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Report

To: Mayor and Councillors

From: Manager Planning & Environmental Services

Date: 3 August 2011

File reference: Document: 780078 Appendix A: 786635 Appendix B 780078

Portfolio holder: Councillor Carmine

Meeting date: 31 August 2011

Subject: Planning and Environmental Services Monthly Report – July 2011

Recommendation: THAT the report be received, and THAT the Chief Executive be authorised to sign the Relationship Agreement between the Crown and the Council, and the services contract with the Department of Building and Housing; and any other documentation related to the Council’s participation in the Weather tightness Financial Assistance Package scheme; and THAT Pursuant to Clause 32 of Schedule 7 of the Local Government Act, 2002 Council Appoints Alan Watson, Graeme Ridley and Councillor Mary Carmine to a Hearings Panel to hear and make a recommendation to the Minister on the Proposed Variation to the Martha Mining Licence 322388, and THAT Council hold a Public Meeting with residents and ratepayers of the Seabird Coast on Monday 24 October, 2011 commencing at 10.00am to discuss the Proposed 2012-22 Proposed Long Term Plan. INTRODUCTION This month has seen work continued on finalising the staff reports for the Proposed District Plan and preparatory work on the Long Term Plan documents. The draft Dog Control Policy and Bylaws were finalised with the working party for Council’s consideration. Customer services have been busy with the Kia Ora Mai training and are now working through Rate Rebate interviews. CUSTOMER SERVICES TEAM The Customer Contact Centre was offered 3419 calls in July of which 3322 were successfully managed. The Abandonment rate was 2.84% and the Service Level 88.56%. This is equivalent to the same period last year. The staff have been working to complete the requirements of the Kia Ora Mai customer service training programme. This is a Unit standardised programme put together by the


Aviation, Travel and Tourism Training Organisation (ATTTO) at the request of the government specifically aimed at raising the Customer Service bar for the Rugby World Cup. We have received positive feedback about our Team from the Tutor and Assessor, Tom Parsons. Congratulations to Lynda Muller, Gayleen Allen, Susana Leat and Linda Norris who have all completed the programme. The programme has been an excellent tool for reaffirming that the way we do things here is of a high standard, and has provided good revision for the staff. As the focus has been in part on understanding New Zealand, providing a uniquely New Zealand experience and being able to “point customers” in the right direction to attractions and activities, it has also raised staff awareness around what is available in our own and neighbouring areas. The team have now commenced the Rate Rebate Application process for the 2011/2012 year.

The Rates Rebate Scheme was established in 1973 to provide a subsidy to low-income homeowners on the cost of their rates (see The Rates Rebate Act 1973 for more information). For 2006 the Government revised the Scheme and increased the rates rebate thresholds significantly, making more people than ever eligible for the rebate. These changes came into effect on 1 July of that year. The Government, following a review of the Scheme's key settings, has further increased the rates rebate thresholds for the 2011/12 rating year.

The following changes came into effect from 1 July 2011:

• Maximum rebate increased from $570 to $580 • Income threshold increased from $22,340 to $23,240

The additional income allowance for dependants will remain at $500 per dependant. It has been apparent that many of our customers are much more aware of the scheme now and they have been proactively seeking their appointments without the reminder from Council. Nevertheless we will proactively invite any resident who received a rebate last year to apply, and there will be advertisements in the Hauraki Herald starting from the 26th August. Please be aware that the letters are sent out progressively (40 per day over several weeks) to ensure that staff can manage the incoming phone calls effectively and spread the workload. If a resident complains they have not yet received their letter this is why. Councillors are welcome to encourage them to call the Customer Service staff for an appointment. We aim to have 90% of Rate Rebate applications processed before the first instalment falls due. We are currently working primarily with customers who pay be Direct Debit to ensure that their payment structure is as convenient and manageable for them as possible. The Customer Service staff will be busy for the rest of the year with Rate Rebates, Rates and managing the Advanced Voting facilities in the Hauraki District prior to the General Election. DISTRICT PLAN District Plan Review The staff are finalising the reports on the submissions in preparation for posting them to the submitters and the District Plan Committee in early September prior to the commencement of the Proposed District Plan Hearings in October this year. A recent meeting with the staff of Waikato Regional Council was held progressing the Coastal Zone issue working towards an agreed position on the Coastal Environment and incorporating the NZ Coastal Policy Statement 2010 into our Coastal zone, in line with what is being proposed in the Proposed District Plan.


In addition to the Mayor’s letter asking Hauraki Iwi for a nomination for our Proposed District Plan Hearings Committee by 5th August for the Hearing of submissions; a further reminder letter was sent to Iwi asking for those nominations and further information on the nominees given by the 24 August 2011. Franklin Plan Changes Progress on resolving appeals on Rural Plan Change 14 continues. In August the Environment Court requested an update from all parties on progress on each of the outstanding appeals. Only three appeals remain that will affect district-wide rules. An Environment Court date of April 2012 has been proposed to finalise rural and coastal zone subdivision methods (primarily relating to transferable development rights and environmental enhancement lots), while the remaining two topics have not been allocated specific timeframes for resolution. Plan Change 25 (Natural Hazards) was notified in July and one appeal received relating to provisions surrounding National Electricity Transmission. Auckland City Council’s legal services team is acting on behalf of the three successor Councils to resolve this appeal. Submissions on Plan Change 30 (District Wide provisions) have closed and we are awaiting completion of staff reports. Commissioner’s decisions on Plan Change 27 (Remedial Minor) are currently being made and notification of these decisions will follow. Plan Change’s 24 (Pokeno) and 20 (Transport Routes) were made Operative on 1/6/2011 and 22/6/2011, respectively. DEVELOPMENT Development Table – to 31 July 2011 Consents Issued 2010/11 2011/12 Year to

date Building Consents 26 19 73% Subdivisions 5 6 120% Land Use - 5 500% Designations - - -% Variations 2 - -200% 7 11 157% LIMs 17 17 100%

The above table indicates development figures for Building and Resource Consents issued so far for the first month of this financial year. REGULATORY SERVICES TEAM PLANNING IMPLEMENTATION Processing For the month of July all the resource consents applications were processed within the statutory timeframe of 20 working days.


Biennial RMA Survey The information for this two yearly survey, was sent to MFE at the end of July and a letter of acknowledgement is attached in Appendix A. Hauraki Gulf Forum Following on from the recent release of the Hauraki Gulf State of the Environment Report 2011 the Technical Officers of the Hauraki Gulf Forum will be meeting to begin the discussions on the options available to address the adverse environmental impacts identified in the State of Environment report. BUILDING TEAM Processing Council received 23 Building Consent applications in July with 3 new dwellings, and these were processed within the statutory time frame, with an average of 13 working days. Building Consent Authority Accreditation The two yearly IANZ Building Consent Authority accreditation assessment was held this month which showed this Council as demonstrating continued compliance with our legal requirements and a recommendation from IANZ is for the continuation of the accreditation once the three minor corrective actions have been cleared. Weathertightness Homes Financial Assistance Package At the 29th September 2010 Council meeting Council resolved to support the Government’s Leaky Home Financial Assistance Package for owners of leaky homes in the Hauraki District. The Government has recently announced a Weathertightness financial assistance package at the end of July for owners of leaky homes as part of rhe Weathertight Homes Resolutions Services (Financial Assistance Package) Amendment Act 2011. This provides a new approach for fixing leaky buildings and gives a further option for affected homeowners. More information on the package is available from the Department of Building and Housing and outlined in Appendix B of this report. Under the scheme qualifying homes will be fixed on a no blame basis with central government and liable councils each paying 25 per cent of the assessed repair costs while the homeowner pays the remaining 50 percent. For councils joining the scheme, LGNZ recommends that Council sign the services contract with the Crown as outlined in Appendix B. It is recommended that as a follow on from the 29th September Council resolution that the Chief Executive be delegated to sign the Relationship Agreement between the Crown and the Council, and the services contract with the Department of Building and Housing; and any other documentation related to the Council’s participation in the Weather tightness Financial Assistance Package scheme. STRATEGIC PLANNING Thames Coromandel District Council – Response to Annual Plan submission. Attached for information is a copy of the Thames Coromandel District Council response to the Hauraki District Council submission to its 2011/12 Annual Plan. In terms of Councils submission, matters of particular interest were obviously the Hauraki Cycleway, the Hauraki Settlements Area and Economic Development (Hauraki – Coromandel Development Group, Tourism Coromandel and Aquaculture).


Waikato Regional Council – Response to Annual Plan submission Attached for information is a copy of the Waikato Regional Councils response to the Hauraki District Council submission to its 2011/12 Annual Plan and Amendments to its 2009 – 19 Long Term Council Community Plan. In relation to Council’s submission the Regional Council has detailed it’s specific decisions in relation to Council’s individual submissions. Variation 6 to the Waikato Regional Plan The saga with Variation 6 continues although it has now reached the stage where the submitters and the Waikato Regional Council have given their final submissions and summaries to the Environment Court for consideration. The Environment Court will now retire and consider the Variation along with the minute amendments made in relation to the National Policy Statement on Fresh Water. At this stage Councils position in relation to water allocation and water takes appears to be reasonably catered for under Allocated Catchments but the situation in Over Allocated Catchments is still a little unclear. A fuller report will be prepared for the Council once the consideration of the Environment Course has been received. The whole process with Variation 6 demonstrates that complex matters such as water allocation and alterations to Regional Plans can be incredibly expensive exercises. There were a large number of submitters, many of whom were corporate, and the total cost of this Variation to date would be well into the millions of dollars. Hauraki District has been very mindful of costs in relation to this Variation and has only used it legal and planning advisors for the critical matters as they relate to Hauraki District. 2012 – 22 Long Term Plan The production of the Long-Term Plan document is underway, with a view to having much of the wording completed for the Activities sections by 30 September. A brief had been sent to two local artists to showcase their ability to create the Hauraki Family for the Long-Term Plan theme. Unfortunately, after expressing interest in the project, both have advised that for various reasons they can no longer take part. Alternatives will need to be considered, which could include re-themeing the document. Work has been done to produce an ‘Economic Development Conversation Piece’ for inclusion in the Plan. This will be presented to the staff Management Team for comments, then to the Council Advisory Group at its next meeting. Work is continuing on the review of the Groups of Activities for the Long Term Plan. Part of this process involves the review of the levels of service and non-financial performance measures and targets (our performance framework). Staff have progressed the review of the following activities so far:

Community Initiatives Community Growth Community Recreation Community Facilities Democracy Iwi Liaison Policy Development Community Protection


For the 2012-2022 Long Term Plan, staff will be preparing two activity plans for non-asset activities. These will replace the internal business plans that have previously been in place. Staff are currently preparing an internal Activity Management Plan for Policy Development (what was previously called Strategic Planning) and will follow with Animal Control Services. Both are expected to be completed by 30 September. The purpose of an internal Activity Management Plan is to provide supporting documentation behind non-asset activities to ensure a useful planning and risk management tool is in place for all of Council’s operations. It is hoped that internal Activity Management Plans for other non-asset Council activities will be produced in following years Ward Discussions – 2012-12 Long Term Plan The October Ward Meetings will include an item for Ward matters to be included for consideration in the 2012-22 Long Term Plan. Ward Chairs and Ward members are asked to give initial consideration to the works and services in their wards they would like to see addressed as part of the 2012–22 Long Term Plan so that the October Ward Meetings can contain a meaningful discussion/workshop on these matters. At the workshop it is hoped that a draft works programme for each ward can be prepared for costing. Strategic Planning staff are available to assist the Ward Chairs and committees if they wish to hold workshops or informal meetings on this matter prior to the October Ward Meetings. 2010/2011 Annual Report Work is continuing on the draft Annual Report and Summary. Staff are planning to have a full draft Annual Report and Summary ready for the Management Team review on 27 September, with Audit booked to review the documents between 3 and 14 October 2011. The Council will be asked to adopt the Annual Report and Summary at its 26 October meeting. Newmont Waihi Gold Proposed Correnso and Martha Exploration Projects As Councillors will be aware the mine company announced on Tuesday 23 August 2011, its intention to:

• Lodge a Variation to the Mining Licence for the Martha Pit to allow for exploration drives to be undertaken under the North Wall of the pit

• To develop a new mine to access the ore body of the Correnso Vein and to put in a series of development drives to allow for further exploration. This is a new project and will require a fully Notified Resource Consent application. This is expected to be lodged in February/March next year.

In relation to the Martha Exploration Programme we cannot confirm or otherwise whether a Variation to the Mining Licence is the only statutory process required. Once we have received the application and viewed it, we will be in a position to determine as to whether a resource consent is required as well as a Variation to the Mining Licence. We expect this application to Vary the Mining Licence to be lodged in the week of 5 September, 2011. In relation to the Correnso Mine and exploration activities, we expect that a number of draft Technical Reports will start to be received early in the New Year to allow Council’s technical


staff and consultants to review them and assess whether all information requirements on each aspect of the mine have been met. When the full application is received in February/March 2012, a further review occurs to ensure that all of the information required to allow for public notification is contained within the application. At the time of the preparation of this report the notice of these mining projects had just been given and no comment can be made on the public reaction to the announcements. However, Council has prepared the Customers Services Team and other Council staff to deal with the queries that can be expected and a full briefing has been given initially to the Ward Councillors and then to the Full Council. A meeting with the 46 property owners/occupiers immediately over or adjacent to the proposed open stoping areas of the Correnso Mine was organised for the Thursday 25 August, 2011. An update of the meeting and the issues raised will be given to the Council at its meeting on 31 August, 2011. In relation to the Hearing processes for the above two projects I can advise as follows:

• If a Mining Licence Variation only is required for the Martha Exploration project then this is approved by the Minister for Economic Development. In practice the Minister delegates his responsibility to the Hauraki District Council for Landuse matters, the Waikato Regional Council for Regional Council matters and the two Councils consider the application and make a recommendation to the Minister. Once the Minister makes a decision on the recommendation this is advertised and the public have the right to object to the decision made to the Environment Court. There is no public Hearing in relation to the consideration of the application.

As with previous applications of this type I am recommending the appointment of independent commissioners and a community commissioner to hear the application and make the recommendation to the Minister. As the application is expected next week and any commissioners appointed will need time to read and consider the technical reports that will be submitted I am recommending that we use the same three (3) Commissioners that were used for the Mining Licence Variation required by the Trio Mine Development. They have a full understanding of the mining issues and mining licence requirements within Waihi and, more importantly, have a full understanding of the role as a Minister in this situation.

• In relation to the Correnso Mine I will be contacting a number of potential Independent Commissioners (including those used for the Trio Mine Resource Consent Hearing) to assess their availability for a Hearing in approximately mid 2012.

NWG Noise and Vibration monitoring reports for the period 1 April to 30 June 2011 These reports cover the Martha Pit consents as well as the Favona and Trio consents. The company advises that all noise readings made during the second quarter of 2011 complied with the consented limits for the various resource consents. The Council undertook a number of independent noise measurements through the month in relation to specific complaints received but these were also within the compliance limits for the consent. However, the independent readings did highlight the issue that noise can be a very unpredictable matter to predict and it can in fact less noisy closer to the mine than further away.


In terms of the Noise Management and Mitigation Plans, ten (10) yellow compliance assessments (first warning) were made by the company and mitigation measures were taken to reductions in noise levels. During the period there were 35 complaints received compared with 18 the previous quarter. In terms of vibration 94.9% compliance was achieved at Martha during the second quarter and the twelve month rolling average was 96.8% as at 30 June 2011. 98.4% compliance was achieved by underground operations during the second quarter and the annual rolling average was 99.1%. There was one significant exceedance in the Favona operation although no complaints in relation to this blast were received. We have obtained all of the technical information in relation to this exceedance and we requested that our blasting and vibration technical expert reviewed the probably causes for this. As a result of these investigations some training matters were addressed by the company and I am satisfied that the matter has been addressed appropriately. The number of vibration related complaints was less than the previous quarter as was the number of complainants. Twenty five (25) underground related complaints were received from six (6) residents and twelve (12) Martha related complaints were received from ten (10) residents. There are no outstanding matters of concern. Proposed Public Meeting with Seabird Coast Residents Council has previously expressed the wish for a meeting with Seabird Coast residents following their move into Hauraki District. The Mayor is recommending that Council give consideration to a possible public meeting to be held in Kaiaua on the Monday of Labour Weekend (24 October) at 10.00am in the Hall at Kaiaua. This would be a similar format to the Whiritoa meetings held on each Auckland anniversary day. The purpose of this meeting is to discuss with the residents of the Seabird Coast the Proposed Long Term Plan and the short, medium and longer term issues that the residents may wish to see addressed in the Proposed 2001-12 Long Term Plan. It is recommended that if this meeting proceeds that an article should be placed in the publication “The Compass” in early October which circulates in the Seabird Coast area giving some background to the meeting and publicising the event. It is also proposed letter of indication be sent to all the non resident ratepayers within this Seabird Coast area. The key issues identified relate to roading, land drainage/stormwater as well as local community issues. The meeting may be assisted with the development by relevant asset managers of briefing papers in the key areas for the Coast, particularly roading, land drainage and stormwater, community facilities and a general issues paper. Programmed Works Over the next three months the major issues being dealt with in terms of strategic planning will relate to:

• Preparation of Evidence on submissions and Further Submissions to the RPS • Long Term Plan timetabling, workshops and preparation of Draft Plan • Development Contributions policy • Hauraki Rail Trail governance issues


• Hauraki Treaty Settlement issues • Hauraki District Council’s articles in the Hauraki Herald and the Waihi Leader • Finalising the Draft Dog Control Policy and by-law • Development of a review plan for the Domestic Violence policy • Correnso mine • Martha Exploration project • Finalise dog policy and by-law

Peter Thom Manager: Planning and Environmental Services


MONITORING REPORT Publication of the Annual Report

That the Annual Report is completed, audited and adopted by Council by 31st October, each year.

The Annual Report for 2009/10 was adopted on 27th October, 2010.

Publication of the 2011/12 Annual Plan

That the Annual Plan is adopted by 30 June, 2011.

Draft estimates are in the process of preparation.

Special Consultative Procedure

That all issues subject to a special consultative procedure meet the requirements of the Local Government Act, 2002.

This has been undertaken as required with all Council Plans; Policies and Bylaws.

Resource Consents & LIMs

Target Progress towards success All notified resource consents applications are decided and issued within statutory timeframes.

99% of all notified resource consent applications are decided and issued within 70 working days.

1 Jul 2011 to 31 July 2011 Notified Consents to the end of July 2011 In time 0 Out of time 0

All non-notified resource consent applications are decided and issued within statutory timeframes.

All non-notified consent decisions, not requiring a hearing, are issued within 20 working days.

1 Jul 2011 to 31 July 2011.

Total 11 In Time 11 100% Out of time 0 - % Land Use 5 In Time 5 100% Out of time 0 - % Subdivision 6 In Time 6 100% Out of time 0 - % Other

Misc/Desig 0 In Time 0 100% Out of time 0 - % Variations 0 In Time 0 95% Out of time 0 -% Objections 0 In Time 0 100% Out of time 0 - %


Issue building consentwithin statutortimeframes. • 100% of all buildin

consents are issuewithin statutortimeframes

• 20 working days

Jul-10 YTD Jul-11 YTD2010/11 2011/12

No. of Consents 26 26 19 19% in time 100% 100%

New Houses Paeroa 2 - Waihi 5 2 Plains 2 1TOTAL 9 3

2011/12 Average Processing Time of BC's

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

1 2 3 4 5 6 7 8 9 10 11 12

Month

Num

ber o

f Day

s

2010/11 2011/12

Number of BC Processed

05

101520253035404550

July

Augus

t

Septem

ber

Octobe

r

Novem

ber

Decem

ber

Janu

ary

Februa

ryMarc

hApri

lMay

June

Month

No.

of B

C's

2010/11 2011/2012


All LIMs are issued withistatutory timeframes

All LIMs are issuewithin 10 workindays.

Jul-10 YTD Jul-11 YTD2010/11 2011/12

No. of LIMs 17 17 17 17% in time 100%

LIMs by Ward Paeroa 4 6 Waihi 9 6 Plains 4 5TOTAL 17 17

# LIMS %in time Avg # LIMS %in time % Avg2010/11 2010/12 Processing 2011/12 2011/12 Overtime Processing

July 17 100% 6.7 17 100% 6.6August 17 100% 8.2September 17 100% 7October 27 100% 8.4November 14 100% 9.7December 22 82% 8.5January 10 100% 3.8February 15 100% 5.8March 25 100% 6.4April 17 100% 6.4May 21 100% 8June 15 100% 8.5TOTAL 217 99% 7.30 17

LIMS Processed

0

5

10

15

20

25

30

July

Augus

t

Septem

ber

Octobe

r

Novem

ber

Decem

ber

Janu

ary

Februa

ryMarc

hApri

lMay

June

M o nt h

2010/11 2011/12


Appendix A


Appendix B


WEATHERTIGHT HOMES: FINANCIAL ASSISTANCE PACKAGE

1.0 EXECUTIVE SUMMARY

This report recommends that Council becomes a participating territorial authority to the

Financial Assistance Package (FAP) recently passed into legislation by the Weathertight

Homes Resolutions Services (Financial Assistance Package) Amendment Act 2011.

The Financial Assistance Package (FAP) is a government initiative aimed at giving

homeowners of leaky buildings an option to quickly repair their homes without going through

the current often protracted legal process.

Under the FAP, the government pays 25 per cent of the cost of repairing the building; if the

Council has a liability we pay 25 per cent, and the homeowner pays the remaining 50 per cent.

The government has made arrangements with lending institutions which are intended to

facilitate borrowing by homeowners who need to obtain mortgage financing for their 50 per

cent.

The FAP scheme has been developed as a collaborative process between the government

and local authorities, represented by Local Government New Zealand (LGNZ) and the four

most impacted councils.

The scheme is optional to the homeowner. It is a relatively quick and straightforward method

for owners of leaky buildings to get their homes fixed, and is an alternative to litigation.

From the Councils perspective, it has the advantages of supporting ratepayers who want to

get their homes fixed, giving the Council certainty as to repair costs and the percentage of

contribution of the repair costs that we will pay, and controls our exposure to third party claims

and excessive payouts due to joint and several liability.

In signing up to the scheme, the Council is committing to funding our 25 per cent of eligible

claims. It is a five-year commitment, with a review period in 2014.

The cost to the Council of joining the FAP is the difference between the costs it would have

incurred if it had been sued for the cost of repair (which will include legal costs), and the

contribution it will make to repair costs under the FAP (which will not include legal costs). In a

typical claim the costs of the latter are expected to be generally less than the costs of the

former, balanced by the fact that more claims might eventuate. Council will also incur

additional operational expense through the requirement to provide assessment and inspection

services, as a contractor to the Department of Building and Housing but free of charge.


2.0 RECOMMENDATION

2.1 That the Council agree to become a participating territorial authority under the FAP.

2.2 That the chief executive be authorised to sign the Relationship Agreement between the

Crown and the Council, and the services contract with the Department of Building and

Housing (DBH), and any other documentation related to the Council's participation in

the FAP.

3.0 CONTEXT

The problems related to leaky buildings arose from a series of building and system failures

between the mid-1990’s and the mid-2000’s. Some buildings constructed during this time

period proved not to be weathertight, and suffered significant structural and health issues due

to water penetrating within the building frame.

Because councils carried out building consent approval and building inspections of these

properties, the courts have found councils to be partly liable for the leaky building problem.

Court cases across New Zealand have typically found the proportion of councils “fault” at

between 15 per cent and 25 per cent and the other building professionals, such as architects,

builders and relevant subcontractors, to be liable for the balance.

However all parties have joint and several liability and if the others have all disappeared or

can't afford to pay their share, the Council will often end up footing a share of the bill

substantially in excess of 25 per cent of the repair cost, as the ‘last man standing’.

There is a maximum 10 year long stop period for claims. FAP does not provide any relief to

those homeowners whose houses were consented and inspected more than 10 years ago

unless they make a claim within six years of first becoming aware of the problem and within

the 10 year long stop period.

4.0 FINANCIAL ASSISTANCE PACKAGE

4.1 The Weathertight Homes Resolutions Services (Financial Assistance Package)

Amendment Act 2011 provides a new approach for fixing leaky buildings. It is a

partnership between the government and local authorities. It is focused on fixing

homes on a ‘no blame basis’. The importance of this is that it avoids litigation and a

significant amount of money councils are spending on the litigation process; money that

would be far better spent on fixing homes.

Under the FAP, the government pays 25 per cent of the cost of repairing the home. The

local authority pays a further 25 per cent where we have a liability from approving or

inspecting the home when it was built. The homeowner pays the remaining 50 per cent.

To assist the homeowner, the government has made arrangements with the banks to


assist homeowners to raise their part of the money. Furthermore, other contributing

parties such as the builders can participate in the FAP scheme. Their contribution goes

towards reducing the homeowners 50 per cent.

For the qualifying homeowner, this means they get their homes fixed quickly, they get 25

per cent of the assessed repair cost from the government and if the council is liable they

get 25 per cent from the council,. They also get an enhanced opportunity to borrow

money because the arrangements made by the government gives the banks confidence

to lend.

If the Council does not have any liability for example because a building was consented

and inspected by private certifiers, then we do not pay. The government still pays their

25 per cent and the homeowner will have to fund the other 75 per cent.

Not all homeowners will want to pursue this approach. The FAP scheme is optional.

Homeowners who wish to pursue normal litigation will still be able to do so.

4.2 The benefit for the council is:

• We only pay if we would have a legal liability to contribute to the cost of the repairs.

• We pay a fixed percentage of the repair costs which are established only after a

rigorous review process.

• Council money goes into fixing homes rather than the experience to date where 20

per cent to 25 per cent of cost can be lost in litigation expenses.

• Council does not have any exposure to additional cost through joint and several

liability.

• Once it has made a contribution under FAP, Council is protected by the legislation

from further legal claims relating to the events which gave rise to the claim, from

any party.

4.3 There are two aspects that Council needs to note. The first is that there is likely to be

some additional claimants under the FAP. These will be people who are not wanting to

pursue the current litigious system, but will be happy with a quick and simple FAP

scheme.

The second is that there may be some claims where the Council would otherwise have

insurance cover. Payments made by the Council under FAP are not likely to be an

insured loss. The design of FAP permits a council with insurance cover for a particular

property to elect to refuse to allow participation in FAP by that homeowner if the entry

into FAP is likely to give rise to greater cost to the Council than leaving the matter as an


insured claim. However this only applies where it is an existing claim subject to

adjudication, mediation, or court proceedings.

4.4 The Council currently has one claim before the Weathertightness Homes Resolution

Service, which does not involve the Council; and no leaky building claims before the

courts.

In September 2010 the Minister wrote to the Council setting out the proposal by the

Government to introduce the FAP scheme. The Minister asked the Council to support

the scheme in principle. The Council decision was also to support this at the

September Council meeting.

5.0 AGREEMENTS

5.1 There are a series of documents which have been negotiated between the government

and local authorities. LGNZ together with the four most impacted councils have

represented local authorities. The agreements will be individually signed by each of the

councils but are a common set of contract / agreements. Because these documents

have been negotiated on a national basis for a New Zealand wide system, it is intended

that all participating Councils sign the same core documents.

5.2 There are four key documents and a series of addenda.

Gazette Notice The first is the Gazette Notice, setting out the contribution criteria. This identifies those

homeowners who will be eligible for the scheme. Councils will only pay where this is a

residential dwelling (as opposed to a hotel or commercial shop or office within a

residential building), and the council has a liability because it approved and inspected

the building project. If the building was fully assessed and certified by private certifiers

then the council has no liability and does not pay its 25 per cent.

Relationship Agreement

The second is the relationship agreement. This defines how DBH and the participating

councils will work together to implement the FAP scheme.

It sets a governance structure where there is executive oversight of the relationship

between DBH and the councils. LGNZ is part of this executive oversight. Annually,

there is a meeting of all participating councils to review the programme and to make

any recommendations for improvement. The relationship agreement sets out the

functions of DBH and the councils. The agreement also provides a dispute resolution

process. Unresolved matters escalate through progressively senior people within the

council and DBH. In the final circumstance, there is a binding arbitration provision.


Homeowners Agreement

The third document is the homeowner’s agreement. This is the agreement between

DBH, the council and the homeowner. It sets out the obligations for all parties. It

ensures the homeowner gets robust advice on how to repair the building, ensures they

have the ability to pay their 50 per cent of the cost plus the cost of any repairs which

are betterment, and requires them to go through a robust process for obtaining quotes

and appointing contractors. It also requires the homeowner to make a commitment to

carry through and complete the job. The process includes a series of checks and

balances, to ensure that council expenditure is applied to repair work, and not to

betterment, and is realistically priced.

Services Contract

The fourth document is a contract for services between the council and the Crown.

This relates to council’s assessing the repair plan and undertaking FAP inspections.

The services provided by the Council will be provided without charge and are a cost to

council's participation in the FAP. The legislation provides immunity for contractors of

the Crown. Consequently, the work the council does in its FAP role of checking repair

plans and undertaking inspections will come under the umbrella of this Crown

immunity. This is a critical protection for the council. The council will retain its normal

functions and exposure to liability as a building control authority, when it issues and

inspects building consents for this repair work.

Appendix I contains a summary the documents/ agreements and the Gazette notice.

6.0 FINANCIAL CONSIDERATIONS

The main objective of agreeing to participate in to the FAP scheme is to provide an option for

our residents who own leaky buildings to get their homes fixed. Secondly, it’s about de-risking

the Council’s exposure to third party litigation and the difficulties with joint and several liability.

The FAP scheme is likely to see our Council paying out about the same or less contribution to

leaky buildings than under the status quo. If the FAP scheme is successful, it’s likely that our

payouts will be earlier in the process rather than the current situation which sees payouts

delayed by litigation.

Critically, all of the Council's payout under FAP will go to fixing homes and we won’t see

significant amounts spent on litigation. Similarly, the Council’s risk profile will be substantially

reduced because the FAP scheme brings certainty as to the basis on which we will contribute

to the fixing of leaky homes. There is a significant benefit in avoiding exposure to joint and

several liability.


There will be some operational costs within our building unit for managing the FAP scheme.

These will be similar to those we would have anyway for managing leaky buildings under the

current system.


Attachment One Financial Assistance Package Scheme Documents FINANCIAL ASSISTANCE PACKAGE SCHEME – AGREEMENTS, CONTRACTS AND DOCUMENTS 1. Homeowner’s Agreement

This is an agreement between the council, DBH and the homeowner. This is the primary document which establishes the FAP scheme and funding for the individual claimant homeowner. The key issues are:

• The Department of Building and Housing (DBH) determines if there is an eligible claim under the Weathertight Homes Resolution Services Act 2006. An assessment report is obtained and the owner may elect to enter the FAP.

• DBH and the council then determine whether the claim is eligible for FAP. A discretionary decision by the council to refuse eligibility is not likely to be able to be challenged.

• If DBH and the council agree that FAP is available, then the homeowner goes through a process of preparing repair plans, obtaining quotes, getting relevant regulatory consents and preparing a payment plan.

• DBH fronts the scheme and has the direct dealing with the claimant.

• The council is fully involved in assessing and recommending approval of the repair plan and payment plan.

• If the council and DBH can’t agree these elements, then these are sorted out prior to DBH talking to the homeowner.

• Once the repair plan and payment plan are agreed, and the claimant has satisfied DBH that they can afford the cost of the repairs (by borrowing or otherwise) the homeowner gives a notice to proceed, i.e. a statement they wish to be part of the FAP. At this stage, they must discontinue any legal proceedings.

• The first payment is made by DBH on behalf of both DBH and the council. This triggers the legal provisions which prevent any person subsequently seeking compensation or redress from the council over weathertightness issues related to that home.

• The council undertakes the inspections, acting as a contractor for DBH so that we come under the umbrella of their immunity.

• Any changes to the repair plan or payment plan go back through a process which gives councils full involvement.

• DBH draws the funds for the council’s portion of the payments (25 per cent) by way of direct debit. There are checks and balances to enable the council to check that drawdown amount is appropriate.

• Before DBH makes the final payment there is an opportunity for Council input and inspection of invoices and other supporting information.


2. Discontinuance Addendum

This is an addendum to the Homeowner’s Agreement which is completed when the claimant has existing proceedings against the council which have to be discontinued before Council makes the first payment.

• The homeowner acknowledges that their legal rights are permanently altered and they can no longer seek redress from the council for weathertightness issues.

3. Multi Units Addendum

This is an addendum to the Homeowner’s Agreement for claims involving multi unit buildings or multiple buildings in a single body corporate. The key points are:

• The Body Corporate and multiple owners need to sort themselves out so they can speak as one voice for the FAP scheme.

• For multi-unit developments in multiple buildings, the FAP scheme will apply to whole buildings.

• All the homeowners of the building plus the body corporate must agree to any staged or partitioned approach to repair.

• It is for the body corporate to determine how the funding the cost of repairs is distributed among members.

• The DBH / Council concern is to make sure that the whole project is affordable and that for staged projects, contingencies are applied in an equitable manner so they are not disproportionally used up by early stages.

4. Fully Completed Repairs Addendum

This is an addendum to the Homeowner’s Agreement for use where a building has been fully repaired already. If a building has been partially repaired, then it goes through the normal process. The key elements are:

• DBH, in consultation with the Council determine a financial amount which is offered to the homeowner.

• The homeowner either accepts or rejects the offer.

• In making its offer the DBH, and the Council, take account of the evidence of costs put forward by the homeowner, any assessor’s report, any betterment to be deducted, and the cost of similar jobs.

• The homeowner is relieved from having to prepare repair plans and payment plans because the job is already complete and they are simply getting a monetary payment.

5. Contractor’s Statement

This document flows from the Homeowner’s Agreement. It is a statement by the contractor/builder that:

• They are aware this is an FAP repair.

• They agree that FAP officers (including council officers when acting as a contractor to DBH) will have access rights to the site.

• There is an FAP payment plan that they need to be aware of (and in most cases will set the payment plan for the contractor).

• They need to carefully identify their costs to distinguish between repairs and. betterment.


• When the building is declad, there will be a critical inspection which will determine the final cost of any variable amounts (provisional cost sums) and builder’s contingencies in the quoted costs.

• Any adjustments to the repair plan or payment plan will need the consent of the homeowner, DBH and the Council.

6. Relationship Agreement

This is the primary document which sets the relationship between DBH and the Council. The critical elements are:

• The core objectives of DBH and council are outlined. It is about fixing leaky buildings. It also relates to us each giving 25 per cent. The agreement particularly records that the parties do not intend that their respective 25 per cent contributions be increased.

• A governance structure is established to ensure that there is executive oversight of the relationship between the Councils and DBH.

• The functions and accountabilities of the different parties are clearly set out, as is the commitment to work a collaborative model.

• It establishes a senior operational managers’ forum and an executive group of chief executives (or their nominees).

• There is a dispute resolution process which targets resolving matters at operational level, but escalates to second tier managers, chief executives, the chief executive of DBH, then arbitration.

• There is a commitment by the parties to stay in the scheme until at least 2014. After that time, under certain circumstances councils can terminate the agreement.

• DBH is required to offer councils a contract to provide the repair plan review and inspection services for the FAP scheme. This ensures councils get the right to deal with repair plans inspections if they wish to.

• The Crown (including Housing New Zealand) and the Council agree not to claim under FAP for their own buildings.

7. Contract for Services

This is a contract between DBH and councils who want to take up the option of providing review and inspection services. It particularly relates to the approval of repair plans, inspections and any changes to repair plans. They key points are:

• Councils are appointed as a contractor.

• Councils are able to appoint agents to carry out their work. These may be people who provide professional services to the council.

• DBH can suspend the contract for non-performance but cannot terminate it until the council has the right to go through dispute resolution procedures under the Relationship Agreement.

8. Information Pack

DBH is to publish an information pack to assist homeowners. As part of this document approval process, councils have agreed a checklist and bullet point content of the key elements to go into this information pack. These are the matters which impact the legal agreements / documents. DBH have agreed the content list, which they will editorialise into a user-friendly information guideline.


9. Contribution Criteria Gazette Notice

This is the Gazette Notice which outlines the criteria under which claimants are eligible for the FAP. Claimants have to pass one set of criteria to qualify for the government's 25 per cent and then must pass a second set of criteria to be eligible for the Council's contribution. Key points are:

• Only residential dwelling houses are eligible. • The property must not previously have been the subject of a settled claim against the

Council • Councils do not pay if they owed no duty of care and would not be liable if sued. For

example council is not liable where private certifiers consented and inspected the job. • The Council's 25 per cent contribution will not be available if the claim relates to a

residential dwelling house in a retirement village and the claimant is the promoter or the operator of the retirement village.