As a ratepayer in Auckland city, I’m angry at reading that I’m now underwriting the revamping of Eden Park. I don’t even watch sport. There are risks that the council already faces that the money could be better spent on.
Bernard Osman pointed out yesterday that:-
Eden Park’s new business plan may not work, and poses a significant risk to Auckland ratepayers, says a confidential report.
City ratepayers have been exposed to a $40 million bill to complete the park’s upgrade for next year’s Rugby World Cup.
Auckland City Mayor John Banks – who earlier promised not to put a cent of ratepayers’ money into the project – voted with councillors in May to underwrite the $40 million shortfall for the $256 million redevelopment after the Government said its $190 million contribution was final.
The council has already put $6.5 million into Eden Park in the form of loans with a repayment holiday until 2013.
I can think of a lot of things that this kind of money could be better used at covering the councils own risk. As a owner of a previously leaky apartment, the obvious one is the massive liability that the Auckland City Council has for its slipshod approach in the past on oversight on building plans and building inspection.
The current guesstimates for the liability for ratepayers and taxpayers in the order of at least 11 billion dollars with estimates of up to 23 billion . Auckland City Council appears to be the council with the highest proportion of leaky buildings both because of the pace of building here, but also because the council was, in my opinion, grossly negligent in its duties. The courts have agreed that the councils are liable and made that quite clear in a recent judgment:-
The Court of Appeal has found that councils are liable for leaky buildings because they have a duty of care to ensure buildings are up to scratch.
The decision, issued yesterday, has been described as a “devastating blow” for councils and led to renewed calls for a joint bail-out scheme between the Government and councils.
The biggest problem is being able to start fixing the buildings before they deteriorate further. Not doing this geometrically increases the costs to the point where it is cheaper to simply bulldoze the building and rebuild rather than repairing. Starting repairs early enough in my building meant that homeowners started paying in 2005/2006 to investigate the problem before finally getting a settlement in 2009 after the repairs were almost complete. It cost about half of my purchase price from when I moved in to my brand new apartment.
Many of us, including me, were almost driven to bankruptcy to pay for the repairs. Meanwhile the city council and their insurers held out for as long as possible before finally settling a few months before the court date. As Grimshaws (a leading legal firm handling this type of case) says
The sad fact is that the individuals, companies and local authorities responsible for your leaky building or leaky home will do everything they can to avoid paying to fix the problem, unless they’re forced to.
At that, we were lucky. The buildings flaws were not inherent in the structure – I’d checked for those when I purchased in 1998. They were almost entirely the result of poor workmanship and poor enforcement of the building standards. The council had not only approved and certified our building, but they’d also done the inspection – in particular of building problems that subsequently caused failures and in the ingress of water.
Because those substantial fees that were paid for the inspection to the council, we had a relatively easy process through the legal obstructionism. We were able to get almost full restitution of direct costs because the council had a clear liability. But it doesn’t pay for the agony of scratching to find enough to pay the interest, and living in a construction site.
Others are not so lucky. Many people with leaky buildings were inspected by the fly by night inspection services with inadequate insurance that a previous National government in the 1990’s allowed to get into the law. The Citizens and Ratepayers dominated council of Auckland City at the time were one of the most irresponsible in not keeping control of the inspection process, in particular in allowing inspection by companies with inadequate insurance.
The current National lead government is promoting a scheme that will help the many leaky homeowners who were caught with inadequate building inspection companies who have since failed or gone out of business. They don’t have a existing litigation target like the the council. But it requires that the homeowner pays 50% of the costs of “homeowners’ agreed repair costs”, the councils 25% and the government 25%. The poor homeowner will be able to get loans but only if they meet bank lending criteria.
The two weasel clauses of agreed repair costs and bank lending criteria are killers. It costs a lot of money to find out the degree of a problem, which in itself whittles away your ability to service a loan. Without pulling the walls away it is frequently impossible to determine the extent of the damage. In our case we would up finding out that there was extensive and expensive damage in an unforeseen exterior walls only after the bathrooms were torn up.
This scheme still is not in place, and isn’t expected until next year at the earliest. Every year that buildings are not made waterfast increases the costs to all parties, including the ratepayers. The available details on this scheme, like many things from this clueless government, are extremely vague. Grimshaws who are probably know as much as anyone else describe it as:-
The Government recently announced a proposed scheme which it believes will assist those parties embroiled in the leaky homes saga. The scheme is apparently to start sometime next year.
At this stage, we simply do not have enough information to make any meaningful comment about it.
With this looming vast leaky bill hanging over the ratepayers of Auckland, it seems incredibly irresponsible wasting money on underwriting a risky business plan for the Rugby Union. Quite simply the Auckland City Council should be looking at how they help the homeowners that C&R shafted decades ago at the earliest opportunity. It also reduces the known potential risks and liabilities to the ratepayers from letting buildings deteriorate with the additional costs that entails.
Underwriting a white elephant like Eden Park seems like the daftest thing that that John Banks and the irresponsible C&R team have done to date.