Monday, 3 November 2014

Coercing heritage

Wellington's scariest building remains Wellington's scariest building.

Last year, the Environment Court denied Mark Dunajtschik permission to tear down the Category 1 listed Harcourts Building. He was also under order either to make the building safe or tear it down. His planned strategy for making the building safe, which involved maintaining the look of the building but not the specific materials currently there, would have improved safety and would have been cost-effective; the heritage people said it wasn't good enough and that he consequently needed to use a repair strategy that did more to preserve specific heritage construction methods and materials. Dunajtschik said the proposed repair strategy was entirely unaffordable given the tenancies the building could attract even after strengthening.

The High Court batted it back to the Environment Court, saying that the Environment Court erred in placing too little weight on economic considerations. I, and others, read this as a bit of a rebuke to the Environment Court and that the Environment Court needed to pull its head in.

Instead, the Environment Court has affirmed its prior decision.
In a decision released this weekend, Environment Judge Jeff Smith said public safety and the risk to the neighbouring HSBC tower could be protected by measures other than demolition of the heritage building, such as strengthening.
"We have concluded that alternative [of repair] is reasonable, although we cannot compel that outcome on this appeal. However, neither will granting a demolition consent compel the owner to demolish the building."
The findings noted if local government considered a building a danger to public safety, it had powers to require that building to be repaired.
Smith's being a bit silly here as Dunajtschik very obviously wishes to bulldoze the building.

The Harcourts Building sits next to the HSBC Building, both are owned by Dunajtschik, and the Harcourts Building would do terrible damage to the HSBC Building in an earthquake: they'd thump together and knock out the HSBC Building's stairwell. 
As the neighbouring HSBC tower threatened by the un-strengthened Harcourts site was also owned by Dunajtschik, "the economic argument against strengthening the Harcourts building looks even more tenuous", the ruling said.
Because Dunajtschik risks losing tenants in the HSBC Building if he does not make safe the Harcourts Building, the Court is betting that Dunajtschik will comply with Council's order to make the building safe via a repair strategy that is uneconomical when considered only with respect to the Harcourts Building but perhaps economical if the total value at risk isn't just the Harcourts Building but rather both buildings. The Court is also betting that there won't be a big earthquake between now and this mess's being sorted out.

Council and the Court, by requiring that the building be made safe and follow gold-plated Herittage standards, can extract not the entire value of the Harcourts Building but also the entire value of adjacent affected properties that are under the same ownership.

The magnitude of potential regulatory takings in Heritage cases is non-trivial.


  1. Not about to waste much sympathy on him. He took a risk, its what business people do - and it has not worked for him. He has choices, there are willing buyers. But, more importantly, he knew what he was getting himself into. One of Wellington's most attractive main street buildings, in a City where so many attractive building where taken down by developers and motor-way builders. Am glad this one is staying.

  2. Didn't he offer the building for $1 to The Historic Places Trust as well as local and central govt and get no joy? Would love to see some more detail about these willing buyers.

  3. Did not hear of that offer, but Bob Jones made an offer at some point

  4. Historic Places Trust turned down an offer to take the building for $1 where the condition was that they remediate it to their own standards.

    Bob Jones offered $12m less the costs of strengthening work; Dunajtschik turned down that offer.

  5. The developer did integrate the HSBC tower with the Harcourts building when he built it, so he did create the problem of the two buildings crashing together in a quake. There is no simple hero and villain in this situation.

  6. Eric, do you have a link to the $1 offer?

  7. Thanks Eric, my nephew, because he was a country cop at a single man station, ended up in all sorts of local committees.

    One committee he was on was trying to do demolish a derelict heritage house because it was a fire hazard. They could not get permission.

    The derelict heritage building did catch fire and nearly burnt down the neighbouring pub. They still couldn't get permission to demolish the burnt out ruins.

  8. The greater oddity of it all, is when economists start talking about the value of life and risk-risk trade-offs, we are routinely denounced us heartless.

    In the Heritage area, the value of live and risk risk trade-offs carry no weight. Heritage aficionados don't know what you're talking about when you talk about people could die if heritage buildings are not demolished or altered.