OPINION: The Public Purse is a fortnightly Herald column focused on the public sector and how taxpayer money is spent.
The Chateau Tongariro is a famous building in a country too new to enduring architecture, and too geologically hostile, to have more than a handful of such places. Some say it is a national treasure and the jewel in the crown of the Tongariro National Park which must be kept and restored. Neo-Georgian, a Category 1 historic place, spectacular in its mountain and parkland setting, steadfast beneath the volcanic cones.
But the cost of keeping the Chateau, though still cloudy, may well top $100 million. It could be much more, and it is likely to be borne by taxpayers.
The building is very seriously seismically unsound. There is additional disrepair which appears to be significant. Renovation is overdue. Furthermore, a lump sum payment is owed to the Chateau’s previous leaseholders.
This latter cost is only hinted at in the Department of Conservation’s bland phrase: lease termination negotiations. These are ongoing.
The Chateau sits on Crown land, and on March 9, care and responsibility for its buildings reverted to the Department of Conservation (DoC) when Malaysia-based hotelier Kah NZ declined to renew the lease.
But there’s more to this picture. In 1991, Kah signed a 30-year lease for the land and some of the Chateau’s ancillary buildings, including the tavern in Whakapapa Village. DoC signed a lease with government-owned Tourist Hotel Corporation (THC) and this was transferred to Kah.
The Chateau itself, however, and other key buildings like staff residences, appear to be covered in a separate document not publicly released, possibly a sale and purchase agreement for the going concern hotel business.
DoC has confirmed to the Herald that Kah paid for the Chateau building in 1991, though the department claimed the amount is “commercially sensitive” and declined to release the figure.
The lease and transfer documents anticipate that Kah will be paid upon lease termination for the Chateau buildings and that a new lessee would be responsible for the cost. The problem, however, is that no such party is in sight and the parlous state of the Chateau appears to preclude one, possibly for many years.
None of this is academic to the mounting cost of keeping the Chateau.
Up front payment by the Crown to Kah is a distinct possibility, and has been part of the current negotiations, correspondence between the parties, released under the Official Information Act shows.
DoC says to the extent the buildings fall short of “good repair”, any payment to Kah should be diminished. It does not appear that the seismic vulnerability of the Chateau will diminish the value owed.
What Kah is owed for the buildings is a matter of considerable difference of opinion, which is why, after seven months, negotiations are still dragging on.
Both Kah and DoC have engaged their own independent valuers.
But for now, the public’s best yardstick for understanding the two positions may well be the value for which each insured the Chateau.
Kah’s last publicly released financial statement shows the company had the “Grand Chateau” independently valued and insured for $90m (the reinstatement estimate).
DoC, on the other hand, currently has the buildings insured for just $10m, excluding natural disasters for which insurance is a bare $2m of cover for demolition only.
In the meantime, DoC emails released under the OIA indicate that ongoing maintenance and repair of the empty buildings is costing the department a whopping $150,000 to $200,000 a month.
In addition, a recent detailed seismic assessment by engineers WSP gave the Chateau an E grade, meaning it is earthquake prone and poses a very high risk to occupants.
It meets just 15 per cent of new building standards. Technically, the strengthening doesn’t need to be complete for several decades. But even if DoC could find a new tenant without first undertaking strengthening, it’s very unlikely it would countenance the risk.
The WSP report doesn’t estimate cost, but it does set out two options for strengthening and either one would almost undoubtedly run to the tens of millions of dollars. Experts say they can’t rule out a cost that tops $100m.
On top of this, the five-storey, 1929 Chateau contains a variety of worrying or deteriorating features including: water tanks in the roof space, unrestrained and supported only by timber framing; vertical discontinuities in the walls (structural gaps); signs of water damage and decay, especially on the third floor and in the roof structure; the state of the concrete in the basement is poor; the condition of the steel is thought to be just fair, and recoating is either due or overdue. These were also touched on in the WSP report.
If the Chateau is worth saving from demolition, New Zealanders will almost undoubtedly pay a very hefty bill.
What, we must ask ourselves, is the grande dame worth? Does she represent enough of us, of our past and of our hopes and ambitions, to warrant keeping? Can she realistically endure into the future?
However spectacularly, she is perched on the flank of an active volcano, in the shadow of three ominously conical peaks, atop magma chambers that will fill or not fill in our lifetimes.
In this way, she is a symbol of New Zealand itself, facing down a perilous geology that is our greatest existential threat.
Kate MacNamara is a South Island-based journalist with a focus on policy, public spending and investigations. She spent a decade at the Canadian Broadcasting Corporation before moving to New Zealand. She joined the Herald in 2020.