Tauranga City Council will pay nearly $30 million after an out-of-court agreement to settle historical defective building claims at an apartment building in Mount Maunganui.
The Pacific Apartments building at 8 Maunganui Rd was built in 2006 and was later alleged to have problems with weather-tightness, as well as structural and passive fire issues.
The council said in a statement today it, and other parties had settled with the owners for a confidential sum on December 4, avoiding the need for a 10-week trial, which had been scheduled to proceed next year.
In the interests of public transparency, the council has obtained agreement from other parties to provide details of its portion of the payout.
The council chief executive Marty Grenfell today confirmed the council's portion of the settlement payment was $29,435,000.
Grenfell said councils around the country have had to face similar legacy liabilities relating to building deficiencies.
Because of their regulatory role as building consent authorities, and ability to fund such liabilities, councils were often left to pay a disproportionate share of claims which should be jointly funded by developers, constructors or professional service providers, he said.
"In the council's last annual report, funds were earmarked for weathertight building claims.
"We've opted to resolve this matter through mediation, which provides certainty to apartment owners who have been dealing with this stressful situation for a number of years," Grenfell said.
He said the council's regulatory approach had fundamentally changed since the early 2000s.
"In 2005, consenting and inspection activities were outsourced. Those activities are now a core part of our in-house regulatory function."
The Pacific Apartments building was constructed by head contractor Watts and Hughes Construction Ltd. It was developed by Asia Pacific Management Ltd and Lincon Pacific Ltd, removed from the Companies Register.
