Wellington City councillors have voted in favour of selling and leasing land it owns at Shelly Bay.

The decision to sell passed by nine votes to six.

A meeting today on the contentious decision lasted more than seven hours, stretching late into the evening.

Tonight's vote paves the way for a $500 million development featuring 350 homes to proceed.

How the councillors voted tonight

In favour: Laurie Foon, Tamatha Paul, Nicola Young, Rebecca Matthews, Diane Calvert, Jenny Condie, Jill Day, Fleur Fitzsimons, Teri O'Neill

Not in favour: Sarah Free, Iona Pannett, Sean Rush, Malcolm Sparrow, Simon Woolf, Andy Foster

Tonight's defeat is a bitter blow for Mayor Andy Foster, whose campaign was part-funded by the staunchly anti development Sir Peter Jackson and Dame Fran Walsh.

The development was originally pitched as a partnership between the Wellington Company and The Port Nicholson Block Settlement Trust (PNBST).

The trust's board is made up of elected members representing Taranaki Whānui.

The iwi purchased land at Shelly Bay with more than half of its Treaty of Waitangi settlement money.

This has now been sold on to developer Ian Cassels, the majority done so at a fraction of the cost.

Shelly Bay South as it is now. Photo / Mark Mitchell

What the councillors say

Māori partnerships portfolio leader Jill Day said she respected and supported the desire of iwi to build collective prosperity.

"Our leadership here today will demonstrate if we're a city open for business, or if we're a city that sets pathways with traps."

She said the development was a good deal for Wellington that delivered housing, economic development, better infrastructure, and public space.

Councillor Fleur Fitzsimons said it was not appropriate for council to act as a mediator between PNBST and Mau Whenua, a group which is currently challenging the sale of iwi-owned land in court.

She said all Wellingtonians have an interest in the council addressing the housing crisis.

"We cannot keep opposing housing developments no matter who they're for."

"The current state of Shelly Bay is not something Wellingtonians can be proud of."

Councillor Rebecca Matthews said she was supporting the sale and lease of land because of the issues of trust, housing, and the council's obligation as a treaty partner.

But Eastern Ward councillor Sean Rush said the commercial terms council officers negotiated "suck" and forced the council to work on The Wellington Company's timetable.

He said the "incredible piece of property" at Shelly Bay should not be valued by how many houses could be squeezed onto it.

Rush said councillors shouldn't be making a decision on the land today given the amount of uncertainty that still existed.

Mayor Andy Foster said Shelly Bay was a special place and council wasn't getting a good deal.

"I've never been happy with this and I guess I'm still not."

A long time opponent of the development, Foster launched his mayoral campaign at Shelly Bay making today's vote a big defeat.

Iwi leader makes no apology for Shelly Bay development

PNBST chairman Toa Pomare said Shelly Bay was an issue because more than half of the iwi's settlement money was spent purchasing it.

"It had substantial negative revenues for the first few years that I was on the trust and by 2015, when we entered into a relationship with The Wellington Company, it was a major problem for the trust."

Pomare said he made no apologies for the relationship with The Wellington Company.

He said without that relationship, the trust would not have been able to pursue other partnerships and land purchases.

"For the first time in our history we've been able to turn around the net assets of the trust for a position that is ahead of what the settlement was."

PNBST trustee Huia Puketapu said at the end of the day they couldn't control or change what has happened in the past and she wasn't interested in "trudging" that up.

She said she wanted to have an enabling conversation where iwi and council were on one side of the table dealing with a problem that was on the other side.

Taranaki Whanui Limited director Jamie Tuuta said the sale of Shelly Bay land was about the "mere survival" of the trust and has subsequently put it in a stronger position to engage more proactively on partnerships.

"You can't see Shelly Bay in isolation of all the activities of the Port Nicholson Block Settlement Trust because it isn't that simple."

He acknowledged the challenges of the situation.

"Taikuru Shelly Bay has tested the resolve of the very social and cultural fabric of Taranaki Whanui."

Land sale challenged

A group within Taranaki Whānui, called Mau Whenua, has lodged court action over the sale, alleging the deal failed to get the necessary support from 75 per cent of iwi members to go ahead. A court hearing is set down for March next year.

Speaking at the meeting earlier today, Mau Whenua representative Hirini Jenkins Mepham said the council did not question whether it had the right to set up Shelly Bay as a special housing area to begin with.

"By failing to carry out due diligence in the first instance, and failing to act when owners did not approve the sale of our land, you breached the Treaty of Waitangi Article Two and alienated Māori from their land."

He asked councillors to respect the legal process underway and defer their decision until the court has ruled on current litigation.

Dr Catherine Love, who was involved in the original treaty settlement negotiation, said there was "absolutely no way" the original PNBST trustees would sell land at Shelly Bay.

She said they wanted to enter into an arrangement with a development partner where iwi retained the land.

Love said they tried to get the Shelly Bay land as cultural redress, which the Crown did not agree to so they paid for it out of their settlement money.

"A sale was not on the cards."

She ended Mau Whenua's submission with a stark warning to councillors.

"You face today your Ihumātao moment. Please think wisely, use today to put an end to the conflict that has been, and the risk of further conflict."

Developers hit back

But Earl Hope Pearson, who submitted on behalf of the developer, said they made no apologies nor did they need to explain themselves for the deals made over Shelly Bay.

He said the development was about helping iwi to achieve its vision.

Hope Pearson said the benefits included jobs, investment, housing, a new way of thinking, the retention of heritage, and a development which will enhance Taranaki Whānui.

He said the development has been "subjected to a barrage of misinformation, court cases, and other antics."

"A deal is a deal. A no today does not negate council's responsibility at Shelly Bay Taikuru. We're not stopping."

But a lawyer acting on behalf of Sir Peter Jackson and Dame Fran Walsh said there was no deal.

Jackson lives nearby and has been a vocal opponent of the development once describing it as one that "will invoke blocks of Soviet-era apartments dumped on Wellington's picturesque peninsula."

Lawyer Craig Stevens argued no binding legal agreement has been entered into between the council and the Wellington Company.

"The council has wisely decided to avoid such obligations at this stage.

"Councillors are being taken blindfolded to a pool and told to dive in, but not told how deep the water is, or even if there is any water in the pool."

Councillor lodges formal complaint about mayor's behaviour

Before proceedings got going today, councillor Jenny Condie complained to the council's chief executive about the behaviour of Mayor Andy Foster leading up to the vote.

Condie sought leave from the meeting to make a personal statement on the matter.

Foster declined to accept that so it went to a vote, which Condie lost.

However, a document outlining the complaint to Chief Executive Barbara McKerrow was allowed to be tabled.

In that document, Condie said she received a text message this morning from the mayor asking her to drop by his office.

According to Condie, at the meeting Foster said he wanted to show her information he had relating to the road leading to Shelly Bay which might change her views.

Condie said when she read the notes they contained potentially defamatory allegations about a former council officer.

"These allegations are similar to those which were heard by the High Court in 2018 and dismissed. I believe it is extremely unwise for the Mayor to attempt to unfairly besmirch the professional integrity and probity of a former Council officer", she said in her complaint.

Condie said nothing in the notes gave her cause for concern about the actions of the council officer and she understood Foster did not have permission to share the information in the first place.

"The actions of Mayor Foster were improper in my view and I am taking this opportunity to request that you investigate his actions. I believe that I am not the only councillor that Mayor Foster has shown this information to."

Wellington City Council negotiates itself a loophole over land deal

A resource consent for the proposed development actually already banks on having the council-owned land.

This is because councillors have voted once before on what to do with their land back in 2017.

They voted in favour of the sale and lease, giving the council's chief executive power to sign off the final deal.

But that power was redirected back to council due to high public interest in the case and subsequent court action.

With Mau Whenua's case yet to be heard by the courts, but a resource consent for development granted more than a year ago, Wellington City Council has negotiated a loophole for itself.

Officers have ensured the key commercial terms nutted out ahead of the vote to sell and lease council land will protect the city council's position going forward.

If Mau Whenua's claim is successful, or any other litigation relating to the acquisition of land by the developer for that matter, the council can get the land back.

If its land has already been sold and leased before any substantive development being done on it, then the council can require the developer to return the land at the same value it was initially paid for.

If substantive development has already occurred, but before practical completion of the development set out in the resource consent, the council can require the developer to return the land and its improvements at the then market value.

In the event council votes against the sale and lease, the developer could apply for a variation of the current resource consent allowing development to proceed on the privately owned land only.