Ratepayers may cop big bill in bid to tackle leaky homes

Tauranga City Council, and its ratepayers, may be saddled with a bill for millions of dollars resulting from the Government's move to resolve the leaky homes crisis.
Building and Construction Minister Maurice Williamson is looking at a package to repair the leaky houses - which could total 40,000 around the country.
And councils such as Tauranga are likely to be asked to contribute a significant percentage towards the cost of the repairs.
Mr Williamson has already spoken twice with the mayors of six cities hardest hit by the leaking building syndrome - including Tauranga's Stuart Crosby.
It's now thought the nationwide cost of the repairs could reach $11.5 billion, up from an earlier estimate of $3.6 billion, but the latest figure could be more than halved if legal fees and other expenses for leaky building claims are removed.
"We are still putting ideas to each other," said Mr Crosby, "but it's good to have the Government involved.
"It is keen to see money spent on fixing the houses and not in the courtroom - and a draft proposal should be ready by the end of the year,'' he said. Mr Crosby said the big
questions were ``where does the money come from'' and ``who pays for it?''
``We can't afford it, not at the moment,'' he said. ``We are maxed out on debt through infrastructure projects, but the parties involved [councils and government] are looking for a solution.''
Mr Crosby would not confirm whether Tauranga City Council would be a party to any government funding resolution on leaky buildings.
He said the community would have to be consulted if it involved council funding.
Tauranga City, like other councils, was already picking up the insurers' excess on the leaky building claims it became involved with.
``We are not as exposed as others - we don't have many apartment complexes like Auckland,'' said Mr Crosby.
``Many of the cases here are single dwellings that are partially damaged and can be repaired. We are finding the builder/developer and sometimes the supplier and architect are resolving the problem themselves - to their credit,'' he said.
For the year ending June 2009, Tauranga City Council had a maximum exposure of just over $640,000 on insurers' excess resulting from leaky building claims. The figure more than doubled, from $290,000, in the previous year.
The council has become involved in about 80 claims through the Weather tight Homes Resolution Service, but it has only been joined as a defendant in a small percentage of them - less than 10 per cent. In those cases, it issued code compliance certificates.
Tauranga's biggest claim is worth $10 million for the repairs to the Cutters Cove Resort Apartments, and it is being pursued through the High Court by the body corporate.
The claim cites more than 20 defend ants, but Tauranga council is not one of them as it wasn't involved with those building inspections. Instead, four inspectors from the now-defunct Bay Building Certifiers have been named.
The leaky problems, now described as a national disaster, mainly occurred in new homes built between 1994 and 2004.
During the latter years in that period, Tauranga council conducted only about 20 per cent of the building inspections - the bulk of the work was contracted to Bay Building Certifiers, which issued code compliance certificates.
The Building Act 2004, which intro duced stricter building controls, eliminated 37 private certifiers around the country, and the powers of issuing code compliance certificates - as well as the normal building consents - were returned to councils.
Bay Building Certifiers was liquidated by the end of 2004, and its owner, Wayne Wellington, established a new entity called CGAF Ltd, trading as Bay Inspections. That company now conducts general building inspections.
Mr Wellington said Tauranga council was ``very astute'' by contracting out its
inspection work prior to 2004. It protected ratepayers from a lot of leaky building costs.
He said that overall the problem should not be as costly as had been estimated. ``In some cases, the cost of legal fees has outstripped the actual cost of the [repair] job. You can fix five houses for the price of one,'' he said.
``I applaud whatever moves are going on to get the repairs done and the problem fixed _ central government has found itself in a situation it created.''
Mr Wellington said all private building certifiers paid premiums to the government for 10-year liability insurance, which in some cases was still running.
Homeowners who have had repairs done could get some of their costs covered by the insurance scheme.