Earthquake prone buildings
Seismic strengthening of buildings deemed to be earthquake prone has long been an issue in New Zealand. Earthquake events in Christchurch have heightened the focus on the seismic integrity of New Zealand’s building stock, and a recent High Court Decision has clarified the obligations on building owners as to what level of seismic strengthening is required for repairs to earthquake prone buildings.
In addition, the Government’s discussion document “Building Seismic Performance” builds on recommendations coming out of the Canterbury Earthquakes Royal Commission final report, and proposes a range of measures to address the remediation of earthquake prone buildings.
High Court decision
The High Court in The Insurance Council of New Zealand Incorporated v Christchurch City Council  NZHC 51 has settled an impasse between the Council and insurance companies over what level of seismic strengthening may be legally required by the Council when repairing earthquake prone buildings.
After the September 2010 earthquake, the Council adopted a policy that required repairs to earthquake prone buildings to aim for 67% of the new building standard (NBS) for seismic strengthening. The Insurance Council sought judicial review of this policy, on the grounds that the policy went beyond the Council’s statutory powers under the Building Act.
The Court found that the Council could not use the Building Act to advance a policy that required seismic strengthening above 34% of the NBS, as once a repaired building meets that level it can no longer be considered earthquake prone under the Building Act.
However, the Council is not prevented from encouraging strengthening to 67% of the NBS.
The decision is advantageous to insurers, who potentially faced an increased repair bill of several hundred million dollars had the Council been able to require repairs to 67% of NBS.
This means that buildings that may have previously been deemed uneconomical by insurance companies to repair to 67% of the NBS, and were earmarked for demolition, may now be economically viable to repair to the lower standard. Consequently, building owners that might have received a replacement value payment under their policy will now receive only receive the cost of repair up to 34% of the NBS.
In addition, owners of earthquake prone buildings who want to strengthen their buildings to a higher standard will now have to meet those costs themselves. This will likely place increased pressure on building owners who face competition from new buildings which will be 100% of the NBS
Building Seismic Performance- consultation document
In December 2012 the Government released the final report of the Canterbury Earthquakes Royal Commission. The Commission issued a range of recommendations relating to the treatment of earthquake prone buildings.
In response, the Government consultation document “Building Seismic Performance” proposes a raft of changes to address the seismic integrity of New Zealand’s building stock. It is estimated that there are 15,000-25,000 buildings in New Zealand that will require seismic strengthening or demolition.
Key proposals include:
- Seismic capacity assessment for all non-residential and multi-unit, multi storey, residential buildings. This is likely to be a desktop analysis carried out by local councils or contractors against a set profiling methodology provided by Central Government.
- The Government has adopted the Royal Commission’s finding that 34% of the new building standard (NBS) is the appropriate level of seismic strengthening for existing buildings.
- Mandatory regulations for buildings to be strengthened, or demolished, within 15 years. This will mean local authorities have up to 5 years to complete a seismic capacity assessment, followed by 10 years for building owners to strengthen or demolish buildings.
- Significantly, requirements to strengthen or remove buildings could take priority over other requirements, such as those aimed at protecting buildings of heritage or local character.
- It is also proposed that a public register be maintained which details the seismic capacity assessments of buildings. Local authorities would enter the information into the register, which could be accessed by the public so they can quickly ascertain their safety in an earthquake.
- Some buildings, such as low use rural churches or farm buildings with little passing traffic could be exempt or given longer time to undertake strengthening works.
The Government is also seeking comment on what implications the proposed changes will have on New Zealand’s heritage buildings. In particular, the Government wants to understand what help heritage building owners might need, if any, to strengthen their buildings to protect people who use or visit them, while also preserving them.
Submissions on the consultation document close on Friday 8 March 2013. This is an opportunity for owners of earthquake prone buildings to have their say on matters that are important to them, and the discussion document provides a range of focus questions to assist submitters. A copy of the Government Consultation Document is available here.
What does this mean for building owners?
The High Court decision provides certainty for building owners and their insurers as to the level of seismic strengthening required for repair of their buildings. The decision also means that building owners who had anticipated insurers would meet the costs of repairs to 67% of the NBS will now need to meet those costs themselves. This will place pressure on those owners who want to remain competitive with new building stock that meets 100% of the NBS.
If enacted, the Government proposals will impose a strict timeline on building owners to strengthen or demolish their earthquake prone buildings.
The Government is endeavouring to respond to the aftermath of the Christchurch earthquakes by improving the safety of New Zealand’s older building stock, however, it is clear the proposals will inevitably result in significant additional costs to building owners.
A timeframe for the proposals has not been set, however the Government has indicated that legislation could be introduced later this year, at which point there would be an opportunity for submissions at the select committee stage.
If you have any questions about any of the proposed changes or how they may affect you, please do not hesitate to contact any of the Adderley Head team.
Disclaimer: This is a brief summary for information purposes only and is not legal advice
Posted on Tuesday 5th March, 2013 at 03:48 pm