13 February 2017
Report no: HCC2017/1/82
Funding Proposal relating to the Unreinforced Masonry Buildings Legislation
Purpose of Report
1. To seek Council approval to enter into the draft funding proposal to allocate funds as a part-contribution to the Government’s initiative to improve the seismic performance of unreinforced masonry building parapets and facades.
It is recommended that Council:
(i) receives the information contained in this report;
(ii) notes that the Government announced its initiative in providing a $3million funding package for the mandatory strengthening within 12 months of the street facing unreinforced masonry (URM) buildings on key routes and that the initiative includes buildings in Lower Hutt;
(iii) notes that this funding package records the joint initiative with Central Government and Council paying up to half the cost of securing the works to a maximum of $15,000 for a URM façade and/or $10,000 for a URM parapet;
(iv) notes that if the Council does not allocate funding, the mandatory strengthening requirement will remain but no public funding will be available;
(v) agrees that, consistent with the funding proposal, it will allocate its portion to the building fund on the basis that the Government and Council contribution will be on a 2:1 ratio for the 2017/18 year, currently estimated to be at least $375,000;
(vi) agrees to enter into the funding proposal with the Central Government to give effect to paragraph (v) above;
(vii) authorises officers to do all things necessary to finalise the funding proposal with the Ministry of Building, Innovation and Employment; and
(viii) authorises the Chief Executive Officer to execute the funding proposal once finalised.
2. On 25 January 2017, the Government announced a $3 million funding package for mandatory strengthening of the street facing unreinforced masonry (URM) of buildings on key routes with high foot or vehicular traffic in Wellington, Lower Hutt, Hurunui and Marlborough. The Government’s contribution of up to $3million is conditional on Council contribution.
3. The intention is to increase public safety on these key routes by reducing the vulnerability of URM parapets and facades in the event of a future earthquake.
4. The Ministry of Building, Innovation and Employment (MBIW) has provided Council with a draft funding proposal which sets out Central Government and Council contributions to the initiative. This is attached as Appendix 1.
5. The combined Government and Council funding will pay for up to half the cost of securing work to a maximum of $15,000 for a URM façade, and/or $10,000 for a URM parapet. Under the funding proposal, the Government and the Council’s contribution are on a 2:1 ratio.
6. In other words, the costs of the works will be borne by the building owner funding half, with the balance split between the Government and the Council on a 2:1 ratio. For a building owner receiving the maximum amount of $15,000 from the URM buildings fund for a façade, a $10,000 contribution will come from Government and a $5,000 contribution from the Council.
7. The Government funding is contingent on the Council also allocating funding. If the Council decides not to allocate funding, the mandatory strengthening requirement remains but no public funding will be available to the building owner.
8. Initial analysis shows there are about 15-80 affected buildings citywide. Of these, 50 are heritage-listed or contributing to listed heritage areas.
9. The final number of affected URM buildings will depend on whether they lie on a key route with high foot or vehicular traffic or on an emergency route. Council officers have provided information to the Government on the streets that should be included with the Government having a final say on which streets are to be included in the legislation. Officers are currently compiling the list of potentially affected buildings but this list will not be able to be confirmed until the Government announces the streets to be included for Lower Hutt. There is a relatively short timeframe to confirm the affected buildings before legislation ‘goes live’.
10. This initiative will be proposed as an Order in Council made under Hurunui/Kaikoura Earthquakes Recovery Act 2016.
11. The proposed Order in Council is expected to include the list of the approved streets, types of buildings needing to be secured and the timeframe for that work. The timeframe is expected to be one year from the date the building owner is notified by the Council.
12. MBIE is leading the development of the technical matters underpinning the initiative as well as the process for implementing the initiative. Council officers have been asked for their views on these matters.
13. The proposed Order in Council will be considered by the independent Hurunui/Kaikōura Earthquakes Recovery Review Panel before taking effect.
14. If the Order in Council is made, it is likely to come into force in mid to late February 2017. After the Order in Council takes effect, Councils will issue notices to certain building owners under section 124 of the Building Act who will then have 12 months to complete the work.
15. Ministry for Business, Innovation and Employment guidance on securing facades and parapets will be available from late February 2017. Council officers plan to send these out to affected building owners together with the notice to secure their facades/parapets.
16. Work covered by the Order in Council will be exempt from the requirement to obtain Building Consents and Resource Consents. The proposal does not allow the partial or full demolition of buildings.
17. The initiative is focused on securing URM parapets and facades rather than strengthening. However owners of URM buildings subject to this requirement may opt to strengthen rather than secure these elements. They will still be eligible for funding support for work fitting the initiative criteria as long as the work is completed within the timeframe required to access the fund. Council officers will be working closely with owners to encourage them to take a long term view with a permanent strengthening solution where possible rather than a temporary securing solution.
Risks and issues future consideration
18. The initiative exempts qualifying work from obtaining a Resource Consent, the normal regulatory mechanism for protecting heritage from inappropriate development. Without this process in place there is a risk of work being carried out which causes a loss of heritage values. However, MBIE has sought to minimize this risk by producing technical guidance documents which includes specific heritage building methodologies. Further, as part of Councils role in implementing the intiative, Council officers will provide targeted guidance as required.
19. If the building fund is oversubscribed, the Government may decide to allocate additional funding, for example if demand exceeded the current funding available. Based on the current co-funding criteria the Council would need to consider approving additional funding.
20. Under the draft funding proposal, MBIE is managing the likelihood of oversubscription by selecting streets on “key routes”. Any further contributions from the Government are conditional on the approval of additonal appropriation. MBIE will monitor the number of facades and parapets required and will provide early warning to Councils if there is a prospect of additonal funding required.
21. The key routes are those which have these features:
a. High pedestrian routes/areas, i.e. areas where people are concentrated for social activities (cafes, theatres, malls etc), and are used for public transport (public transport hubs or stops); or are high foot traffic routes;
b. High vehicular traffic routes, i.e. arterial routes, relevant sections of state highways, or key local streets; heavy use bus stops; busy intersections where buses may be stationary; or areas of high concentration of vehicles during peak hours;
c. Emergency routes, i.e. routes likely to be used by emergency services.
Other EQ related developments
22. This initiative addresses one aspect of strengthening required for earthquake-prone buildings. Government legislation passed in 2016 is due to come into force this year introducing a risk based framework to enforce national time frames and procedures for addressing earthquake-prone buildings.
- This will shorten strengthening timeframes for priority buildings. The majority of earthquake-prone buildings will need to have their strengthening completed within the next 10 years.
- Officers note that the Council’s Built Heritage Incentive Fund (BHIF) exists to assist building owners with strengthening heritage building (see information below).
23. Officers have met with the Jackson Street Programme Co-ordinator to discuss the Government’s initiative.
24. Officers are also planning to organise meetings with interested building owners with representatives from MBIE, Heritage NZ and other relevant agencies in Jackson Street and other areas.
25. Since the Government’s announcement, the Minister and MBIE have taken the lead in communicating the initiative to the public. This is because until streets are confirmed Council officers are not going to speculate on the streets and buildings that may be affected. This would be unfair to the Government process and potentially affected building owners. Officers have been liaising with MBIE staff on communication issues and the Council has supported the Government initiative publically by attending the initial press conference.
26. Council officers will commence sending out s124 notices to affected building owners from the time the legislation is passed. This will include a guideline document prepared by MBIE to help building owners understand the process. Prior to sending out the letters, officers also intend to call affected building owners to give them a heads up.
27. Council officers will work with the Minister’s office and MBIE to ensure as little time as possible between the Government’s announcement of approved streets and letters being sent to affected building owners. Communicating with affected building owners and ensuring they have relevant and sufficient information will be a priority.
28. Information to answer potential questions will be available on the Council website and the customer contact centre and the building team will be prepped accordingly so that phone calls can be answered effectively.
29. Media enquiries about the Government’s initiative will be answered by MBIE and the Minister’s Office. Media enquiries about affected buildings in Lower Hutt and Council’s support for the Government’s initiative will be answered by the relevant officers and the Chief Executive. It is likely that the Mayor may also be asked for comment and he will work with Council’s communications team to respond.
30. Other relevant aspects of the draft funding agreement include allocation of responsibilities between MBIE and the Council. Note that MBIE will administer the fund and will liaise with building owners once the owners submit their URM fund application. The Council will be the main point of contact once we send the notice to the building owners to secure their buildings and until the section 124 notice is removed from the building.
31. Payment will be made to building owners after the strengthening has occurred and been signed-off.
32. Given the current estimates of 15-80 affected buildings, officers have made a provision of $375,000 as Council’s contribution to the fund in the 2017/18 draft budget. Note that this amount will change as the number of affected buildings is confirmed. Officers are still working to confirm the numbers.
33. Most of the work is expected to occur in the 2017/18 financial year.
Other funding options for affected building owners
34. Note that the Council’s Build Heritage Incentive Fund (BHIF) of $50,000 for permanent comprehensive strengthening solutions remains unaffected by the URM initiative.
35. Building owners can apply to use the BHIF for the securing work under the URM initiative provided they meet the BHIF criteria.
36. Council’s BHIF is designed to help owners preserve, restore and protect the heritage values of their buildings or structures. The fund is intended to be used for professional services (e.g. structural strengthening reports, maintenance reports, conservation plans, archeological site assessments, conservation work specifications or supervision work and technical advice), or emergency physical work. It only applies to buildings registered by the Historic Places Trust or that contribute to a heritage area or are listed in the District Plan. The qualifying buildings must have high public access and/or visibility from public places.
Other cost impacts
37. Council officers will need to consider how costs involved in implementing the initiative are managed, for example the costs of Traffic Management Plans, and the issuing and signing-off of notices. However these are expected to be fairly minor and can be covered under existing budgets.
38. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it is a central government initiative aimed at addressing public safety issues in the event of an earthquake. It does this in a way that is cost-effective because it incentivizes and simplifies the process for building owners to fix URM facades and parapets.
Draft Proposal URM Buildings Fund
Author: Joycelyn Raffills
General Manager, Governance and Regulatory
Reviewed By: Helen Oram
Divisional Manager Environmental Consents
Reviewed By: Brent Kibblewhite
Chief Financial Officer
Approved By: Tony Stallinger