KEY POINTS:
Auckland City Council - home of half of New Zealand's leaky buildings - could face a half a billion dollar liability bill.
A figure of $350m to $500m has been touted by a disgruntled councillor who quit a special working party set up to deal with the issue over his frustration with secrecy.
And he has been backed up by mayoral aspirant John Banks, who is urging the council to tell ratepayers how much it will cost to fix the 7500 leaky homes inside city limits.
One billion dollars is the Government's official estimate to fix the 15,000 leaky homes nationwide, half of which are in Auckland City.
Mayor Dick Hubbard has rejected Banks' claim but refused to reveal the estimated cost, although has admitted he is seeking a meeting with Prime Minister Helen Clark to ask the Government for help.
It comes as figures obtained under the Official Information Act show the council has spent $17.5m resolving 191 leaky home claims so far, plus $4.5m on legal fees.
There are a further 181 cases yet to be resolved.
The estimate does not cover the cost to ratepayers if the council is left to com-pensate home owners because building companies, architects and others involved in construction and planning vanish or go into liquidation.
Waitakere City Council was forced to pay $250,900 to Hobsonville owner Colleen Dicks earlier this year. Even though it was only supposed to be liable for 20 per cent of that amount, it was stuck with a higher bill after the builder went into liquidation.
The Auckland City Council's weathertight homes working party has met in secret for the past two years. Councillor Doug Armstrong resigned two weeks ago, frustrated with its secrecy and angry the council had underestimated the financial burden ratepayers would carry, and had been "soft" on pressuring central government for financial assistance. "The public has been lulled into a false sense of security. We have to have a bash at the Government, otherwise the ratepayers of Auckland are going to pay and the Government will get off the hook."
Armstrong won't reveal figures he was privy to, but he believes the cost will be $350m to $500m - easily the single most expensive project undertaken by council.
Banks said rate-payers were being "kept in the dark" over the potential repair bill and council sources had told him that it was between $350m and $500m. "The council must come clean and let ratepayers know what They are in for."
Hubbard said he would not talk figures, but an independent report to be tabled confidentially next month might be made public. He rejected the $350m-$500m claims. "I certainly don't believe it's that high." He planned to ask the Prime Minister for financial assistance, even though the Government has successfully argued in court that it is not liable for repair bills.
Hubbard says it is unfair for burdened ratepayers to foot the bill, particularly those who miss out on leaky homes compensation because their house is more than 10 years old.
As the number of claims mount, councils are increasingly calling on their shared-risk insurance scheme managed by Wellington-based Riskpool.
Although courts are finding councils owe a small portion of settlements, many builders and developers have collapsed or gone into voluntary liquidation, leaving councils to bear the brunt of costs.
John Gray of the Leaky Homes Action Group says at least 7500 leaky homes in Auckland City will cost an average of $200,000 to repair.
A Building and Housing review of the council revealed 47,000 more homes without a code of com-pliance, which Gray said were potential "leakers". He believes there is a moral obligation for the Government to "come to rescue like some national disaster like a tornado, fix the houses and then perhaps hold the hands of the owners to seek compensation".
Last week, owners of leaky homes were given the right to sue for general damages, after Parliament passed new legislation covering water-damaged homes.
However, Building Issues Minister Clayton Cosgrove said no taxpayers' money would be spent to bail out the councils. "The role of government is not to provide compensation for a problem it did not cause."
10-year hitch
When Terry Small heard about a Government-funded project to measure moisture content in homes, he thought it would be a good idea to sign up.
There was nothing to suggest his 14-year-old Pt Chevalier home was leaky - just a few cracks in the cladding - but Terry and wife Kathy thought the tick of approval would help when it was time to sell-up.
"That plan totally backfired," Terry says.
Unbeknown to the couple, their monolithic-clad home was letting water in and the ballpark repair bill was $200,000. But because the house is more than 10 years old - the Smalls bought it brand new in 1993 - there was no way for them to claim compensation.
The news was devastating.
"I'm sorry if I sound blase but the tears have already been shed. We've gone through all the pain, the injustice of it all, now we're trying to deal with it," Terry says.
"The buck stops with us. Now we have to bear responsibility of repairing it."
The Smalls will have to spend about $200,000 to totally reclad their home if they want to get a code of compliance from Auckland City Council, necessary if they ever want to sell.
The $650,000 market value of their home has been slashed to $400,000 until the repairs are made. A "travesty" is how Terry describes the 10-year clause which means he is now liable for the repair costs - he cannot seek compensation through the courts or the Government's weathertight homes tribunal.
Stretching the period of liability to at least 15 years would help homeowners whose property had not yet manifested problems of a leaky home, Terry said.
"We had no idea the house was leaking. There were a few cracks in the cladding but nothing else, no nasty mould.
"What would happen if we didn't notice the problem until we decided to sell the house in another 10 years time?"
Body of evidence
Asking to see the body corporate minutes is the best way to detect whether an apartment block has a history of leaky building problems.
Real estate agents say they often have difficulty getting information from body corporate secretaries because the information can only be released to the apartment owner if he or she requests it in writing.
Buyers considering putting in an offer need to tell their lawyer to ask the vendor's lawyer for a copy of the minutes from annual general meetings in the past three years. Reports or quotes about maintenance or problems with the building should also be requested.
Kevin Hughes, general manager of Crockers Strata Management, says body corporate managers can be caught in the middle when an owner, knowing there are problems looming, will quickly sell the apartment to avoid costly repairs.
One body corporate secretary said there were ways to indicate to real estate agents that there were potential problems with a building.
"We may suspect there are leaky building problems but we don't have the power to say anything to the purchaser's lawyer.
"If real estate agents ask us the right questions we can usually get the information across."
Graham Smith, manager of Barfoot's city office, says any problems with running the building or any expenditure will show up in the minutes.
Seeing that the body corporate has recruited a building company to investigate can be enough to put off a potential buyer.
