The old Awapuni Tavern site on Palmerston North's Pioneer Highway, which was to become the city's next Countdown supermarket.

Plans to build a Countdown supermarket in Palmerston North's Pioneer Highway are headed for the Environment Court.

Resource management commissioners acting for the city council last year refused consents for the $16 million Progressive Enterprises' development that was expected to create about 100 jobs.

Despite an appeal, court-ordered mediation and attempts by mayor Grant Smith to negotiate a compromise, council planners are standing firm in their intention to defend the decision.

The two parties went into mediation starting on July 4, but could not reach an agreement.

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Countdown general manager for property Adrian Walker confirmed there had been formal mediation about the planned investment, but "unfortunately", there was no resolution.

Smith said meetings between the council and Progressive had managed to "narrow the gap" between the two parties significantly.

"Eighteen months ago we were poles apart. But there is still a gap."

He remained optimistic the supermarket development would go ahead and was encouraged Progressive was persevering with its applications.

Palmerston North developer Brian Green said it was a great shame the parties had not been able to come to some compromise.

It sent an unfortunate message to developers, that it was not easy to get consent to do anything in Palmerston North.

"We are lucky they [Countdown] are obviously still prepared to keep on going. It would surely have been easier for them to build in Christchurch or somewhere."

He said the bare property on Pioneer Highway, the 2-hectare former Awapuni tavern site, was not a good look on one of the main entrances to the city.

"It would be better to have a supermarket or nice development there rather than having it looking like a bomb site."

And former council property manager, now commercial real estate agent Dave Marriott, said it was very sad the supermarket was having to fight all the way to get approval.

"I'm extremely disappointed.

"What a terrible message to be sending to investors."

City councillor Adrian Broad, who holds the economic development portfolio, said he was disappointed an agreement could not be reached out of court.

"From my point of view it's an opportunity for employment for people, especially young people. Now it looks like it's going to be dragging on for quite some time."

Broad said it was important the council had a say in ensuring the development looked good, but he thought common sense should prevail.

The Countdown application was the first major plan to be assessed against new rules in the District Plan for development of neighbourhood centres.

The main issue at the hearings was around design requirements affecting the desired layout of the site, including the supermarket, groups of shops, parking and outdoor community space.

Countdown made several concessions to try to get the plans accepted, but council planners argued the development still would not provide the active street front, and visible, engaging community spaces the District Plan required.

Council head of planning services Simon Mori declined to elaborate on what key issues of disagreement remained.

"Because we're proceeding to a hearing, we have no further comment at this stage."

Countdown and the council have asked the Environment Court to set a date for hearing in November or December.

The court has noted the request but has not yet confirmed a date.



