The estimated cost to demolish red-zoned Category 3 homes in Hawke’s Bay has ballooned and is now expected to cost ratepayers more than $10 million.
That is largely due to the “high level” of asbestos which needs to be removed and disposed of in some homes flooded during Cyclone Gabrielle last February combined with the “complexity” of demolition work.
Asbestos removal began on Thursday for the first Category 3 home to be demolished in the region.
That home on Gilbertson Rd in Pākōwhai was the first to accept a buyout from the Hastings-based Voluntary Buyout Office and will be the first to be knocked down.
The buyout process is ongoing for many Category 3 homeowners and about 120 properties with a dwelling could accept a buyout (plus about 45 properties without a dwelling).
The estimated cost to demolish all Category 3 homes whose owners have had a voluntary buyout was initially estimated to be up to $7 million, the cost of which will be worn by Hastings District Council (HDC) and, to a lesser extent, Napier City Council (NCC).
That cost has now been revised.
“The cost of demolition, site remediation, and disposal-related costs could reach between $10 million to $12.5 million,” a new Hastings District Council report read.
“The initial estimate of an average demolition cost per property has increased from $30,000 per property to $55,000 per property.
“This is to account for the high level of asbestos that has been identified and the complexity of some of the required demolition.”
The $55,000 cost per property does not include the cost of disposal and site works after demolition, which makes up the remainder of the estimated $10m-plus bill.
The Government is paying 50 per cent of all Category 3 property buyouts in the region and HDC and NCC are paying the other 50 per cent.
However, the Government is not contributing to demolition costs.
Hastings District Council considered making Category 3 homeowners, who accept a buyout, pay for some of the demolition costs to knock down their old homes.
However, that contentious proposal was dropped following a backlash and the two councils will instead pick up the entire bill.
There are 326 properties across the region that have been placed in Category 3 after the floods of last February.
That means they are deemed no longer safe to live on due to an unacceptable risk to life in future flood events.
Of those 326 properties, 167 are eligible for a voluntary buyout (153 in Hastings district and 14 in Napier City) as they have a dwelling on them or at least had plans to build a home.
“Demolition is a really critical part of the [buyout] programme,” HDC cyclone recovery and special projects manager Gus Charteris said.
“That is where we are trying to remove the intolerable risk to life.
“The intolerable risk to life resides in the dwelling, it resides in people being able to live in these dwellings. It is a key responsibility [to remove them].”
Hastings District Council - the council most impacted by Category 3 house buyouts in Hawke’s Bay - believes it will still remain within its budget of $50 million for the entire buyout and demolition exercise.
That is despite the increase in demolition costs.
“There is around $3 million potentially available to us in selling and disposing of the Category 3 properties that we do own now and will own,” Charteris said.
“We need the sale of those proceeds to bring us in just under the $50 million cap.”
Much of the $50 million budgeted by that council for the buyouts is being debt-funded.
Hastings District Council - which is proposing a 25 per cent rates increase - is nearing $400 million in debt and has by far the most debt of any council in Hawke’s Bay.
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.