How did the Department of Conservation become the department of defunct buildings?

Sunday, 22 December 2024

The abandoned Chateau Tongariro was transferred to DOC simply because it sat on conservation land. It’s sucking up $2.1m a year of the conservation budget to maintain.

DOC is currently spending $2.4 million a year on abandoned buildings that have nothing to do with conservation. Nikki Macdonald examines how we got here, and how many more private buildings on public land could end up on DOC’s books if their owners walk away.

It was the gift no-one wanted. And it came with no exchange card.

In 2023, the cash-strapped Department of Conservation (DOC) was handed not one but two bum deals - the run-down and earthquake-prone Chateau Tongariro, and the MetService building atop Wellington’s Botanic Garden, which had warned the nation of gathering storms for almost 60 years.

Together, the two defunct buildings are costing DOC $2.4m a year just to maintain - a financial tempest no-one forecast, and that, documents say, is “having an ongoing and significant impact on DOC’s financial position”.

With the Government hitting pause on the Expression of Interest process to find a new hotel operator for the Chateau Tongariro, there’s no end in sight for the drain on DOC’s coffers of that icon (and its 26 associated buildings).

Documents show financial pressures are “a significant and pressing challenge” to DOC’s ability to look after New Zealand’s biodiversity.

But the bigger question is, how did this happen, and how many more buildings are out there on conservation land, that could become DOC’s problem if the owner or lease-holder walks away?

Why is DOC left to look after defunct buildings?

So how did DOC become saddled with two buildings that have nothing to do with conservation?

A December 2023 briefing headed “Abandoned buildings” notes simply that DOC had two long-term leases terminated that year, and their associated buildings “were returned to DOC to manage, including all operational and management costs”.

An Official Information Act request for any documents analysing the implications of the building transfers to DOC, or any documents discussing which agency should take responsibility for the defunct buildings, turned up a big fat blank.

One document was identified - a briefing on next steps for the Chateau - but was withheld because it’s still being considered by Conservation Minister Tama Potaka.

DOC says the department had an initial conversation with Land Information New Zealand (LINZ) in March 2023 about “critical risks and issues relating to the termination of the Chateau Tongariro lease”. “However, discussions did not progress further,” its statement says.

Potaka has repeatedly acknowledged that DOC is in financial trouble, and last month released proposals to make the department more financially sustainable, including charging $20 for access to some DOC land.

Under the heading “Increasing challenges for DOC”, Cabinet papers specifically cite the Kelburn weather building transfer as a drain on DOC resources.

“The department has also inherited a legacy of ageing assets, eg the MetService land and buildings in Wellington and a complex array of historical contacts with third parties set up under different legislative regimes. Together, these factors present a significant and pressing challenge to DOC’s ability to deliver its responsibilities for biodiversity, recreation and heritage.”

Asked why DOC is left to look after buildings that have nothing to do with conservation, and whether that’s appropriate given its financial struggles, Potaka’s explanation is simply that the buildings are on DOC land.

Ruapehu Mayor hopes petition plan can help save iconic hotel.

“As such, in absence of ongoing lease arrangements, the buildings were transferred to DOC.

“While the added cost that comes with managing some assets is not always ideal, it is a function of our system and someone has to look after the assets until decisions about their long-term future are made.”

Environmental Defence Society policy director, Raewyn Peart, also questions why DOC is left to clean up messes that have nothing to do with conservation.

“Given the funding difficulties DOC has, and its prime purpose - which is to manage conservation land for biodiversity - it seems unfortunate if DOC’s being expected to divert that money to looking after old buildings.”

She believes LINZ would be better placed, as it looks after Crown land and assets.

Peart thinks DOC should also be getting better value from the concession fees it gets for activities on its land, which currently make up just 3% of its revenue.

Built in 1964, the former MetService building overlooking Wellington’s Botanic Garden is one of two buildings that were abandoned in 2023 to landowner DOC.

And there should also be better legal protections in lease or concession agreements, Peart says.

“There should be some surety or bond, to make sure that DOC is not left with the expense.”

What’s the history?

Both the Chateau Tongariro and the MetService building have sat on conservation land for decades.

Opened in 1929, the grand hotel at the foot of Mt Ruapehu was run by the Government’s National Park Board and then the Tourist Hotel Corporation until 1991, when the buildings were sold to KAH New Zealand hotel company for $4.5m. But DOC retained the land, and leased it to KAH.

That long-term lease expired in 2020 and the company operated on a monthly lease until January 2023, when it announced it was closing the Heritage category 1 building.

Documents show a seismic report commissioned by KAH found the hotel was earthquake-prone, with some parts of the structure rating just 15% of the new building standard.

That, combined with a general tourism downtown and uncertainty about the future of the skifields, prompted the company to walk away.

KAH’s lease required them to return the buildings in good condition. But documents say the buildings were in “poor condition overall” and needed costly work even to prevent them leaking.

It’s a similar story for the MetService building.

Built in 1964, for £261,958, the four-storey concrete weather hub overlooks the city from its Kelburn perch, on a weird scrap of DOC land adjoining the botanic garden.

The old Ōtaki Children's Health Camp is one of 1600 privately-managed assets on conservation land.

MetService’s long-term lease was not due to expire until June 2027, but it also walked away, after getting a seismic assessment.

The forecaster initially tendered for an earthquake strengthening refit, in 2021, but that was put on hold after “it was evident the project was no longer feasible with the proposed design”.

And in January 2022, MetService decided to move permanently, abandoning almost six decades of weather history, and its old building on DOC land.

How many more Chateaus and MetService buildings are out there?

DOC deputy director-general of policy and regulatory services, Ruth Isaac, says more than 1600 assets on public conservation land are owned and managed by third parties.

While the process to find a new hotel operator for Chateau Tongariro has been paused, Conservation Minister Tama Potaka says all options remain on the table for its future.

They include tracks, churches, huts, cemeteries, wharves, ski-lifts and lodges.

Isaac says most contracts - particularly more recent ones - include a requirement for those third parties to remove infrastructure and fix up the land when the lease ends.

DOC is currently analysing the range of leases it holds “with a view to determining potential risks for the Crown associated with these and what changes may be necessary to deal with these scenarios”.

The department has been introducing bonds and other measures to deal with defunct infrastructure, and the Government’s discussion document proposes changes to the Conservation Act that would help smooth transitions between operators when leases end, Isaac says.

Where to now for the grand dame?

In September, DOC recommended that the Expressions of Interest (EOI) process to find a new hotel operator for the Chateau be paused, because of the “scale of the investment required”.

In emails, DOC boss Penny Nelson said “it would cost substantial millions to even get the Chateau ready for an EOI”.

Documents show the Government would have to fund repairs and strengthening, and refurbishment of staff and hotel facilities before the building would be taken on by an investor. And either a short-term or long-term lease would still leave the Government in the red.

However, Ruapehu mayor Weston Kirton, who organised a 12,990-signature petition to save the Chateau, remains hopeful it will rise again to its 2017 heyday, when it employed 73 people and its 106 rooms made up 30% of the area’s hotel rooms.

He has an interested investor, but they would need a 100-year lease to justify the price tag of making it useable, which is likely to be in the hundreds of millions. (The Conservation Act only allows 30 years, plus another 30 in exceptional circumstances.)

“First, you’ve got to have someone who’s prepared to spend that. And that’s not the taxpayer or ratepayer, it’s a private investor. Then you’ve got to talk on their terms, which is not 30 years. And that’s the conflict we’ve got at the moment.”

To complicate matters further, local iwi have indicated they’re not keen on anything longer than 5-10 years while treaty settlement processes continue.

Potaka says no decisions have been made, including on any possible government contribution, and direction on next steps will be sought from Cabinet “as soon as practicable”.

“I am still considering options regarding the future of the Chateau Tongariro, and all options remain on the table.”

But with every year of uncertainty for the Chateau, another $2.1m will disappear from the conservation budget.

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