Govt’s red-sticker buyout scheme: Deputy Mayor Desley Simpson confused over ‘funding split’

Auckland’s deputy mayor has expressed confusion over who will foot the bill for about 700 red-stickered homes the Government yesterday announced will be voluntarily bought out - describing it as an extra burden on the council’s already dire finances.

Deputy Mayor Desley Simpson last night told the Herald Auckland Council “didn’t know” how the estimated $1 billion price tag for the buyout would be split between the Government and local councils.

“If you say it’s 400 [Auckland homes] times $1.2 million, give-or-take just like the average house price, you’re talking half a billion dollars,” Simpson said.

“This could cost us a lot. We don’t know what the split is between the taxpayer, the ratepayer and the homeowner themselves.

“I welcome the announcement, I welcome the timeframe, but I’m holding my breath on what happens next.”

Speaking to Newstalk ZB’s Mike Hosking this morning, Associate Finance Minister Michael Wood said the funding announced yesterday would provide support for the councils in the cyclone recovery process.

“In the next weeks, we will sit with the councils to discuss cost share.”

And some of that engagement was already under way, Wood said.

Councils had categorised properties into one, two and three, he said.

The details of the buyout process will be “sorted out in the coming days”.

“It is a voluntary buy-out process, with the money Government is providing.

“In the event that people don’t want to move out council have a process they can engage in.”

The cost-share process between the council and the central government would be quicker, Woods said.

“In areas where repeat floods happen, the best thing we can do is support those people to move on.”

The number was just an indication brought by a task force comprising of data from the council and insurance companies, Woods said.

Nothing was certain, some category two properties could move to category three.

“People will have a chance to respond.”

On the Puhoi Holiday Highway not being opened yet, Woods said it would open once all checks had been completed.

“I expect that to be relatively soon.

“But with something this significant we need all checks to be done. That is the decision politicians can’t make, engineers will make it.

“I want it to be open as soon as possible but we got to do these things properly.”

700 homes unliveable, 10,000 need flood protection

Finance Minister Grant Robertson made the announcement in Wellington yesterday, saying an estimated 700 properties across the country are now considered unliveable due to recent weather events and homeowners will be offered a voluntary buyout through a funding arrangement between the Government and councils.

But the joint funding announcement comes at an extremely challenging time for Auckland Council, which yesterday announced its final proposal to help fill a $325m budget hole to be part-funded by the sale of Auckland Airport shares.

A further 10,000 homes will require investment in flood mitigation around them so they are protected when the next severe weather event hits.

Robertson said the Government has a “ballpark” figure that the buyouts could cost $1 billion.

Simpson said: “The bottom line is, we don’t know what that funding balance looks like. It makes our decision next week on our budget even harder.

“The good news is, yes, the Government has said they want to do it and they want to do it in 12 months.

“We acknowledge that we have to change where these homes are, and you know, we’re acknowledging that there are parts of Auckland that will be completely unfixable. But the Government’s not paying the [whole] bill. We’ll go into discussions with them as to how that should play out.”

Simpson said councillors would have to consider the uncertain funding and prepare for the cost in the council’s budget before it is voted on next week.

“The Government knows that we’re a bit tight financially, but on the other hand, they’re not going to fund it all. We need to make sure we have the headroom to deliver.”

Luci Harrison's Parnell property was damaged after land from a council-owned reserve behind it slipped and ate away at the ground her house stood on. Photo / Dean Purcell

Red-stickered property owner Luci Harrison, while welcoming the announcement, was concerned about how much she would be offered for her house if she was bought out.

Her Parnell property was damaged after land from a council-owned reserve behind it slipped and ate away at the ground her house stood on.

She was also unsure whether she was even eligible to be bought out, saying she had no official word on what the future held for her property.

“It’s a logical solution to do what they’re doing. But it all depends on the value of what the buyouts are,” Harrison told the Herald.

“Whether they’re at the rateable value or whether they are a value that has been independently evaluated - that’s going to be interesting to see what they come up with.

“I will be hoping it’s at least CV, which would be good. At least CV or market value.”

While she didn’t know whether she would be bought out or told she can repair or rebuild, Harrison hoped she wouldn’t be told she couldn’t rebuild on her land.

“Hopefully I’ll just be able to fix. Hopefully, mine’s not just a buyout and they will actually try and fix it because the house and the land are worth more than, potentially, what a fix would be,” Harrison said.

“But there’s been no clarity at all [whether I’ll be eligible for a buyout].

“It seems to be that the communication between the council and the people that are actually affected has been really non-existent,” Harrison said.

“I was only told yesterday that I’d even be eligible for rates relief.”

The council reopened its emergency relief fund with a $1m top-up to provide rates relief to mostly red- and yellow-stickered property owners last week.

Mayor Wayne Brown said the assistance would only be for homes that are uninhabitable and could include some white-stickered homes.

Brown said the Government’s announcement yesterday would allow the council to start engaging with homeowners.

“It’s good to see the Government making some progress in this area, and the council now needs to look into the Government’s proposal and assess what it means for Auckland and Aucklanders,” Brown said.

The chairman of flooding resilience and managed retreat advocacy group West Auckland is Flooding, Lyall Carter, meanwhile, called the announcement a “historic and hope-filled moment”.

“So yeah, I’m very happy,” he said, “There are still details, I think, to figure out but I think there’s a sense of relief.

“It feels like this chapter is coming to a close and the next chapter is going to begin,” Carter said,

“There will be a real sense that common sense has prevailed.”

He hoped homeowners would be adequately and fairly compensated for their properties, but acknowledged the costs to the council and Government.

“It is our hope homeowners will get a fair deal [with voluntary buyouts]. We would need to see some detailing around that to make a call on whether we thought it was a fair deal.

“It has to be a fair and sustainable deal, not just for the homeowners, but for the tax and ratepayers.

“Our hope would be that local and central government would work with homeowners to come to an arrangement that if their homes are being bought out they are not left financially desolate and with no hope of being able to get into another home and community,” Carter said.

Over the properties outside of Auckland, 17 homeowners in Tairāwhiti/Gisborne have already had their land classified as not safe to live on and eligible to be bought out.

Tairāwhiti Mayor Rehette Stoltz called it a “devastating blow for property owners” but echoed feelings of relief and certainty for people left in limbo for months.

“Yesterday we started calling the 17 owners of these homes,” she said, and “a few” of them expressed concerns about what would come next.

National and Act both confirmed they weren’t opposed to the scheme proposed by the Government, but did have concerns ahead of the finer details being released and what impact the buyout might have.

National Party deputy leader Nicola Willis said the confirmation of zones in Hawke’s Bay was a step in the right direction.

“I understand there’s not quite as much detail as people would like so we’ll be encouraging the Government to bring that forward as soon as possible and we’ll be examining the package and listening to those affected to see whether there are any issues that need to be fixed up.”

However, she clarified that National was not proposing any changes to what was announced yesterday, for the sake of preserving certainty for affected residents.

Act leader David Seymour welcomed the Government providing that certainty but warned the buyout created a dangerous precedent.

“It means that every property use effectively has an unwritten guarantee by Government. Governments and councils will inevitably respond by becoming more restrictive on consenting as a result.”

Nevertheless, Seymour said his party would keep the commitments of the current Government, saying: “People need certainty in these kinds of circumstances, and they have waited long enough.”