Auckland Council's Albert St base faces an unknown repair bill to replace some or all of its stone cladding, which one councillor says could run into tens of millions of dollars.
Ratepayers have already paid $128.5 million to buy and fit out the 31-storey ASB Tower, described as robust, structurally sound with good bones when it was bought in 2012.
Last night, councillor Chris Darby said he was not thinking one or two millions, but tens of millions to repair the building, which opened in 1991.
"The cladding is extremely heavy granite slabs and they just come with a big tab," he said.
Home Owners & Buyers Association president John Gray said the cost of repairs would be many, many millions of dollars and "could blow out to an extraordinary amount".
New health and safety regulations requiring the installation of full protection for scaffolding was very expensive and would cost millions of dollars alone, he said.
Mr Gray said the experience of large apartment buildings showed once the cladding came off other deficiencies were exposed. He said the repair bill on the Landings Apartment building in Parnell, not as high as the council tower, started with an initial estimate of $8 million for facade and cladding issues, went to $12 million and was now close to $15 million.
Fencing went up around the base of the council tower on December 21 while the full extent of the problems are fully investigated.
Council corporate finance and property general manager Kevin Ramsay said all reasonable and practical steps were being taken to reduce or eliminate risk to people using the building and the public.
"Fencing has been erected and the escalators cordoned off. A protected walkway under the canopy has been constructed and work on a platform above the canopy will begin soon."
He said costs were being fine-tuned as the council worked through the investigation and design phases so a full cost estimate was not available.
When the building was purchased, he said, some repairs or replacements to the stone cladding were identified and about $4 million was set aside for repair works as a result of due diligence work. "Full costs are as yet unknown and we will address any need for additional funding, as we would with any capital project, when the need arises," Mr Ramsay said.
The former ASB Tower was purchased in July 2012 from Brookfield Multiplex for $104 million. A further $24.5 million was spent fitting out the building and bringing it up to a five-star green rating.
Councillors were told in August 2012 that the due diligence process had identified the facade and roof as having unexpected areas of premature degradation with the potential to cost $4.2 million to repair, but this was not a major issue. Senior officers said the purchase would save ratepayers $27 million over 10 years compared with the mix of rented and owned CBD accommodation.
"This is a sound investment we are making on behalf of the people of Auckland", producing "significant savings for ratepayers now and in the future", former chief executive Doug McKay said in July 2012.
Mr Darby said the purchase of the building was controversial at the time and questioned if the full extent of the problems were picked up by the due diligence. "Is there a cock-up here?"
Said Mr Gray: "We would have grave concerns that the council have failed to do the proper level of due diligence on the building in the first instance. The council should always take prudent steps to protect the ratepayers' purse and it is really disappointing they have exposed it in this way."
Brookfield Funds Management previously owned the 33,443sq m tower through the unlisted Multiplex New Zealand Property Fund.
The buy was handled by Auckland Council Property Ltd (ACPL). Peter Wall, who was on the board of ACPL at the time, yesterday said he removed himself from all discussions on the purchase because of a conflict of interest as a board member of Brookfield Multiplex.
• Former ASB Tower faces cladding problems.
• Purchased by council in 2012 for $104 million.
• $24.5 million spent on a new fitout.
• Council still investigating problems and costings.
• Much of tower fenced off before Christmas.