• Video: Hastings District Council holds off making a decision on category three demolition costs, wants more information

Video: Hastings District Council holds off making a decision on category three demolition costs, wants more information

The Hastings District Council has today held off making a decision on a proposal that would see Cyclone Gabrielle Category Three property owners liable for some of the costs for demolishing their homes.

At a full council meeting this afternoon, the council decided unanimously that it needed more information to make a decision.

The proposal was contained in a report presented to the Council today. The Napier City Council will also hear a similar proposal at a later council meeting.

In a joint statement this week, the Hastings District Council and the Napier City Council said they were considering a change to the Cyclone Gabrielle Category 3 Buy-out Policy to “fix an anomaly”.

The report prepared for Hastings District Council says that in total, demolition costs are likely to exceed $6 million.

After hearing a presentation from Dan Gale, a spokesperson for Category Three property owners, and after robust debate on the subject, the council decided to “leave a decision on the table”.

Mayor Sandra Hazlehurst proposed the motion which was seconded by Councillor Simon Nixon.

Hazlehurst said that councillors were not in a position to make a decision.

“We need some more information. We've had some facts shared to us. We've had some queries and questions that we need to fully understand and I'm going to leave this item on the table.”

“Questions that have been raised that the officers haven't been able to answer. We need to do some more work on this. We're not going to adopt a policy on the hop and on the fly.”

Hazlehurst said balancing the needs of all was “undoubtedly very difficult and very emotional, and, in fairness to both our most severely impacted residents and our ratepayers who are funding this policy, we will not make this decision without all of the information we need.

“I am acutely aware of the distress our people who have lost their homes are under. But, equally, as raised by councillors in our meeting, I’m also acutely aware that in this cost-of-living crisis we have families and elderly who are struggling to put food on the table. We must take great care to be fair to all parties.”

Council officers had earlier attempted to answer questions from councillors about the proposal.

Debate raged with some councillors saying that the situation of the affected property owners needed to be weighed against the plight of Hastings ratepayers who were struggling through the cost of living crisis.

The previous Government decided not to contribute to demolition costs as part of its Cost Share Agreement with Council, so demolition and other residential improvements falls on the Councils. The new Government has not indicated that it will change this decision. However, Hazlehurst said that Hawke’s Bay Regional leaders were meeting with the Minister of Finance and Deputy National Party Leader, Nicola Willis, later this month and would ask her once again if the Government  could pick up some of the costs.

Earlier Gale, the owner of the cyclone-damage Eskdale Holiday Park, said that Category Three property owners are disgusted at a “flawed and unfair” policy that could see them liable for some of the cost for demolishing their homes.

He said that the community has been blindsided, “having been told throughout the whole process that these demolitions costs would be covered by council”.

“Ultimately, our communities want the contribution to be left out of the policy and are furious at the suggestion that we are benefiting by receiving a full payout.”

“There are no winners in this situation. People are hanging on by a thread. People are suffering with depression, marriage breakups, serious health issues, and suicide due to the stress of the cyclone and this drawn-out process. This could very well tip some over the edge. Is a $2 million saving really worth that?”

Gale said he wanted to acknowledge all the cyclone-affected families and said the communities were disgusted at the “timing of this flawed and unfair policy right before the one-year anniversary, with already heightened emotions”.

This afternoon the Council released examples for typical groups should the proposed change be approved by Council:       

Fully insured

Council and property owner agree a valuation.

Property owner is fully insured (likely including a demolition component) with the proceeds exceeding the independent market valuation.

Under the policy, the homeowner chooses the option that allows them to keep the insurance payout and receive a payment for the land (under 2ha) or residential rights of the property (over 2ha).

That means the property owner (by keeping the insurance including the demolition component) is receiving more than the property’s value and the ratepayer is paying for the demolition.

Council works out the cost of demolition based on a rate per m2. The amount taken back is a small proportion of the payout.

Underinsured

Council and property owner agree a valuation.

Property owner is insured (including demolition allowance where the house is not deemed repairable) however the proceeds are below or at the independent market valuation.

Under the policy, the homeowner chooses the option that allows them to ‘sell’ the property to Council at the agreed price, less the insurance payment.

Council ‘tops up’ the difference between the insurance payout and the agreed value. In this scenario Council has had the benefit of the ‘demolition component’, as it has lowered the amount paid to the owner, so does not claim further demolition costs.

Uninsured

Council and property owner agree a valuation.

Property owner has no insurance (and therefore no demolition allowance).

Under the policy, the homeowner chooses to have Council buy the property at the agreed value.

Given the Council is effectively acting as the insurer providing a full insurance payout (which would include a demolition allowance), it is considered fair to the ratepayers (who are effectively paying for the demolition) that the equivalent of a demolition contribution is deducted from the payout.