The city council failed to follow its own building control processes for the Bella Vista Homes development in Tauranga, a damning Government investigation has found.

The investigation did not discover evidence of a systemic issue within the Tauranga City Council but did find some similar issues in two other, unrelated, properties in the city built during the same period.

The Ministry of Business, Innovation and Employment (MBIE) this afternoon released its review of how the council performed its building control functions concerning the failed Bella Vista Homes development at The Lakes.

One of the key findings was that council management intervened in and subverted normal council processes when dealing with the Bella Vista development.

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The report said that was, in part, due to "undue or inappropriate pressure from the developer".

The ministry review said the Bella Vista Homes outcome represented "a significant failure in the council's building control system".

It found there were a number of reasons for that failure, but a common theme was the council not following its own processes and procedures.

This meant it lost the benefit of the inherent safeguards, checks and oversight provided by those processes, the ministry said.

Lead advisor Paul Hobbs, who led the review, said council management intervened in normal process, assigning the Bella Vista development a single point of contact, meaning concerns about the development were not escalated appropriately.

The review also found the council did not:

•Enter conditions on building consents or follow through on the need for third-party verification of compliance.

"For instance, where engineers were to carry out on-site inspections on elements of specific engineered design."

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•Manage departures from building consents in accordance with the proper procedure once work was underway.

"For example, changes which clearly required an amendment to the building consent were dealt with as a minor variation."

•Use enforcement powers to stop or require remediation of non-compliant building work when this was observed.

"The council allowed building work to go ahead after earlier failed inspections had not been fully resolved, and it did not require building work to stop when critical documents such as 'producer statements' for third-party inspections were not provided."

•Maintain proper records of its decisions and the reasons for decisions.

Tauranga Mayor Greg Brownless called the ministry's review "open and honest" and said it made it clear that the council failed to fulfil its functions "as that check and balance" on buildings.

Brownless said he was disappointed by the mention of management intervening in council processes, and also by the "undue or inappropriate pressure from the developer" referred to in the report.

Asked if he was confident of the report's finding that there wasn't a systemic issue within the council, Brownless said: "I think why it isn't a city-wide problem, even though there's two other examples, was that phrase about the involvement, the pressure from the developer. And I believe that that would appear to be unique to that particular situation."

In response to a question about what consequences there have been for council staff, he said: "A number of the people involved are no longer with the council. Anybody involved has either been held accountable, or I'm asking the chief executives to look into getting that accountability."

Brownless said the yet-to-be-released Colgan report (the council's internal investigation) would relate more to specifically what different people did, and that would be strictly employment related.

On March 9 last year, 21 Bella Vista houses were evacuated by the Tauranga City Council. Photo / File
On March 9 last year, 21 Bella Vista houses were evacuated by the Tauranga City Council. Photo / File

Other sites and properties reviewed

As part of its review, the ministry visited other Tauranga sites either under construction or which were developed at a similar time to Bella Vista.

The report said the purpose of this was to identify whether all, or most, of the contributing set of circumstances evident in the Bella Vista development failure were present elsewhere, which might lead to a conclusion that there was a systemic issue within the council.

Such a conclusion was not made.

The ministry said it did not find evidence of a systemic issue, "that is, it did not identify as part of its review other Tauranga sites … that had all, or most, of the contributing set of circumstances".

"MBIE considers that the extent to which the council has failed to perform across a number of its building control functions regarding the Bella Vista development, and ultimately the failure of the Bella Vista development, to be an isolated incident with a unique set of circumstances and does not represent a systemic issue."

However, the ministry did find some, but not all, of the same issues were evident to some extent in two other properties unrelated to Bella Vista, which were constructed in the same period.

Particularly regarding:

•The council's obligation to ensure it has sufficient information about matters such as siting, ground conditions (including third-party verification of those matters if applicable) before the applicable building inspection is conducted.
•Following proper procedure to approve and document any changes to the building work.
•Lack of appropriate enforcement action when the council became aware of non-compliant building work.

The ministry said some, but not all, of its comments and conclusions on why the council failed in the performance of a number of building control functions regarding Bella Vista, were also applicable to the council's oversight of those other two, unrelated properties.

It said the owners of those two properties had active determination applications with the ministry in relation to particular decisions of the council, and other issues from those properties had been raised separately with the council.

MBIE requirements

The ministry noted in its report that the council had already made process improvements to prevent similar failures happening in the future.

However, it has also set out a list of requirements for the council in the report, which include:

•Revising some council policies and procedures including its enforcement strategy, requesting critical documents such as 'producer statements' or the associated third-party inspection records before the affected building inspection or construction monitoring is undertaken.
•Ensuring that staff are aware of, and enabled to carry out, their obligations in accepting building consent applications, understanding the distinction between minor variations and amendments to building consents, inspections and enforcement.
•Submission of updated policies and procedures to the ministry within two months of receipt of this report.

The ministry said it would revisit the council within the next six months and the council is required to provide a further update on progress within 12 months.

The ministry said it would also share its findings with other building consent authorities and the wider sector, so others could take action to improve their own building control functions with what was learned.

Bella Vista Homes saga

Bella Vista Homes went into voluntary liquidation in November 2017, leaving behind unfinished houses and millions of dollars in outstanding debts to creditors.

Several months later, on March 9 last year, 21 Bella Vista houses were evacuated by the council, which later issued dangerous and/or affected building notices following concerns about the safety of the houses and their compliance with the building code.

The council eventually bought all 21 properties off the homeowners for $14 million, after an independent investigation by a former High Court judge found council failed in the performance of its regulatory functions as a building consent authority.