Christchurch City Council will continue to issue building consents despite losing its accreditation, but has seen its credit rating downgraded today.
International Accreditation New Zealand (IANZ) informed the local body last week that its building consent accreditation would be revoked after it failed to meet requirements.
The council officially lost its consent accreditation today.
However, Canterbury Earthquake Recovery Minister Gerry Brownlee said the council "can and must'' continue issuing building consents.
"The council is obliged to continue processing building consents. It is still registered under section 191 of the Building Act, which under section 193 allows the council to perform the functions of a building consent authority (BCA),'' Mr Brownlee said.
"Revocation of accreditation does not automatically revoke the council's registration as a BCA, but it does mean it no longer meets the criteria for registration.
Officials from the Ministry of Business, Innovation and Employment, including a structural engineer, were working alongside the Christchurch City Council building consent department ahead of a Crown manager's arrival to identify process problems and encourage change.
An emergency meeting last week saw councillors vote unanimously to appoint a Crown manager to oversee the consenting department.
It is hoped that person will be appointed this week.
Local Government Minister Chris Tremain said the consenting department would operate a "business as usual'' policy until the manager was appointed.
Meanwhile, Building and Construction Minister Maurice Williamson said it was important to note that IANZ had not said any CCC building consents were issued illegally.
"In a letter to me ... IANZ says while granted consents may not be technically compliant with the requirements of the Building Code and/or Act, this should never be interpreted as consents are not legal,'' he said.
"To allay any concerns about recent consents MBIE officials have already started work on an audit of those IANZ has raised concerns about. The scope of a wider audit is yet to be determined.''
IANZ removed CCC's accreditation last Monday, saying it had granted building consents which could potentially put people and property at risk.
The council had been given a month to improve its consenting process, including speeding up the flow of consent approvals, but it failed to do so.
Credit rating downgrade
Meanwhile, the council's credit rating has been downgraded from AA- to A + by international credit rating agency Standard & Poor's.
The new credit rating reflects a changed assessment of the council's political and managerial strength, the revoking of its building consent accreditation and the perceived risk of future legal action against it.
General manager corporate services Paul Anderson says the changed credit rating reflects ``temporary factors'' that the council is working with the Crown to address.
``We believe this situation is temporary as our management issues will be resolved with time and we are working closely with the Crown to ensure we regain our IANZ accreditation,'' he said.
``Our financial strategy and our debt levels were not a direct factor in this rating change. Our underlying financial strategy remains unchanged and Standard & Poor's noted this strategy as prudent in its last review.
``Our forecast levels of debt are lower than previously signalled due to the cost-sharing agreement with the Crown.''
Standard & Poor's recognised the recently announced cost-sharing agreement as a positive development for the council.
Mr Anderson says a possible credit downgrade was signalled and factored into the recently signed off Three Year Plan and will not affect the council's ability to borrow.
``The downgrade is obviously concerning but Standard and Poor's weighs up seven factors in assessing the council,'' says Corporate and Financial Committee chair, councillor Helen Broughton.
``This change was based on two factors - management changes and contingent liabilities potentially occurring from the loss of building consent accreditation. Five other quantitative factors remain unchanged.''