Taxpayers are affected by a leaky resort solution

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Ratepayers in Queenstown-Lakes will each pay more than $300 a year for the next 30 years in what is expected to be one of the biggest leaky building claims in New Zealand.

The council is facing a $162.9 million bill for costs associated with the Oaks Queenstown Shores Resort at Frankton Rd.

In its submission to the Department for Business, Innovation and Employment (MBIE) planning permission system review, the council said the impact on rates of Wensley Developments Ltd’s claim to Oaks Shores would incur an additional $9.56 million in debt service over the next 30 years.

This would increase rates by an average of 9.6%, costing $305 per property, every year, for three decades.

The council’s submission urged the MBIE to include risk, liability and insurance in its review of the system, and ‘strongly’ denied that the joint and several liability in play at present was the ‘fairest’ .

“The Council’s experience and position differs significantly from the policy position paper,” the brief states.

“Currently, ratepayers bear a disproportionate burden of liability, with building law consent authorities (BCAs) often the only party left to compensate owners when construction defects occur…”

The council wanted the liability framework to move to one of “proportionate liability”, as this would reflect the roles and responsibilities of those involved and encourage building practitioners to actively manage risk.

“This should be accompanied by a compulsory housing guarantee system… and/or insurance products.

“The owner’s interest would then be protected and there would be no [be] an obstacle to the transition to proportionate liability”.

If, however, the joint and several liability approach were to remain, the BCA’s liability should be capped at 20%, the council said.

The submission said the heightened risk liability at present has caused the BCA function to be “more cautious and demanding”.

The council said it had experienced an increase in the number and amount of claims against it by landowners relating to waterproofing and other construction defects, and a “significant increase in the running costs of the council to defend and resolve these complaints”.

The “total of all expenditures” during the 2021-2022 year to defend and/or resolve these claims, including costs, was approximately $40 million, largely funded by increased board debt. .

This had translated into an annual tariff increase of around 1.6% for the year 2022-23 “and beyond”.

The submission said the effect of the Oaks Shores case also included a loss of borrowing power, which would “inevitably” lead to reduced investment in its community assets.

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