Leaky building legal fears hang over city councillors

Auckland City councillors have been gagged from talking about the leaky building crisis - but not before a bitter stoush and claims it will send the rates bill soaring by $270 million.

Chief executive David Rankin and the ruling City Vision-Labour faction have put the cost in the tens of millions of dollars but have refused to release any information to back up their figures.

The issue boiled over at a finance committee meeting last week where Citizens & Ratepayers Now councillors Doug Armstrong and Scott Milne costed the leaky building fiasco at $270 million. The meeting was quickly moved behind closed doors where a gagging order was issued by councillors terrified of the legal ramifications and costs. Mr Rankin, finance manager Andrew McKenzie, and finance committee chairman Vern Walsh are the only people allowed to talk on the matter.

Leaky buildings are the second financial crisis to hit the present council. The cracked and leaky underground Civic carpark has blown a $73 million hole in ratepayers' pockets. Rates went up 9.7 per cent this year to boost transport, urban design, heritage and social projects - and the inside word is rates will go up again next year by more than the rate of inflation.

At the finance committee, Mr Armstrong revised down an earlier estimate of $500 million to $270 million based on figures obtained by Cairns Slane, the law firm acting for the owners of more than 2500 leaky buildings.

The previous estimate was based on the number of owners and did not reflect multiple ownership.

Mr Armstrong said the council had woefully underestimated its exposure, while Mr Milne said councillors had to get it into their heads that this was the "biggest single issue facing the council in decades past and decades hence".

Deputy mayor Dr Bruce Hucker said it was improper of them to get their figures from a firm of solicitors taking litigation against the council.

Mr Armstrong was yesterday too scared to discuss the matter after the gagging order. The council has spent $4.6 million settling 79 leaky buildings claims and a further $2.4 million on legal fees.