to issue their decision.
