Town Hall’s $147m blowout reflects the 'cost of heritage'

Wednesday, 4 October 2023

The city council is in the same predicament as several other building owners across Wellington as it faces skyrocketing earthquake strengthening costs and a looming deadline.

The Wellington City Council announced on Tuesday that it may have to spend millions on proceeding with the Town Hall strengthening. In the worst-case scenario the cost could jump from $182 million to $329m; the best-case scenario was a total budget of $254m.

The historic building cannot be demolished because of its heritage listing, and its earthquake strengthening deadline is next year – meaning if the council paused the project it might have to take enforcement action against itself.

Owners of other earthquake prone buildings, like the Herbert Gardens apartments, are also scrambling to find solutions as the cost of construction projects climbs ahead of the strengthening deadline.

Dealing with these very difficult, very expensive projects was the downside of living in an earthquake-prone city, said Mayor Tory Whanau. She had asked staff whether mothballing the Town Hall was possible, but there were too many limits in terms of regulations and sunk costs.

“I’m frustrated … I don’t really want to be spending that amount of money on a building when we have all these other issues.”

The council was already strengthening the Te Matapihi Central Library and recently declared the Michael Fowler Centre and Opera House to be earthquake prone.

Throwing $147m at the Town Hall without much choice was a “tough pill to swallow”, Whanau said. She would like to see reform of heritage building protections, but that would be something to advocate for in the long-term.

“This is the cost of heritage,” said Tamatha Paul. There were “steep penalties” if the council didn’t meet the earthquake strengthening deadline, but she would rather see the money spent elsewhere.

The building was part of a bigger question for the city, said Iona Pannett, as hundreds of earthquake-prone buildings approached their strengthening deadlines in 2025.

“It makes me wonder how anyone is meant to strengthen their building with these increasing costs,” she said.

Pannett supported the building’s heritage listing and the restoration project, saying it was always the “greenest” option to restore what was there instead of building something new. The problem with expensive earthquake strengthening was not limited to heritage buildings.

Some of her colleagues were less keen on the heritage listing. The four Labour councillors wanted a closer examination of whether other options, such as delaying the project, were possible.

“We can’t break our own rules but are we really going to take ourselves to court?” wondered Ben McNulty. He wanted the council to press pause until the economic climate had improved.

The heritage listing had the council in a “headlock”, said Teri O’Neill, and meant they were asking residents to fund a “historic opulent building” they could not afford.

At a time when people were struggling to buy groceries it seemed inappropriate to spend so much on the Town Hall. “It’s going to be very hard to swallow a cost like that.”

The city could not afford the cost blowouts at a time when it needed to fix the pipes, said Nureddin Abdurahman.

Rebecca Matthews was dismayed at the cost increase, saying any benefit the city would get out of restoring the building was now out of all proportion to the cost. But she understood that the city needed to “role model” for other building owners in terms of strengthening and restoring buildings.

“I am interested in options for resources to go into the future needs of the city rather than preserving old monuments,” Matthews said.

Other councillors were worried about where the funding for the project would come from – though Whanau strongly denied claims about a financial crisis facing the council and said she had “full confidence” staff would be able to map out the budget for the work.

The options to raise funds for the project included selling or leasing the Civic Administration Building and the Municipal Office Buildings, also in Civic Square. The council was also looking at changing the scope of the strengthening project to save money.

“We’ve got to finish it,” said Diane Calvert, but that could mean scaling back some “gold-plated options”.

She wanted more in-depth financial information to be released before making the decision, so the council had the right “backdrop” for a significant amount of spending.

Tim Brown believed it would be impractical to pause the project now, with possible savings on the table from council officers to keep the budget closer to $289m than $329m.

The original project seemed to have been both over-ambitious and oblivious to risk, he said, but that was “spilt milk”.

The cost escalated mainly because of the condition of the ground under the Town Hall, said chief executive Barbara McKerrow. The hall was built on a pile of rubble, transported to the waterfront by horse and cart in 1903.

Conditions had proved to be much worse than expected. The basement of the Town Hall, where workers were drilling in piles, was near the water table. The construction site was frequently filling up with water and piles had to be drilled deep into the ground to be stable.

“Every time we delve into a new part of the building, we also discover things like unexpected asbestos contamination.”

No construction firm in the country had been willing to provide a fixed-price contract for the work because of the uncertainty about the building and underground conditions, McKerrow said.

She could not rule out further cost increases but said the council had done its best to identify every possible risk.

The council will vote on the budget increase on October 25.