$87m leaky homes threat to rates
26 May 10Wellington City Council's bill to fix leaky homes has blown out to $87 million - more than three times previous estimates.
And ratepayers, including those still living in rotting homes, may have to pay for it with a rise in their rates.
The city council will vote tonight on whether to support the Government's rescue package - in which the Government and council will each meet 25 per cent of repair costs. There are an estimated 2115 leaky Wellington homes eligible for the scheme.
Deputy Mayor Ian McKinnon - chairing tonight's meeting because Mayor Kerry Prendergast has a potential conflict of interest with a leaky homes investigation into her apartment - said funding would come from increasing rates or borrowing funds.
The council's liability for leaky homes was previously estimated at $26m.
It has so far spent $9.3 million on leaky homes payouts, $2.8m of which was legal costs. Mr McKinnon expected at least 70 per cent of Wellington leaky-home owners would opt into the scheme.
That would amount to a bill of $61m, although that could rise steeply if the other owners successfully sued the council.
"If such people are successful, it would obviously cost the council considerably more."
If all eligible homeowners opted into the scheme, the cost to the council would be $87m. The council had $7.5m set aside in a leaky homes contingency fund.
Building litigation specialist Dan Parker believed more than 30 per cent of owners of leaky homes would want to sue the council.
"I would be very surprised if it was anything like [70 per cent] that would opt for that."
Under the scheme, owners would have to foot half the repair bill themselves, but Mr Parker said he had represented homeowners who had recovered full costs.
Councillor Celia Wade-Brown said the deal was as good as local councils would get.
"This is a way of limiting [council] liability and most importantly ensuring any public money goes to fix the houses, not paying lawyers' bills."
Rates may have to rise several per cent, she said.
Councillor Iona Pannett said it would be difficult to borrow money knowing future ratepayers had to pay it back. "Why should future generations be burdened?"
It was a "devastating call" to potentially deprive communities of new swimming pools or sports fields.
At Kapiti District Council, a spokesman said it had received 12 claims for leaky homes, with a potential liability of $450,000.
Another four Kapiti claims were before the Weathertight Homes Tribunal.
Upper Hutt City Council had received five claims, with formal proceedings issued in two. Its liability was not yet worked out.
Masterton District Council has dealt with one claim, at a cost of $150,000.
Hutt City Council has received eight claims, with four resolved.
Source: The Dominion Post
