An estimated 700 properties across the country are now considered unliveable and homeowners will be offered a voluntary buyout through a funding arrangement between the Government and councils.
A further 10,000 homes will require investment in flood mitigation around them so they are protected when the next severe weather event hits. About 400 of the unliveable homes are in Auckland.
Cyclone Recovery Minister Grant Robertson, also the Finance Minister, was making the announcement earlier today in Wellington.
Robertson said the Government has a “ball park” figure that the category 3 buyouts could cost $1 billion.
The announcement follows months of analysis of local risk assessments in affected regions alongside data from insurance providers. Consultation with affected Hawke’s Bay property owners begins today while it is expected the same will begin in Auckland from June 12.
Labour MP for Te Atatū Phil Twyford called it a win for homeowners in his West Auckland electorate, some of whom have been battling repeated flooding for years and for whom he has been asking for a buyout scheme.
The Government has set three categories for affected areas to be designated. Category 3 applied to areas where future severe weather event risk couldn’t be sufficiently mitigated, while category 2 applied to areas where it was determined community and property level interventions, such as raising stopbanks, were feasible to manage future severe weather event risk.
Robertson said the Government will enter into a “funding arrangement” with councils to offer the buyout for homes in category 3.
That would also co-fund the work needed to protect properties in category 2. An initial $100m to fund this work had already been announced as part of Budget 2023.
“The Government is committed to assisting local councils to find solutions for those who have been affected,” Robertson said.
“As I have said many times, we cannot meet all the costs, particularly knowing that we will see more extreme weather events like this.
“As a Government, we have to strike a careful fiscal balance between supporting affected communities and not making all tax-payers bear the cost.”
Making the announcement today, Robertson said the category designations were local-led, while also bringing in expert information.
“Local voices led the way,” he said.
In terms of category 2 homes, he said a process will be put in place so central government and council can set up plans and a business case for the redevelopment of these homes.
He hopes that is finalised by early next year, with $100 million in Budget funding this year allocated to enable that.
Regarding category 3 homes, central government and councils would work together to fund voluntary buyouts.
Robertson said there are complexities in areas where there is multiple ownership of land.
“We want to work through that in a careful and considered way,” he said.
Associate Minister of Finance Michael Wood said households will still have a chance to give feedback and input into these processes.
Wood said there are about 400 Auckland properties likely to be in category 3. A significantly larger number are in category 2, he said.
Te Atatū MP Twyford said West Aucklanders are happy with the chance to have clarity moving forward.
“There is a lot more work to do, and for many there will be continuing uncertainty,” he said.
“But this is a win - the Government is committing to what we have been asking for: a comprehensive recovery programme tackling the causes of flood risk, with support for homeowners, including the option of voluntary buyouts for the most at risk.”
Robertson said houses could be shifted between categories as further assessments of risks and dangers are taken.
He said the first stickers homes got in the aftermath of the damage, such as red or yellow stickers, was not indicative of which category those homes will be in under the rebuilding scheme.
Robertson said the issue of what role insurance will play in voluntary buyouts is still being worked through.
One example of how it might work is that the insurance would pass to the Government and council if they buy out a property.
He also said there needs to be a decision made about whether insured homeowners should get a different deal to uninsured homeowners.
In the case of category 3, one of the important questions is that of valuations - how damaged homes and properties can be valued, Robertson said.
He said the final buyout decisions will be made by local councils.
“What we are saying today is we are willing to step up and support that,” Robertson said.
“We all have a desire to give people certainty as soon as we can.”
When asked if people who don’t accept voluntary buyouts could get insurance, Robertson said these homeowners could face risks. But his team wanted to ensure the buyout was voluntary.
“The Government is making very clear today that if these events unfold over future years, we’re here to help, we’re here to support but we cannot bear all the costs.
“Every event has to be judged on its own merits, but what we are signalling is we are there to support,” Robertson said.
When it comes to category 2 areas, those people won’t be offered a buyout because resilience to weather events will be centred on community efforts, such as broader works like flood stopbanks.
Robertson said the buyouts are not based on whether someone wants or doesn’t want to live in an area.
He said it is based on a variety of data and risk assessments that these properties are those in which mitigation measures aren’t judged to be effective in preventing future weather damage.
In terms of how central government finances the buyouts with local government, Robertson said that decision hasn’t been made.
Initially, a principle split amount will be set but then there will be room for some discussions.
Hawke’s Bay MP Kieran McAnulty said that with the announcement today, category 2 residents will know that insurance companies have said they will reinsure those properties again.
Decisions on the details of how the voluntary buyout process will work would be made in the coming weeks, including the criteria for valuing category 3 properties, how costs would be split between central government and councils, and what would happen for uninsured properties.
Robertson said today’s focus was on homes but more information was to come regarding commercial properties.
“We are working with sectors, such as the horticulture sector on possible targeted support for commercial operators, and on regional plans that will provide overall support for recovery and rebuild,” he said.
Māori engagement would be conducted through a parallel process, which would address the future of whenua Māori (Māori land).
Councils would lead further engagement with affected property owners in their areas, Robertson said.
“From the beginning of this process, the Government has supported a locally-led response to the North Island weather events, as requested by councils and communities in affected regions.
“Today’s announcement will help councils get the right solution in the right place and avoid significant financial hardship for property owners.”
Wood said it was understood Auckland Council would be contacting affected property owners from June 12.
Some owners of category 3 properties in Tairāwhiti had already been contacted with the remainder to be finalised over the coming weeks.
It comes as maps have also been released - for the first time - showing a breakdown of flood-hit areas in Hawke’s Bay and which risk categories each area has been placed into.
Much of Esk Valley, north of Napier, which was hit extremely hard by the cyclone, has been provisionally categorised as having an unacceptable risk to live on in the future (category 3).
There are three risk categories (or zoning categories).
Properties in category 1 have been deemed safe to rebuild on, and those owners can now fix their homes and safely return home.
Properties placed in category 2 or 3 are indicative only, meaning they could still be moved to another category in the future following community consultation, which will begin in mid-June.
Category 2 (which has three sub-categories) effectively means conditions will need to be met before a property is deemed safe to rebuild on (such as raised homes or improved stopbanks).
Category 3 properties will be deemed unsafe to return to and off-limits for living.
Whirinaki, just north of Napier, resident Maggie Braviner told Hawke’s Bay Today ahead of the announcement she eagerly wanted to be placed into category 1.
“Definitely category 1 - we hope to be in that one. We would love to rebuild and love to return home.”
For those whose properties have been placed in category two or three, a lengthy process was still ahead to determine exactly what will need to happen for their properties to be deemed safe to rebuild on, or whether they will need to relocate due to the high flood risk.
Hawke’s Bay’s five councils, in collaboration with the Government’s Cyclone Recovery Taskforce, had been working on which areas should be placed into each category.
That risk assessment process was based on data from the regional council, Ministry for the Environment, and insurance company claims data.
A breakdown of the number of homes included in each category in Hawke’s Bay will be officially released at noon.
