Quake compliance costs burying apartment owners

Saturday, 20 January 2024

Earthquake prone building reform campaigner Hazel Kirkham wants the government's EPB laws repealed.

How much is a life worth? $1.86 billion dollars if you own an earthquake prone apartment, apparently.

The dream of hassle-free inner city living for many is crumbling under the weight of “bad legislation” as thousands of occupants of apartments are being financially buried by escalating earthquake-prone building compliance costs.

Former Wellington apartment owner Hazel Kirkham has put a case to key Government ministers arguing that the earthquake prone building provisions in the 2004 Building Act should be repealed.

She had calculated, based on the Government’s cost benefit analysis, that the safety benefits of strengthening apartments far-outweighed the personal costs to owners.

In her presentation to minister for regulation David Seymour and building and construction minister Chris Penk she said “the way the system treats these owners is unreasonable, disproportionate, unfair and inequitable”.

Building and construction minister Chris Penk is open to bringing forward a scheduled review of the legislation.

“They face life-changing losses or debts in trying to do the impossible for no good reason. The costs of risk mitigation are not proportionate to the level of risk posed by EPBs (earthquake prone buildings).”

Kirkham has spent several years dealing with her own earthquake prone apartment situation and working with councils and advocacy groups to understand the law and its obligations.

When the building she and her partner had owned an apartment in was assessed as earthquake-prone they subsequently found their personal compliance costs would be “well over $1 million”.

“To the general public the earthquake-prone building legislation looks like a good thing, but beneath the rhetoric it is nothing of the sort.

“I started to look into the background to the earthquake-prone buildings legislation and I tried to find out what risk there really was of so-called earthquake-prone buildings collapsing and killing people in the event of an earthquake.”

Kirkham said research that she and apartment owner advocacy group Inner City Wellington had done showed that the legislation was “riddled with flaws”.

“The greatest of which is that if ‘earthquake-prone’ buildings complied with the legislation, their owners would collectively have paid out $1.85 billion for each of the 29 lives MBIE estimates the legislation will save before the end of the century.“

Based on Government data, Kirkham estimated there were around 7700 apartments across New Zealand in buildings seismically assessed as below 34% of the new building standard (NBS), making them ‘earthquake prone’.

Kirkham said government ministries had known since 2012 that the earthquake-prone buildings policy was “indefensible, and that councils and their ratepayers, large companies, small businesses, charities, and apartment owners would be liable for costs and risks out of all proportion to any benefits”.

“But the Ministry and successive ministers for building and construction have persisted in dishonestly claiming that the legislation ‘balances life safety and cost’ and in stonewalling anyone who has tried to point out that this is not true.”

While initial government estimates speculated that it might cost around $30,000 to strengthen the average apartment, surveys of apartment owners by Inner City Wellington in 2020 found the reality was closer to $400,000, with $500,000 the current estimate.

The process of trying to comply with the law had been a nightmare for owners and could lead many to financial ruin, Kirkham said.

“Thousands of private building owners, like apartment owners, are deprived of their property rights and have their lives damaged beyond repair due to the financial and non-financial impacts of the legislation.”

Herbert Gardens apartment building on The Terrace is one of many Wellington buildings caught up in the EPB legislation.

Kirkham and her fellow apartment owners were eventually able to find a buyer for the whole building, who now planned to demolish it and develop housing on the site.

She and her partner lost more than half the value of their apartment and had now opted to move overseas for cheaper housing.

The Post recently reported cases where an EPB heritage apartment building in Egmont St that had already been earthquake strengthened once estimated it would cost around $500,000 per apartment. Another case on The Terrace estimated its remediation costs at $400,000 per apartment.

Kirkham said the consequences of the 2004 Building Act laws was that “regardless of cost or consequences”, New Zealanders would need to “retro-engineer or demolish up to 20,000 buildings to save three of them from collapse“.

“Wellington is facing a tsunami of non-compliance as deadlines expire and the council will soon need to make decisions about prosecuting building owners, excluding them from their buildings, strengthening or demolishing their buildings, and taking charges over their properties if they cannot pay for the work.”

Penk told The Post in November he would be open to bringing forward scheduled review of the legislation.

David Seymour’s office said the minister for regulation would not comment at this stage.

Suzannah Toulmin, MBIE’s acting manager policy, building system and performance, said cost benefit analysis (CBA)was a useful tool, but it had limitations and was more suited to some types of intervention than others.

“When an intervention aims to address a risk that is of low likelihood at any given time but could have disastrous consequences, the benefits listed in the CBA can struggle to fully convey the scale of damage, injury and loss of life that the system aims to prevent when an event occurs.”

Toulmin said MBIE had heard from building owners and councils who were concerned about the ability to meet remediation deadlines.

“The remediation process can be complex and costly, and there is a range of barriers individual building owners may face; it’s not an easy thing.”

Geraldine Murphy of advocacy group Inner City Wellington said their worked showed that actual EPB work was much higher than early Government estimates, and they have called on Minister Penk to review the legislation.

Toulmin said they were working with the new minister on options that included bringing the earthquake prone building system review forward, and were “exploring a range of settings that impact how we manage seismic risk to buildings in Aotearoa New Zealand”.

“We anticipate that this work will include opportunities to hear and incorporate a range of voices to ensure the system is workable and reflects society’s expectations for the performance of buildings in an earthquake.”

Inner City Wellington and some Wellington City councillors have been lobbying for an independent review of the earthquake-prone buildings (EPB) policy, legislation, and implementation system since 2017.

Geraldine Murphy of Inner City Wellington had also written to Penk recently and said Kirkham had done “great work” digging out the cost benefits of EPB strengthening.

“The conclusion of the cost benefit analysis is that the cost substantively outweigh the benefits, but that was ignored.”

Murphy said the Government failed to investigate the effect of its legislation on owners.

“It’s had a huge impact on so many people and so many lives, which has totally not been factored in. Something has to be done. We have to look at it again. We cannot continue to do what we’re doing.”