'Extreme' risk that number of cyclone buy-out properties could increase significantly

Wednesday, 1 November 2023

Ford Panirau at his property at Tongoio. It’s one of 37 properties at the development that may still be assessed as lying in a Category 3 area. (File photo)

The huge costs and financial risks facing Hastings District Council in its voluntary buy-outs of properties affected by Cyclone Gabrielle have been laid bare.

The voluntary buy-outs will be an option for anyone who has a residential dwelling located on a property that lies within a Category 3 area in Hawke’s Bay.

There are 287 properties in the Category 3 areas in Hastings and Napier, but only 140 of them have residential dwellings on them; 126 in Hastings and 14 in Napier.

Some of the other 147 properties, which do not have residential dwellings on them may still be eligible if the council agrees to approve ‘special circumstances’ where the owner meets certain criteria, such as showing they had a valid resource consent to build at the time the cyclone hit, or that they had a genuine intention to build there.

There are other properties, presently within Category 2 areas, that could yet be placed in Category 3 if there is no way of making them safe in future. These also could be added to the list of properties eligible for a buy-out.

Land confirmed as being Category 3 in the Esk Valley, Hastings.

Amongst the Category 2 properties are the 37 properties at the Tangoio development north of Napier.

A paper by Hastings District Council’s manager of recovery and special projects, Guy Charteris, states there was an “extreme risk” of the number of Category 3 properties increasing significantly as Category 2 properties get assessed through a technical process by the Hawke’s Bay Regional Council.

The paper said the risk could be mitigated by the regional council ensuring it carries out robust decisions when it categorises the land.

Signs of Cyclone Gabrielle’s damage remain across Hawke’s Bay.

The paper also noted that the funding agreement with the Crown, which has agreed to put $92.5m towards the buy-outs, could be revisited and “is eligible for further negotiation”. This funding is to cover 50 per cent of buy-out costs, with councils covering the other half.

The risk that the financial impact on councils will be significantly greater than thought would remain high until the buy-out process “has advanced considerably, enabling revised estimates to be prepared”.

At present the total estimated value of the 126 properties eligible for a buy out in Hastings is more than $150m. The estimated value of the 14 eligible properties in Napier is $15.7m.

The Government will work with councils to make voluntary buyout offers to homeowners of property in designated Category 3 areas, Cyclone Recovery Minister Grant Robertson said, at a June 1 press conference.

The buy-out offers will be handled for Hastings and Napier councils by a newly established Voluntary Buy-out Office (or ‘VBO’), which has set up a base in a building near the Hastings District Council offices.

The process of valuing the properties eligible for a buy-out will be headed by John Reid, an independent registered valuer who was appointed to the position by the council.

Reid will head a team of valuers who will meet property owners at their property before undertaking a retrospective valuation.

Property owners can engage their own valuer, with council contributing up to $5000 towards the cost.

If there are two valuations, Reid will compare these and reconcile any difference before recommending a value that will form the basis for an offer from the council.

The property owner will have three months to consider the offer.

If the buy-out proceeds, the council will then consider how the demolition of any dwellings will occur, and how the property might be sold. The council was still developing processes around this.