AUCKLAND CITY COUNCIL

MEDIA RELEASE

13 September 2007

Potential costs of leaky building claims outlined

Auckland City Council estimates that it could face costs of between $200 million and $360 million to settle all leaky building claims.

A central estimate of $251 million, reported to today’s Finance and Corporate Business Committee, is based on:

• what council has spent settling claims to date
•
• legal advice on how much it will cost to settle outstanding claims
•
• independent actuarial advice on the likely cost of incurred but not yet reported claims. This assessment incorporates the council’s experience with previous claims as well as the relative performance of construction methods.
•
Committee chairperson Councillor Vern Walsh recognises there is no certainty in estimating future events based on historical data.

“Even though the council has made considerable provision to settle leaky building claims, based on the revised estimates it will need to reconsider this in next year’s annual planning process.

“We need to act in the best interests of both homeowners and ratepayers by having adequate finances put aside.”

The council remains concerned by the hardship faced by many homeowners who have to get their homes repaired, and continues to advocate to the Government on finding a fairer solution.

To that end, Auckland city Mayor Dick Hubbard has requested an urgent meeting with the Prime Minister. He will be proposing a joint, central-local government approach that will ensure people’s homes get fixed.

Ends

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