Christchurch, 16 September 2016

Empowered Christchurch Inc.

Collusion between Christchurch City Council, the EQC and insurers?

Empowered Christchurch recently wrote to the Office of the Ombudsman, calling for an investigation into the practices of the Christchurch City Council since the earthquakes. An excerpt from the letter is included below.

According to information obtained from an insurance company, the required floor level for a high hazard area (South Brighton) was finally raised four weeks ago to the level required by the Resource Management Act (12.3 m above the city datum), which should also be the level required for a flood management area and a tidally influenced area. Residents have not been informed of this change, which is long overdue. Empowered Christchurch has been asking why the higher level has not been applied for the last two years. Information on floor levels on the Council website remains greyed out for most of the city and almost no houses in the eastern suburbs of the city have been rebuilt to this level. In fact, information from OIA documents shows that the Council actually lowered finished floor levels in certain areas following the earthquakes, despite the fact that there had been significant land settlement. At the time of writing, there has been no response from the Council to a request for information on the subject of the increased floor level.

Council has delayed updating regulations that would have ensured new houses were built at adequate heights to protect against flooding. This procrastination has now lasted for five and a half years. Council documents also reveal that the tidally influenced area of the city extends from the estuary as far as Fitzgerald Avenue and that these are the properties that will be at most risk in the future. As with floor levels, the tidally influenced area has also not been updated or notified. This delay has served the city council, the EQC and private insurers very well, but has cost homeowners dearly since most people’s insurance claims have now been settled. Last month, Tim Grafton of ICNZ, stated that insurers have now "fully settled" 93% of all the Canterbury earthquake residential properties.

Only this year, the Council admitted to a flood modelling "error" (the insertion of a fictitious tidal stop bank on a flood map) that led to homes in South Brighton being built with incorrect floor levels.

This matter was brought to Council’s attention in April 2016, but it has still not provided any information on how the affected homeowners are to be compensated.

Of more concern is evidence from documents obtained under the Official Information Act about a working group set up in 2012 called the Canterbury Regulatory and Consenting Working Party.

Much of the correspondence between the Christchurch City Council, Tonkin & Taylor and the EQC at the end of 2012 appears to centre on ways to avoid liability and expense. Resource consents for earthworks, for example, could potentially have cost the EQC around $100 million in application fees. It therefore requested, and obtained, a global consent for land remediation. Yet more recently, one of the EQC’s explanations for making diminution of value (DoV) payments rather than carrying out land remediation has been that it would be impossible to obtain a consent from the Council for the work. At a community meeting in July 2016, Mr Keith Land, Head of Canterbury Land Settlement, stated "you cannot get consentable repair[sic] to raise land within the FMA (flood management area)". He went on to say there was "no practical consentable repair technique for ILV". Bizarrely, this followed a description of the technique of horizontal soil mixing. A further three methods are described on the EQC website (http://www.eqc.govt.nz/sites/public_files/documents/EQClandtrials- infographic.pdf).

The question of liability was clearly also a matter of concern for the Christchurch City Council. A Tonkin & Taylor email in January 2013, following the working group’s meeting on 12 December 2012 states that: "In addition, the fact that CCC have a assigned an external planning consultant to process the global consent application illustrates that they are trying to distance themselves from the matter as much as possible.”

The OIA correspondence between the various entities suggests that the primary considerations were cost and liability, rather than for the protection of people and property, in particular against flooding.

For example, an email was sent in May 2013 to Hugh Cowan, EQC Head of Research, with the heading "Draft information for Min CER on flood management issue" with the following queries:

• "EQC is suggesting that they (the South Brighton properties) can be patched up without needing to be raised to conform with variation 48 rebuilt levels. Is there any evidence of this?”
• "The council is allowing repairs on an unconsented basis – which looks to get it out of future liability. Is there any evidence of this?”

Furthermore, a paper was submitted to cabinet in February 2014 to "explore opportunities to apply some EQC land settlements to support offsite works to mitigate the future flooding risk in parts of Christchurch. These works have the potential do not only resolve the EQC liability but to further accelerate the residential housing rebuilt and protect the future insurability of some areas.”

EQC and Council were to work together towards achieving these aims, but the proposals were never implemented, and two years later, a number of areas face flooding and erosion hazards without any remediation having taken place, and with a question mark over long-term residential insurability.

The Council introduced the coastal flooding and erosion zones in August of the following year yet took few measures to protect areas against flooding (temporary stop banks from 2011 are still in place and have not been raised), and with the hazards now on homeowners’ LIMs, it avoids liability for the impacts from the hazards.

To our knowledge, no information about the working party’s activities has been made public. We hope that the Office of the Ombudsman will conduct a thorough investigation into these matters and bring clarity to the many contradictory practices and ratepayer-hostile policies the Christchurch City Council has been implementing. In view of the implications for ratepayers arising from the above-mentioned policies, we believe there are strong grounds for an external investigation into the City Council’s activities.

Excerpt from letter to the Office of the Ombudsman:

……The Christchurch Mayor stated in 2014 that: "It was the lack of transparency and accountability that meant the council was not trusted by communities and strategic partners alike.”

Recently obtained Official Information Act documents from the government reveal that a “Canterbury Regulatory and Consenting Working Party” was set up in early 2012 following the last of the major earthquakes. There is no internet footprint for this body.

To judge from the unredacted sections of these documents, its objective seems to have been to achieve a reduction in liability for insurers and EQC through the use of exemptions, waivers for resource consent applications, and the transfer of flooding risks to residents through the issue of hazard notices (Section 72 and 74 Building Act). Existing use rights is a particularly frequent subject of the correspondence. The following entities participated in the working group: CERA, IAG, DBH EAG, Tower, Arrow, Hawkins, EQC, Lumleys, NZIA, ICNZ, Southern Response (AMI), DBH, Tonkin & Taylor, Christchurch City Council, Selwyn District Council, and the Ministry for the Environment (now MBIE).

As an example of the costs involved, Tonkin & Taylor estimated that EQC would have to pay at least $100 million for 20,000 resource consents, each of $5,000.

In April 2012, Christchurch City Council confirmed to Tonkin & Taylor that reinstatement of land to levels that existed prior to the earthquakes in September and February would have existing use rights and therefore not require resource consent. However, EQC has recently stated that compensation for increased liquefaction vulnerability (ILV) would take the form of cash payments because, in many cases, Council would not issue a resource consent. This was given as one of the reasons for not reinstating land to pre-earthquake levels, which was EQC’s stated position up until 2015.

One option suggested by the Working Group to circumvent such problems was an Order in Council, amending the provisions for the relevant city and district plans, and making land remediation on residential sites a permitted activity (i.e. one that did not require a resource consent).

Extension to the period allowed for existing use rights

On the question of existing use rights, one document states that "it is Council’s intention to be as flexible and pragmatic as it can be when considering whether existing use rights exist". This approach was also taken for extensions to the period during which existing use rights apply. Pursuant to the Resource Management Act, existing use rights should lapse after the activity has been discontinued for a continuous period of more than 12 months.

(Tonkin & Taylor memo following a meeting of the Working Group on 17 April 2012)

"In relation to reinstating land levels, it is anticipated that Council would be able to extend the 12-month period in which existing use rights cease to exist as the building would not create significant tension with the City Plan. No limits to an extension are specified in the Act but to give a guide, February 2014 might be an appropriate extension to the duration of existing use rights for this particular matter.”

"Council will attempt to establish existing use rights from its own records and only request the applicant1 to provide information where necessary. Existing use rights would not expire where it can be demonstrated that progress has continued to be made with respect to insurance settlement, building consent application an engagement of builders. They will only expire when external obstacles have been removed and a further 12 months later no construction has commenced.” We are now 5½ years since the first earthquake insurance claims were lodged, and with no progress with respect to insurance settlement, Christchurch City Council has continued to maintain that existing use rights apply in certain cases.)"

At a meeting with the Mayor on 6 April 2016, Empowered Christchurch requested a legal opinion on existing use rights from the Council’s lawyers. We followed this up several times and then finally made a request under the Official Information Act. On 10 August 2016, we also sent Council a list of 24 houses that we believe have been rebuilt well below the minimum Building Act height of 11.8 metres above the Christchurch City Datum. We still await any response on the matter2. On the same date, a reply was received from the Council on the OIA request, stating

"After careful consideration, we are refusing your request, under the following sections of the LGOIMA:

17(g) – the information requested is not held by the local authority".

We can only speculate on the reasons why Council is not prepared to issue a legal opinion on EURs, but we believe they have been incorrectly applied in many cases.

Coastal inundation and coastal erosion zones

In August 2015, Christchurch City Council introduced coastal inundation and coastal erosion zones. Modelling for the zone 1 areas for each of the two hazards assumes that substantial areas of the city’s eastern suburbs will be affected by flooding and erosion within the next 50 years. Yet at the same time, Council was issuing exemptions and indiscriminately allowing existing use rights for houses to be built with extremely low floor levels, thereby exacerbating the risks it was already aware of.

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1 In most cases this means the insurer/PMO
2 A response has since been received.

About Empowered Christchurch Incorporated: Empowered Christchurch is an apolitical community group set up to support Canterbury earthquake insurance claimants, engage on their behalf with the relevant authorities and entities, and help them achieve fair and just settlements.

www.empoweredchristchurch.co.nz

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