Shock $24m Parnell Terraces bill: leaky repair costs escalate

Parnell Terraces under repair at The Strand Parnell. Photo/Doug Sherring

The repair bill for 81 Quay Park townhouses between the waterfront and Parnell has shot from $11.7 million two years ago to $24m now and one owner says it is too much.

A townhouse investor/owner in Parnell Terraces complained to the Herald today that the new bill was beyond her: "As an owner living on a pension, I have contributed so far but can no longer do so. I am not alone. There will be a large number of owners who cannot," she said.

Michael Rehm - body corporate chairman of Parnell Terraces between The Strand, Roynane St, Ngaoho Pl and the main trunk railway line - said $24m was the new estimate for the buildings, now under repair by Corbel Construction and managed by consultants Maynard Marks.

A change in the scope of works and compliance issues caused the cost rise and instead of being finished by February, the last block was not projected to be finished by August, he said.

Rehm is also concerned about the cost rise: "It's beyond our worst nightmare. What could happen with Parnell Terraces could be unprecedented," he said, raising the spectre of extensive repairs being unfinished.

In 2015, a decision from the High Court at Auckland described repairs: "Extensive work is required to the buildings. The estimated repair cost is $11.7m."

Rehm is concerned about the cost and time blowouts.

"We might be in a situation where we can't go forward. We have a unique situation because we're on leasehold and the ground rent review happens to be coming up next year," he said today.

Each owner now pays around $9000 a year ground rent but Rehm said that could rise to $18,000 a year, compounding owners' financial woes.

Rehm said owners would meet at 6pm at Parnell's Rose Park Hotel for an extraordinary general meeting next Thursday, November 23. There, they would vote on the new proposed payment schedule.

In September 28, the repair bill was estimated to be about $20m for the big complex, now covered in scaffolding and white protective covers.

The notice of meeting tells owners an extra $99,920/unit needs to be raised to complete repairs.

"In addition to the original repair levy agreed at the EGM held on 16 August 2016, an additional remedial cost overrun levy of $7,037,830.00 (+GST) needs to be raised by unit entitlement in order to meet the additional costs as laid out in Maynard Marks' forecast project costs report #5 and project overview report dated 31 October 2017. This remedial cost overrun levy represents an average cost of $99,920 inclusive of GST per unit," the notice of meeting says.

If the EGM meeting votes in favour of paying the extra amounts, owners' bills will be due on December 21 and Rehm said that would be the real test of their resolve.

"Most of the owners are investors. They're going to have different attitudes [to resident owners]. People might walk away," said Rehm, an owner-resident, who along with all other residents has been forced out while the townhouses are fixed.

Owners will vote on:
• A fourth repair levy of $3,318,613.38 plus GST;

• A remedial cost overrun levy of $7,037,830 plus GST;

• A $50,000 (plus GST) review of the remediation project.

The notice of meeting says Maynard Marks will submit update reports and speak to that at the meeting. Rainey Law will also be present.