Thursday 27 August 2020

For A Reverse Public Works Act

Earthquake strengthening is expensive enough on its own. Layering heritage restrictions on top of those costs can make it impossible. 

The Herald reports on the former Tramway Hotel in Mt Cook, Wellington. It has the lovely unreinforced brick masonry facades that look so very similar to the ones that fell over and killed people in Christchurch. It was supposed to have been strengthened by December 2013. It hasn't been yet. 


The building is basically useless. The owner would like to demolish it, but has to go through a consenting process for that. Council would like to take over the building temporarily, spend millions strengthening it, then hand the building and the bill back to its owner. The Herald says strengthening will cost more than $6 million, and the building would only be worth $2.6m after those works are done. 

If the heritage value of that building is really in excess of $3.4 million, which seems impossible to believe, then Council should be fronting that cost - not the owner. The heritage value clearly doesn't accrue to the owner. 

But Council can't afford to spend millions and millions on each of the hundreds of buildings it has decided are of substantial heritage value. Instead, it wants to load those costs onto the owners of piles of buildings of dubious heritage value. 

This is clearly a regulatory taking. Council is forcing these owners to provide a public amenity, at the owners' own cost. When we'd looked at this stuff back in 2016, nobody could explain to us the selection criteria for heritage listings. There certainly wasn't any cost-benefit assessment going on. The best explanation we were able to get was that some Council official likely drove around with a clip-board, ticking off buildings that looked to be nice a few decades ago. Back then, there wouldn't have been substantial cost associated with a listing. Now, a listing means it is impossible to undertake earthquake strengthening works, which are compulsory, without going through ridiculous layers of heritage consenting bureaucracy. 
In 2017 Parbhu sent WCC plans to build a bigger hotel but that was not progressed after what he considered to be unlikely support from heritage officers.

He told the Herald his prime goal was to preserve the building, but he needed to break even and that meant adding to the existing structure.

Parbhu was reluctant to comment any further while the demolition application was before council.

Another option he has considered is selling the building for land value, but that has also proved unsuccessful because of heritage restrictions.
Iona Pannett, on Wellington Council, heads up the Heritage portfolio:
But speaking generally, she said the council's approach was to work constructively with owners.

"Obviously owners do have property rights in this country, and we want good outcomes for the city as well, so our preference is not to spend ratepayers' money to come in with a big stick to take enforcement."

Pannett said there were more than 500 earthquake-prone buildings in the city and she acknowledged some owners were struggling to find an economic solution to pay for strengthening.

Safety, heritage, and owner's ability to pay was a difficult balance, she said.

"I don't think you can say that one thing takes precedence, we're trying to balance all those things in a reasonable manner but it's not easy."

The reasonable way to balance these things is for Council to set a heritage budget, to pay the owners of these buildings an annual easement reflecting the annual value the community presumably enjoys from the existence of the building as it is, and to remove all other encumbrances. If the owner decides to forgo the annual easement by demolishing the building, or to take a reduced easement because strengthening processes detracted from the heritage value, that provides the balance between safety, heritage, and the owner's ability to pay. We went through this in a report in 2016

Another option would be a Reverse Public Works Act. 

Under the Public Works Act, the Government can compel a property owner to sell property to the government because it is needed for some public purpose. 

Under a Reverse Public Works Act, the owner of a property encumbered with a heritage designation would be able to compel Council to purchase the property at its rateable value, or at the value of the underlying land, whichever is higher. Council could avoid that obligation only by de-listing the building. In that case, if the real value of the heritage amenity were high enough, Council would buy and strengthen the building in heritage-sensitive ways, and then either sell or lease out the building. If Council instead viewed the heritage value as being less than the cost of buying the thing and strengthening it, it would come to the decision it should have come to in the first place and de-listed the building so that it could be bowled or strengthened in more cost-effective ways. 

In the alternative, if Council insists on sticking with this process, the heritage people on council should be personally liable if the earthquake comes and fatalities inevitably result. The owner's trying to make the building safe by demolishing it; those on council standing in the way really should be culpable here. 

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