Opera House value cut in half

QUAKE RISK: The Hawke's Bay Opera House is one of the buildings affected by the earthquake assessment.

An assessment of the quake-prone Hawke's Bay Opera House and adjacent Municipal Building has slashed $6 million off the value of the Hastings District Council-owned facilities.

But it will be early next year before ratepayers know the exact cost of repairing and reopening the city's cultural complex.

The Opera House's historic theatre building was closed in March after a surprise discovery that - despite a recent multi-million dollar upgrade, including structural strengthening work - the building posed an earthquake safety risk.

The council will on Monday release a detailed independent report into events leading up to the closure.

Hastings mayor Lawrence Yule said yesterday the report would provide "a far better direction about the process going forward" for restoring the affected buildings.

Produced by a "review team" of engineers and consultants, the report will be discussed at a meeting of Hastings District Council on Thursday and would provide the starting point for a decision-making process on what the council needed to spend to reopen the Opera House and affected parts of the surrounding precinct.

Councillors will also next week be asked to sign off on a proposed $6 million write-down of the Opera House and Municipal Buildings following a re-valuation of the buildings in the wake of the repair work requirements.

Valuers Logan Stone have recommended that given the "seismic limitations", the book value of the buildings be cut by 50 per cent - from a 2012 valuation of $12.32 million down to $6.16 million.

"At this point in time preliminary strengthening schemes and cost estimates have not been completed," the firm said in a letter to the council.

"However, given the heritage nature of both buildings and their age and complex nature, one would assume that the cost to improve the seismic performance of these structures would be substantial."

In a report that will be discussed by the council's finance and monitoring committee on Tuesday, council accounting manager Joanne Guilford says based on an updated 2014 book value of the buildings, and using Logan Stone's recommended 50 per cent figure, an "impairment" (write-down) of just under $5.97 million should be recorded in the council's accounts.

"This impairment has been discussed with Audit New Zealand and they are, in the absence of any detailed cost estimates, prepared to accept the Logan Stone impairment assessment as being prudent at this stage," Ms Guilford's report says.

She said with detailed cost estimates and council decisions on repairing the building still to be made, an adjustment to the council's accounts may need to be made at the end of the current financial year.

The council has previously said it is committed to repairing the building, and was expecting the cost to run to millions of dollars.

Mr Yule reiterated that stance yesterday, saying the $6 million figure arose from the council's need to show an impairment in its accounts but the actual cost of repairs was still up in the air.

"We need the engineers and designers to come up with costs before we make any decisions," he said.

"Equally we need to work out what level of fix we are going to go to."

Mr Yule said the council would be presented with a range of options which would include bringing the buildings up to various percentage ratings for earthquake compliance under the new build code.

All options and costs should be known by February, at which point the council will be able to make a decision on restoring the buildings.