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Owners fear losing homes because of unaffordable quake strengthening costs

apt-owners-meeting
Wellington apartment owners at a meeting on Thursday night

Report from RNZ
Owners of earthquake-prone apartments in Wellington fear they’ll end up destitute or homeless with the cost of strengthening their units now at 10 times more than government estimates. The inner city residents are demanding a law change.

“We’ve had various assessments of the costs of strengthening our building, ranging from about a million dollars and now we’re up to about four million dollars, and it is just an ongoing nightmare,” said apartment owner Carol Brown.

Her share of the bill could be as much as $120,000 and Ms Brown, who is retired, said she had no idea how she would afford it.

“Today, I still own that home, I’m still debt free – but I don’t know for how much longer. I’ve got modest savings and when they’re gone, I don’t know: I could be homeless. And so could other people,” she said.

The 1920s Blythswood building Ms Brown lives in is on a priority route, where there are lots of pedestrians and traffic.

A 2016 law change means owners of earthquake prone buildings in high risk areas like Wellington have 15 years to fix them.

But owners such as Ms Brown, whose buildings are on priority routes, have only 7.5 years to complete the work.

“The government needs to understand the singularity of what they are asking, the enormity of what they are asking. And because it is largely for a public benefit – I allow there is some private benefit in there too – the public purse should be opened for a public benefit,” she said.

One resident said he had a bill between $500,000 and $600,000. A recent survey found costs ranged from $93,000 to $805,000.

It is a scary reality for hundreds of inner-city residents, one which Hazel Kirkham, a member of lobby group Inner City Wellington, said was not foreseen by government officials.

“Nobody ever checked with the funders of this programme – a multi-billion dollar programme – whether the funders were ready or able to pay for it. And now we find we can’t,” Ms Kirkham said.

Ms Kirkham said she spent nearly 18 months digging through government documents to try to find a reason for apartment owners to be included in the legislation, but found none. And now, she say, they’re being forced to spend hundreds of thousands of dollars they’ll never recoup. “It’s iniquitous… the definition of that is unfair and morally wrong,” she said.

Officials advising on the law change had estimated it would cost $25,800 to strengthen the average unit, she said.

But when Inner City Wellington surveyed owners of 16 buildings it found the average cost to be $241,571 excluding GST. The group thinks that could balloon to $436,868 once expenses like lawyers fees, interest rates, GST and resource consents are included.

The average rateable value of those apartments was $483,542.

Geraldine Murphy, the association’s seismic spokesperson, said it was clear the government needed to take another look at the law. “This is way, way bigger than the government knows, than the council knows. They’re making these policy decisions based on really poor data, or no data at all,” she said.

The government has set aside $23 million for a suspensory loan scheme to help apartment owners or investors struggling to pay for the strengthening work.

Ms Murphy said that was not enough.

“Some of them will be spending way more than they’ll ever get back,” she said. “If [the government’s] imposing this burden, and they’re not stopping it, we’ll be pushing for compensation.”

“For donations to charitable organisations you get 33 percent of your donation back, just like that, no questions asked. This is a public benefit, that sounds a good starting figure,” she said.

Owners who could not afford to strengthen their apartments could be stung with a $200,000 fine and still have to pay for the building to be demolished.

But the group would not giving up without a fight and would be going to Parliament to demand a law change.

23 comments:

  1. Laura, 7. June 2019, 10:15

    Big winners are the Government and Council, collecting tax on tax, and engineers and others in the strengthening industry who stand to get fat on owners’ misery. No way will I ever be able to afford the $700K for strengthening and relocation of business and residence while work is completed, so it looks like I may have to pay the $200K fine and demolition costs off at $100 a week. But the Government and WCC can’t take my land, I’d rather a lump of dirt than sell off my humble unit to a hungry developer.

     
  2. KB, 7. June 2019, 10:54

    @Laura. Between those two options ($700k for strengthening & $200k fine) seems like a good third option is this: Demolish building, rebuild with smaller apartments, leaving room for additional new units to be sold, the proceeds of which would hopefully pay for a significant part of the rebuild cost, and you end up with a nice new modern apartment (albeit a bit smaller than before).

     
  3. Traveller, 7. June 2019, 11:16

    KB But this could involve the demolition of a beautiful heritage building, so important for the cityscape.

     
  4. Solution, 7. June 2019, 12:02

    Scrap the new code.

     
  5. Spongebob, 7. June 2019, 12:57

    @traveller if you want to keep your ugly heritage buildings then how about you pay out of your pocket to keep and strengthen them.

     
  6. Traveller, 7. June 2019, 13:29

    Ugly?

     
  7. Guy M, 7. June 2019, 13:57

    Laura, I don’t think your harshness towards engineers and others in the strengthening industry is justified. They’re certainly not doing it to get fat on your misery, and they are not after huge profits, but they do have to make sure their business continues to operate. They’re there to help you keep your home. I agree the costs are horrible for strengthening – but don’t blame the good guys.

     
  8. OMG, 7. June 2019, 14:31

    If ten individually-owned apartments are in one building on ten levels, and all but the level five apartment owner strengthen their part, does that mean that the nine owners are thrown out on the street because level five does not want to, or can’t afford to comply with the standard?
    If nine owners decide to demolish the same building but level five doesn’t want to, can you force the demolition?
    Crikey! I hope WCC has an answer or the owners will be paying lawyers more than the cost of the building to work it out.

     
  9. Mark Spencer, 8. June 2019, 10:39

    Why can’t the new erroneous code be scrapped as a solution?

     
  10. Geraldine Murphy, 9. June 2019, 10:22

    At an ICW meeting in 2012, a well-known Wellington engineer described the mandatory requirement to strengthen under the 2004 Building Act coupled with the Canterbury earthquakes as a ‘perfect storm’ for the sector.

    Yes, it’s a government legislation, but the NZ Society of Earthquake Engineers were instrumental in driving the original legislation change under the 2003 Building Bill, which was focused on fixing the leaky home debacle. This Bill increased the threshold to 34% NBS – widened the scope beyond unreinforced masonry and unreinforced concrete to all construction types – and the Government, Parliament and media did not understand the implications of it. The only media coverage I found was after the legislation was passed when they were doing the regulations to define a ‘moderate earthquake’.

    Yes, engineers are running businesses and there are good engineers, but the law of supply (being supply you can trust, rely on and who will deliver when they say they will) and demand, means residential owners are more severely impacted than commercial building owners.

     
  11. Kara, 9. June 2019, 11:24

    Some of these routes may be impassable anyway post a major shallow quake, because they are on either deep alluvial soils or reclamation areas. I really feel for people who have been caught up in what might have been well-intentioned legislation but which didn’t factor in price rises. Time to make this a local body election issue.

     
  12. Mark Spencer, 9. June 2019, 12:28

    So there is no reason why the erroneous new code can’t be scrapped as the clear and obvious solution to this problem.
    People should be aware that good engineers in what has become a booming engineers industry in Wellington are still not geologists/seismologists. And engineers are not knowledgeable about and do not specialize in large earthquakes.
    The buildings we are talking about have stood for many many small and some moderate earthquakes.As someone else stated “no building is safe in a large earthquake”.
    Let’s not make another issue for elections as we need to move back to the Council’s main functions, duty and roles that they have moved away from.

     
  13. michael, 9. June 2019, 14:15

    So much for a “well-being” government! They have spent hundreds of millions helping some people in NZ and overseas, while ignoring the stress and suffering endured by others who have worked and saved to get their homes, only to have them legislated away from them. Shame on both central and local politicians! I wonder how different it would be if any of them or their families were caught up in this mess.

     
  14. Guy M, 9. June 2019, 15:53

    Mark Spencer – umm, No. There is no way on Earth that the new code will be scrapped. It is not erroneous. It has been carefully calculated. Building Codes in general will only change in one direction – i.e. requiring more protection, and I can guarantee you that they will never go back and say Less is fine.

    Let me put it like this: buildings which reach only a third of the capacity of the new building code are more likely to kill people when they collapse, and they are more likely to collapse in a moderate earthquake. That’s where the 34% comes from. Buildings over two thirds of the capacity of the new building code are highly unlikely to collapse and also unlikely to kill anyone, in a moderate earthquake. That’s the 67% limit. Buildings gaining less than 34% are typically brick, and known as Unreinforced Masonry – URM. Wellington needs to either get rid of its all-brick buildings, or strengthen them so that the brick mass cannot easily collapse, i.e. take it from less than 34% to (preferably) somewhere near or above 67%.

    The problem we (Wellington) had in 2016 was that we had an earthquake which was caused by a number of faults failing in a row down in Kaikoura, all pointed straight at Cook Strait. The effect on Wellington buildings was severe, especially for long-span buildings – i.e. modern structures. They got hit by a frequency that was completely unexpected, and so they resonated in an unexpected manner – i.e. much bouncing up and down, swaying from side to side and generally getting stressed in the column and beam joints. Not expected to happen again, but now as it has happened once, we cannot say it will never happen again. I hope that helps explain why we have the the of code we have, and why we need to strengthen our buildings to resist future quakes.

     
  15. Geraldine Murphy, 9. June 2019, 17:28

    Having walked around the residential earthquake-prone buildings in Wellington, many of them are not unreinforced masonry buildings as the predominant construction type. The scope is much wider than that. I’m not an geologist/seismologist, but doubt if any two quakes are the same as the centre can be in different locations and depths with different magnitudes and go on for different lengths of time.

    I would like someone to explain the approach to earthquake risk for existing buildings in California, Oregon and Washington. These states all have many older buildings as we do, but do not appear to have the same broad brush approach to requiring retrospective strengthening to newer codes across all buildings.

    I agree that new codes will keep getting higher or smarter … The question is how these changes are applied to existing buildings. Does society expect these owners to keep retrospectively strengthening their buildings (and paying for it) as the code changes (ie, ‘improves’)? Does this happen in the electrical industry, as an example? I understood that the 2016 EQ legislation had provisions to prevent this happening, but now I wonder how much protection there will actually be. If this is a public safety issue – the driver for the legislation – then public money must pay, or at the very least, substantively contribute.

    For transparency, I’m the seismic spokesperson for Inner City Wellington

     
  16. Andrew, 9. June 2019, 18:27

    “buildings which reach only a third of the capacity of the new building code are more likely to kill people when they collapse”
    More likely than what? Buildings with a higher rating? I’m sure buildings with a higher rating are just as likely to kill if they collapse.

     
  17. J M, 9. June 2019, 20:47

    There’s absolutely no interest in the subject being shown by the mayor, which shows a lack of leadership on this urgent issue. He’s never attended any of the meetings that us owners have attended. Beyond poor.
    I believe that owners need to open their books and have their circumstances looked into on a case by case basis if they are to receive public funding. Residential owners may live in one apartment but have property and other investments elsewhere. Residential is not necessarily any different to commercial in many cases.

     
  18. Heidi P, 10. June 2019, 5:03

    It is unfair to try to enforce such a code on people, when it’s obviously crippling.

     
  19. Casey, 10. June 2019, 7:55

    Good point Andrew: The only building in the 2016 earthquake that may have killed and severely maimed people was Statistics House built in 2004 to the then current code. It was fortuitous that the earthquake occurred when the building was empty. No buildings, not even un-reinforced masonry ones, collapsed.

    An apartment block in Thondon has a less than 33 percent earthquake rating only because the emergency stairs are of “floating” construction and could fail in another earthquake. The cost of strengthening the stairs to bring them up to an acceptable standard is about $40K per apartment owner. Once done the rating of the building will rise to around 50% of code. Not all gloom for apartment owners but appreciated that with diminished savings such costs will be unaffordable for some.

     
  20. Ms Green, 10. June 2019, 9:13

    The simple observable fact is this:
    All these so-called key routes will be vulnerable after an earthquake. This is not because of the buildings – unreinforced masonry or not. It is because everyone panics, jumps in their cars to escape to somewhere else, and blocks the route(s) to a standstill.
    That is the problem… I saw it happen after one of our stronger earthquakes. No changing of the building codes is going to stop that.
    Other measures have to be in place.

     
  21. roger walker, 10. June 2019, 10:58

    To be consistent with the ‘risk’ argument, the price of buying a car should be tripled as clearly the road fatalities are so much more than seismic deaths.

     
  22. Brendan, 10. June 2019, 12:56

    @Roger Walker. There were 33,225 deaths in 2018 of which 377 (1.1%) were on our roads. We spent 1.1 billion hours ‘driving’ in 2018 (approx 227 hours each at 45kph)so we die at a rate of one per 3 million hours driven.

    Now there were 32,878 non-road deaths in NZ in 2018 which equates to one death per 1.3 million hours (4.9 million people x 24hrs x 365 days). Thus we die nearly three times faster off-road than on-road!

    Therefore to live longer, live in a car!

     
  23. Dave B, 10. June 2019, 14:36

    @ Brendan – If you look at the average age of road-fatality victims you would find it far lower than the average age at death from all causes. After all, we’ve all got to die sometime and most people’s aim is to live until their bodies finally wear out, not to be prematurely-terminated on the roads.

    If you are killed in a road accident the likelihood is that you will lose a far larger chunk of your potential life-expectancy than if you die of most general causes which tend to kick-in mainly in senior years. Road accidents are reportedly the biggest single killer of people between ages 5 and 45 (sorry, can’t cite a source for that).

    It’s actually a bit futile trying to compare causes-of-death which involve major, premature loss-of-life-expectancy, and those which mostly affect people who have already lived a full life and will inevitably be going to die soon anyway.