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A group of Auckland retailers hope the Ombudsman will give them the go-ahead to sue Auckland City Council for more than $2 million.
The retailers say a council "cockup" has turned the prime Lorne St shopping area into a wasteland, with fumes, noise and traffic jams from a
construction site driving shoppers away in droves.
Auckland City Council says it cannot be held responsible for inconvenience from construction of the 33-level Precinct apartment tower, despite approving the building consent without notifying neighbours and renting half the street as a loading zone to construction company Mainzeal.
Ferner Galleries is the latest business to close its doors - the fifth since construction began three years ago. It is moving this weekend.
Director Richard Jarvis is "sick to the stomach" over the situation which has seen his gallery lose sales of about $40,000 a month. "On the day that construction started, our turnover went downhill. If I was a customer, I wouldn't have gone down there."
Ferner Galleries in Wellington has closed because of the $1.5m loss of sales at the Lorne St premises.
Jason Black, owner of Winos wine and tapas bar, sold his home to repay business debts after earnings dropped overnight in June 2004, forcing him to close his business. Anzac Framing and Artigiano Gallery have also shut down.
At least six other businesses want compensation. The retailers are also angry that the council has made at least $250,000 from renting the road to the site.
A solicitor approached the businesses and offered to act for them on a contingency basis, but pulled out after discovering there was no provision for damages under the Resource Management Act for building consent - and therefore no pay-day.
A judicial review to overturn the non-notified consent was an option, but Jarvis said it would have been "absurd" to do that when the 33-storey building was nearly finished.
However, if the Ombudsman finds that the council rented out the public Lorne St space wrongfully under the Traffic Management Plan, rather than the RMA, Jarvis said the retailers had one final chance at compensation.
He was disappointed that the council had delayed the Ombudsman's investigation and said the city should not be run as a profit-making venture. "The bureaucrats in Auckland City Council are untouchable. There is no way any ratepayer can touch them.
"The only thing the council is interested in is the rent for the street. All they could see was the potential interest in the rates from the potential tenants. We are ratepayers and we've been screwed over."
Dr Stephen Rainbow, general manager for council transport, said he could not comment further until the Ombudsman's report was finished.
However, he said there were up to 30 large construction projects in the CBD at any one time. "As with any big city undergoing major transformational change, we will occasionally experience construction issues and we are constantly reviewing ways to mitigate the impact on affected parties."
In 2001, Kitchener Group applied for consent for the Precinct.
But because the tower would loom over Albert Park, independent commissioners were appointed to consider the proposal. They decided that a public hearing of resource consent was unnecessary because Kitchener accepted the recommended conditions and adverse affects would be minor.
- jared.savage@heraldonsunday.co.nz
