Wellington City Council considers loan scheme for earthquake-prone buildings
Thursday, 3 December 2020
Wellington City Council is considering providing loans to the owners of earthquake-prone buildings, amid fears many will miss their deadlines for expensive and complex strengthening work.
There are 563 buildings in the capital that need to be strengthened or demolished to meet new earthquake regulations, introduced in 2017 after the Kaikoura earthquake, and 372 are required to be fixed by the end of 2027. But as it becomes increasingly difficult to meet this deadline, the council is looking for ways to help building owners.
“I guess the council’s been quite risk averse from a financial perspective, but the deadlines are coming up really quickly,” said Councillor Iona Pannett, who holds the council’s associate urban development portfolio.
As the council looked to build on the government loan scheme announced for quake-prone building owners in September, all options were on the table, she said. “Staff are being tasked to go away and look at some other solutions.”
Other options include partnering with the central government to undertake strengthening or demolition work independently, or offering rates remissions to cash-strapped building owners, she said.
Councillors on Wednesday asked staff to look at ways to assist building owners.
City council chief resilience officer Mike Mendonca said staff would report back to councillors in February. He said it was not appropriate to comment while staff were looking into possible options.
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A council loan scheme would likely be set up through a special purpose vehicle (SPV) – a separate council-owned entity that could borrow money at lower rates than private building owners, said Councillor Fleur Fitzsimons.
That money would in turn be lent to landlords to complete strengthening or demolition work. Debt would be accrued by the council-owned entity, not the council itself.
Pannett said previous councils had flirted with the idea of a lending scheme for building owners but had never fully investigated it.
The existing central government scheme offering low-interest loans of up to $250,000 for earthquake strengthening of owner-occupied units and apartments was “a really good start”, Pannett said, but was “not necessarily enough money and not accessible enough”.
Of the 563 Wellington buildings deemed earthquake-prone, 283 are considered a high priority.
Another 152 buildings are deemed potentially earthquake-prone pending further assessment.
“We’ve been chipping away at getting buildings off the [earthquake-prone] list, but we’re really going to be up against it,” Pannett said.
The council currently provides $500,000 a year to assist quake-prone building owners, but this money is available only for detailed seismic assessments, not for any actual repairs.
Fitzsimons, who called for the council to investigate further options, said the fund was too small and did not adequately address the problem.
“The implemented approach of the council so far has been to start with what the council can allocate in an annual budget, not what the actual scale of the problem is,” Fitzsimons said. “The reality is that time is running out, and we need a city-wide solution to earthquake-prone buildings.”
However, the initiative has not impressed Wendy Booth, executive member of the Body Corporate Chairs’ Group, representing unit and apartment owners.
Booth recently sold her apartment of 24 years at Wellington’s Tasman Gardens because of earthquake and watertightness problems.
“It’s very disappointing … having made the decision to sell because we can’t afford to strengthen, that anything is coming out now that might be able to assist,” she said.
Booth wondered who would be able to access a council loan scheme, saying many apartment owners not qualifying for the government loan.