Hawke’s Bay cyclone recovery: Behind the scenes of the Voluntary Buyout Office

It has been nine months since Cyclone Gabrielle tore through Hawke’s Bay, destroying hundreds of homes and killing eight people.

As part of the recovery, the Hawke’s Bay Voluntary Buyout Office has been set up to buy flooded homes that would be most at-risk in future events.

Hawke’s Bay Today reporter Gary Hamilton-Irvine went behind the scenes in the office to find out more about a process expected to cost around $110 million.

Sometimes, letting someone stay on a piece of land puts them at an “intolerable risk” of losing their life.

That’s what the Hawke’s Bay Voluntary Buyout Office is for, at its heart. But telling people they can’t build or return to the slices of Kiwi paradise they’ve lived on for decades or generations will never be easy.

Three months after the devastation of Cyclone Gabrielle, Hawke’s Bay Regional Council began work on the start of the process, land categorisation, placing flood-prone areas into different risk categories.

The buyout office's David Elliott (left) and Gus Charteris talking about the process ahead for impacted homeowners. Photo / Paul Taylor

In October, 287 properties in Hawke’s Bay were finalised in Category 3, meaning they have been deemed too unsafe to live on in the future. That number could still rise.

Now a buyout will be offered to each Category 3 property owner who has a home on their land (or who was planning to build). That currently amounts to 140 homeowners.

The Hawke’s Bay Voluntary Buyout Office was set up late last month in Hastings to lead the buyout process, headed by Hastings District Council (HDC) in conjunction with Napier City Council (NCC).

Esk Valley in Hawke's Bay after Cyclone Gabrielle struck. Photo / Paul Taylor

The buyouts will be funded 50/50 by the Government and those two councils.

“The main purpose of the [buyout] policy is to remove the intolerable risk to life that exists for people living on Category 3 land,” HDC cyclone recovery manager Gus Charteris said.

“A key way to do that is offering people the voluntary buyout, then making sure that dwelling is gone.

“At any time, people can withdraw from the process - it is voluntary all the way through.”

Auckland City Council and Gisborne District Council are in the process of setting up their buyout offices.

The buyout team

There is a core team of 20 people involved in the buyout process, half of whom are based in the buyout office in Hastings.

That team includes four community connectors, four independent valuers, a 10-person team from The Property Group and a couple of other staff members.

A wider group is also called upon from time to time from within the councils.

Charteris said it was important the valuers were independent.

“We want that to be an arm’s length from the council because we want that to be an independent process.”

The process

The buyout process is broken down into four steps: information, valuation, offer and completion.

In-person meetings are currently being held at the Hastings office as part of the information stage.

Community connectors have contacted all the homeowners eligible for a buyout to arrange those meetings.

“We ask them to come in for a meeting and tell us their story ... they bring in photos and other things to help us with the valuation process,” David Elliott, HDC operations manager for the voluntary buyout office, said.

David Elliot (left) says the initial in-person meeting is about gathering enough information to send to the valuer. Photo / Paul Taylor

As of Wednesday, 35 information meetings had been held. A property owner can bring their lawyer or a support person to that meeting.

The next stage will be valuation. Elliott said a “super-file” for each property will be compiled and sent to head valuer John Reid.

One of the four valuers will then organise an on-site meeting to do the valuation.

Property owners can get their own valuer, meaning two valuers can price up their home and property. The buyout office is offering a $5000 grant to help cover those costs.

Those valuations will form a valuation report, which will be used to compile an offer.

The offer will be checked by a three-person advisery panel before officially being sent to the owner.

“Attached with that offer will be everything from background information to how that offer was arrived at,” Elliott said.

If accepted, the completion stage will include settlement, followed by the councils removing or demolishing any home or homes on each piece of land.

The entire process - from the information stage to completion - is estimated to take around three to eight months per property.

The buyout office hopes to have a handful of offers made by Christmas.

The offer

Properties have been split into two basic groups - properties under two hectares with a dwelling, and properties over 2ha with a dwelling.

For those under 2ha, property owners can choose to sell their home and land as one package (minus any insurance payouts already received).

Or, they can sell their home and hold on to the land, in which case they will also get a relocation grant.

For those with properties over 2ha, property owners can only sell their home (minus any insurance payouts received) but not the land. They will also get a relocation grant.

A relocation grant is a touch complicated and based on an equation.

A flowchart of offers available to Category 3 homeowners. Photo / HDC

The relocation grant is the value of your land with rights to be used as a residential property, minus the value of your land without rights to be used as a residential property.

For example, if a section of land was worth $400,000 as a property for residential use, and $250,000 without the potential for residential use, the relocation grant would be $150,000. That example is not based on a proper valuation.

All offers will be based on market values as of February 13.

A council spokesperson said properties were treated differently over 2ha as “the value of the property resides more in the agricultural/horticultural use than residential”.

“If, [for example, the] council were to purchase 2ha of a 3ha property, then both the council [ratepayer] and the owner would be left with properties that had reduced value and suitability for productive purposes.”

Under the policy, the owner still retains the right to sell the entire 3ha of land in future, in that example.

The cost

Current projections put the costs of the buyouts at around $110m.

About $55m will come from the Government, about $50m will come from Hastings District Council and $5m from Napier City Council, under those projections.

The projections are only estimates and could change due to a number of factors.

Hastings District Council has the lion’s share of the impacted homes, and therefore a much heavier cost.

The projections include some space for more Category 3 properties to be added at Tangoio Beach which are currently provisional.

The uninsured

Both insured and uninsured properties with a dwelling will be given buyout offers.

“Fundamentally, what we are trying to do is remove the intolerable risk to life,” Charteris said.

“If we didn’t provide uninsured with the pathway, they would be much more likely to stay there, because they wouldn’t have options.

“We wouldn’t be achieving our objective.”

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.