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Why new initiatives are needed, to get unsafe buildings strengthened

by Geraldine Murphy
Inner City Wellington’s submission on Wellington City’s Draft Long Term Plan proposes two new initiatives to enable owners of both heritage and non-heritage buildings to progress strengthening projects. Funding for these proposals comes from a range of other initiatives in the Long Term Plan, including the proposal for zoo upgrades for snow tigers and cheetahs.

We’re proposing these initiatives as there has been no progress within the Council, despite the City Strategy Committee agreeing in November 2017 to investigate mechanisms to help all owners progress strengthening projects, with a report back in December 2017. The report back didn’t happen and we were advised that it would be part of the Long Term Plan. There is nothing in the draft Plan about mechanisms that help owners progress strengthening. The only new item is a mention in the Statement of Service Provision about a pilot for yet more investigation, with no funding attached.

Owners don’t need another pilot. They need pragmatic tools and support along the lines that owners of URM buildings with facades and parapets, and heritage buildings have been receiving. In our view, snow tigers are not a priority when private owners are funding public good outcomes, and for some, face losing their homes.”

One initiative is a programme and advisory support for funding specialist advice to help owners and Body Corporate committees begin and progress complex projects. This is costed at $9m over 10 years.

A lender of last resort facility of $5m is also proposed. This would be a no or low-interest rate loan with a caveat on the property. It would be available for owners in a body corporate environment who cannot access funding through normal channels. If all owners cannot confirm funding, the project is put at risk, and without a last resort facility, the owners would be forced, by their neighbours, to sell their apartment. This process increases the costs to all owners in the body corporate and delays the project.

Neil Cooper, Immediate Past National President of the Body Corporate Chairs’ Group (BCCG), says that the BCCG strongly supports the ICW proposal. “Strengthening of buildings carries a high level of public good benefit” says Cooper. “Private owners should not be expected to carry all of that cost themselves”.

While the BCCG welcomed the financial assistance available for strengthening of facades and parapets and the additional six months to have this work completed, the timeframes and money available are still inadequate for many bodies corporate. In addition, the total absence of financial and other support for bodies corporate having to undergo major earthquake strengthening is yet another problem for owners and additional delays and potential risks for others who walk or drive past these buildings.

Christopher Butler is an owner in an earthquake-prone Wellington heritage building that must secure its facades and parapets by September this year, before it can begin an $11m strengthening project. Butler says “Owners in earthquake-prone buildings need enablers to help them progress these complex, technical projects in multi-owner environments.”

“We are investigating assistance from the heritage fund and will also apply for the government grant towards the cost of facade and parapet remediation announced by Minister Salesa on 19 February. We appreciate the assistance but in reality it’s a drop in the bucket of the overall costs. Resource constraints are also becoming a real issue. Our project manager has told us that two construction companies he had approached have withdrawn from the process, a third cannot even start the work until October while others are inundated already and simply not interested” says Butler. The search for a contractor continues.

“If Council thinks there is a demand and supply issue now, it will only get worse if new deadlines start to be imposed for the remediation of other earthquake-prone buildings” says Butler.

George Kanelos, owner-occupier and a member of the sub-committee running the earthquake strengthening programme for a small apartment building of six owners says “Owners in our situation need the programme and advisory support and the lender of last resort facility. We tried to get a project manager to help but no one was interested. We’re too small and there’s too much work on.”

“We spent circa $20,000 getting advice from an engineer who we only found out after his death, was being investigated. We’re now starting again with another engineer. There isn’t enough resource around and who do we ask for advice? On top of this we know that some owners won’t be able to fund it or obtain funds through retail channels. We shouldn’t have to force our neighbours to sell because the government didn’t do the proper analysis of the implementation impacts,” says Kanelos.

ICW and the BCCG submitted a proposal for a central government lender of last resort facility to the previous government in June last year. We know that MBIE is looking into that, following intervention by Grant Robertson, and we have had discussions with officials. We understand that advice should be going to the Minister soon. We will continue to lobby Government for it, but there is an immediate and urgent need in Wellington. The $5m will be a start. We don’t know how many owners will need this facility, but we are aware of 7-10 owners in three buildings who are likely to need this support.

ICW’s submission suggests there could be a collaborative approach to the lender of last resort facility between Government and Council. Councils already have a rating relationship with all owners through which the repayments could be made. If the legislation doesn’t allow for Crown funding to be collected through rates, then change the legislation.

The demand for engineering, project management, construction expertise, let alone scaffolding, will increase as deadlines get closer for those buildings that are ‘just’ earthquake-prone. It will get
worse when Council starts identifying priority buildings, which then have a shortened timeframe to complete the work. The indications are that Council will continue the programme support used for URM facades and parapets for owners of priority buildings. This is great, but what about the other owners?

The legislation that came into force in July 2017 requires that councils in high seismic risk areas, such as Wellington, identify priority buildings by December 2019. Owners of earthquake-prone buildings confirmed as a priority building will have a shortened timeframe to do the work. This will exacerbate an already tight supply market for quality resources.

Managing these projects in multi-owner environments, with a mix of residential and commercial owners, and a mix of owner-occupier and landlords, is complex. “There has to be practical support and access to funding if Government and Council want the work completed in a timely manner” says Kanelos.

Butler says “We have been working on an achievable solution for well over a year, with some owners engaged on it for part of most days. In our case, there are no easy or cheap options as we have a joint wall with our neighbour and have to strengthen together. Owners are trying to get this completed so they can get on with their lives”.

Feedback indicates that it is residential, multi-owner buildings facing the biggest challenges. Commercial units, including small business employers, get caught up in this. I obtained data from Council which shows that only nine residential owners are receiving the rates rebate that is available to individual owners once the building is off the Council’s earthquake-prone building list.

This suggests that the rebate is not worth the cost and effort of getting a valuation and negotiating with Council on what the valuation uplift has been. Or, it shows that owners and Body Corporate committees in residential, multi-owner buildings are struggling and need help urgently.

The submission is available on the ICW website.
Information on priority buildings is available on MBIE’s website.

Geraldine Murphy is Deputy Chair of Inner City Wellington.

1 comment:

  1. michael, 31. May 2018, 10:42

    It is time the council and the government got together and sorted this out.
    Has the council even given any consideration to the ratepayers affected by this when budgeting millions to bring in a couple of snow leopards for the zoo, along with other unnecessary spending. Get your priorities right WCC!