Hastings and Napier councils could be left with $92m bill for Category 3 home buyouts

Homes in Esk Valley, north of Napier, in the days after the February cyclone. Photo / Warren Buckland

Hastings and Napier councils could face a combined bill of up to $92 million to cover the buyout of Category 3 homes after Cyclone Gabrielle, initial estimates suggest.

Napier Mayor Kirsten Wise says she is “very disappointed” the Government is covering only 50 per cent of the cost of voluntary buyouts in Hawke’s Bay, with councils and ratepayers having to pick up the other 50 per cent.

Despite the hefty costs to be worn by Napier and Hastings councils, Hastings Mayor Sandra Hazlehurst said fresh Government contributions this week for bridge and road repairs had “offset” their costs to help cover the buyouts.

Hawke’s Bay’s five councils met separately on Wednesday and Thursday during extraordinary meetings and unanimously accepted a cost-sharing package from the Government, pending community consultation.

That half-billion-dollar package features $92.5m for property buyouts, $203.5m towards flood protection and $260m for road and bridge repairs and replacements.

It also includes an agreement that councils will pay half the cost of property buyouts.

Wise said that would have a big impact on Napier and Hastings councils – the only two councils in Hawke’s Bay with Category 3 properties.

“It is very disappointing from my perspective that we are in a situation with this 50/50 cost-sharing arrangement with the Crown,” Wise said.

“It was a non-negotiable – that was what they put on the table at the beginning and said that was not open for negotiations at all.”

She was pleased that negotiations had resulted in additional funding for roading and flood protection.

“But, unfortunately, we are in a situation where our local community is having to 50 per cent fund these voluntary buyouts.”

There are 252 residential properties in Hawke’s Bay provisionally in Category 3, meaning they have been deemed unsafe to live in because of unacceptable flood risks.

The Government revealed on Thursday evening that it would contribute up to $92.5m to buy those homes, based on initial cost estimates. That means Hastings and Napier councils will pick up the other half.

“Those figures are obviously estimates at this stage, based on the data that we have had on hand with the Category 3 properties and the insurance data that we have had,” Wise said.

“They are by no means final. There will be an ongoing conversation there if those costs shift.”

Hastings District Council will pick up the lion’s share of council buyout contributions as it has 232 of the region’s 252 Category 3 properties. The other 20 are in the Napier City Council area.

Wise said the package had to go through a community consultation process before it could be formally accepted.

Napier Mayor Kirsten Wise is disappointed the Government is not contributing more for property buyouts. Photo / Ian Cooper

After that point, the council would contact affected property owners around mid-to-late September to work on further details of the buyouts.

“There is still some detail to work through in terms of what exactly we are buying.

“The current proposition on the table is that we are buying the actual house and a small area of land around it, for example, if it is a lifestyle block or a primary sector land block.

“That is not set in stone but we are actively working through the detail of what exactly it is that we are going to be buying in that total landholding.”

At this stage, based on conversations with the Government, the buyouts would cover both insured and uninsured homes.

Hastings Mayor Sandra Hazlehurst said the Government had been “clear from the outset that the costs for settlement of around 300 residential properties in Category 3 would be split 50/50 between the Government and councils”.

“While the terms of agreement from the Crown do place an obligation on us to share these costs, it is offset with a Government contribution to our critical bridge, roading and transport network repairs.

“So there is no increase in the overall costs for our recovery by adding this requirement to co-fund buyouts.”

The 50/50 cost-sharing is a change from the aftermath of the Christchurch earthquake, when the Government covered the full bill to buy red-zoned houses.

Cyclone Recovery Minister Grant Robertson has previously stated that “we know that with climate change there will be more severe weather events like this in the future” and a cost-sharing arrangement with councils would be “the basis for all future events of this type”.

The Government will support councils to buy homes by contributing half the net cost, which is the agreed buyout value less any insurance proceeds received.

Hawke’s Bay is the first region to settle on a cost-sharing deal with the Government since the cyclone, which could set a precedence for other affected councils.

Gary Hamilton-Irvine is a Hawke’s Bay-based reporter who covers a range of news topics including business, councils, breaking news and cyclone recovery. He formerly worked at News Corp Australia.