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HERITAGE BUILDINGS – A WAY FORWARD Our past is told to us through the many Heritage buildings that we see around us in our towns and cities. Buildings help retain the link between the past and the present. Since September 2010 our interest in old buildings has heightened but for a different reason. A recent report commissioned by CERA claims that over 40 persons were killed in the Christchurch Earthquake by older unreinforced buildings. It has been impossible not to take more than a passing interest in the buildings that we all work, live and play in and particularly how they might behave in a major earthquake. If you walk the main streets of most provincial towns and cities you need not look far for good examples of earthquake prone buildings. Many of these buildings will be Heritage classified. Even if we do not get another destructive shake, given the prohibitive cost of insurance and the safety concerns now prevailing, the central business areas of our main cities and towns will look different in ten years time. The events of Christchurch have changed a lot of things. The rules and regulations of existing laws and by‐laws will be more stringently imposed by the authorities. A new “normal” is upon us. 2.
BUILDING ACT Section 122 defines an earthquake prone building as being a building that: All TLA’s have an earthquake prone buildings policy as required by Section 122 of the Building Act 2004. (a)
will have its ultimate capacity exceeded in a moderate earthquake (as defined in the regulations) and; (b)
would be likely to collapse causing; (i)
(ii)
injury or death to persons in the building or to persons on any other property or, damage to other property Section 124 gives powers to Territorial Local Authorities in respect of dangerous earthquake prone or insanitary buildings. Heritage Buildings.amended as at Jan12.PVl.doc Page 1 of 6 If a Territorial Authority is satisfied that a building is dangerous, earthquake prone or insanitary, a Territorial Authority may, (a)
(b)
(c)
put up a hoarding or fence to prevent people from approaching the building nearer than is safe; attach in a prominent place on, or adjacent to the building a notice that warns people not to approach the building; give written notice requiring work to be carried out on the building within the time stated in the notice which must not be not less than ten days after the notice given to; (i)
(ii)
prevent the buildings from remaining insanitary. Section 125 requires that a copy of the notice must be given to ; (a)
(b)
(c)
(d)
(e)
(f)
3.
reduce or remove the danger or; The owner of the building and, An occupier of the building Every person who has an interest in the land Every person claiming an interest in the land Any Statutory Authority The New Zealand Historic Places Trust if the building is a Heritage building. TERRITORIAL LOCAL AUTHORITIES The Building Act 2004 does give Territorial Authorities the “teeth” to force owners to make earthquake prone buildings safe. As required by law, policies were adopted by all Territorial Authorities between November 2005 (Invercargill) and September 2007 (Westland District). Of the 73 Territorial Authorities in New Zealand, 45 have produced a timetable for strengthening the earthquake prone buildings under their jurisdiction All policies are to be reviewed no later than five years after their adoption. The average minimum time required by TLA’s to strengthen earthquake prone building is 9.9 years. The average maximum time to strengthen earthquake prone buildings is 21 years. Of the 73 TLA’s, 26 have identified a different time scale for Heritage buildings. The question is, is the current time frame still appropriate? OR do we need to keep things in perspective. Heritage Buildings.amended as at Jan12.PVl.doc Page 2 of 6 4.
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WHAT DOES THIS ALL MEAN? The Building Act 2004 quite clearly states that a Territorial Authority must adopt a policy on earthquake prone and insanitary buildings within its district. The policy must also state what approach the Territorial Authority will take in performing its functions, its priorities, and how that policy will apply to Heritage Buildings. Typically earthquake prone buildings will be defined as those that, when subject to moderate earthquake shaking do not meet the defined loading and materials standards for new buildings. A 33% loading has been the minimum. Having identified these buildings, what action are TLA’s bound to take once earthquake prone buildings have been identified and what impact will that have on the market values of said buildings in the light of potential strengthening costs and increased insurance costs. Overriding all, is the underlying requirement that the building must be safe to occupy. HERITAGE POLICY The Building Act requires Councils to pay special attention to Heritage buildings. A typical Council policy might state that “Heritage buildings provide benefits and contribute to the amenity value of a town”. There are typically a limited number of “Heritage” buildings in a town. Once demolished a Heritage building is gone forever. It is considered by many that the benefits of preservation of Heritage buildings are substantial compared to the benefits of redevelopment. Many Heritage buildings have already been strengthened. Has the strengthening been sufficient to withstand a major quake? Should more strengthening be undertaken? STRENGTHENING A HERITAGE BUILDING The Christchurch earthquake will likely see the New Zealand Building Code upgraded once more. Scientists have learnt and will learn a lot from the Christchurch ‘quakes. The best way to secure or strengthen a Heritage building will undoubtedly be revisited. Either way the cost to strengthen will be significant, as it was pre‐September 2010. For a modest “Heritage” building in a small provincial centre the cost of strengthening will likely be prohibitive to the owner. A cost of $2.0 billion has been flagged by the CERA report as a “starting point” for strengthening all of New Zealand’s earthquake prone buildings. Who pays……or does the building come down?
Heritage Buildings.amended as at Jan12.PVl.doc Page 3 of 6 7. 8. INSURANCE Heritage buildings are still insurable in most cases but at a cost – a significant cost. The increase in premiums for pre‐1935 structures since the Christchurch quakes has in some cases been tenfold. For a number of buildings, insurance has been impossible to get. Since February 2011 there have been few sales of known earthquake prone buildings anywhere in New Zealand. Getting adequate insurance has been part of the problem. Anecdotal evidence from Wellington suggests some earthquake prone buildings are selling for the land value alone. Tenants of Heritage buildings too are also now less likely to get insurance that is affordable. As a consequence, the prospect of finding a tenant for an earthquake prone building has also become more difficult. EXCESS The increase in “excess” on earthquake prone buildings is now also a significant issue not only for Heritage buildings but for all property. We are now all paying for the losses suffered by insurance companies as a result of the Christchurch earthquakes. Pre‐September 2010, a typical “excess” was assessed at 2.5% of the loss for a normal commercial building. Therefore, if the “loss” was say, $500,000 then the excess was $12,500. Today, the “new normal” is that the excess is to be 5.0% of the “replacement cost” for a commercial building. For a commercial building with a replacement cost of say, $2,000,000 the “excess” will be $100,000. For Heritage buildings the excess is likely to be 10.0% of the replacement cost. Again, for a $2,000,000 re‐build, the excess will be $200,000. For many so called Heritage buildings the Indemnity Value of the structures may well be less than the “excess” even in the event of a partial loss. The Heritage building will therefore be rendered potentially worthless and equivalent only to its underlying land value. Heritage Buildings.amended as at Jan12.PVl.doc Page 4 of 6 9. A STRATEGY We would all agree that the retention of Heritage buildings is a desirable outcome for the respective communities from which they were born. Settlements are a living continuum of history, and buildings are a tangible way of retaining the link between the past, the present and the future. Good working examples of Heritage buildings that have been retained are: •
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Regent Theatre, Palmerston North Library building, Palmerston North Old BNZ Building, Wellington The “cost” of retaining important Heritage buildings is easily justified. The question is, what buildings should be retained and who pays? Not all old buildings are worth keeping for posterity. Many are beyond repair or simply do not hold sufficient intrinsic value, are modest in their appearance and/or will never attract a community use or economic use. Territorial Local Authorities together with their communities could perhaps decide what buildings are worth keeping and what are not. Every community will be different but an unscientific survey would suggest that only up to 35% of existing stock may be economically worth retaining. A case for a higher ratio could be made for the likes of Dunedin, Oamaru, Napier, Wanganui or other “historic” centres. A fund could be established by Central Government and the Territorial Local Authority with the “cost” to be shared with the current owners to secure and strengthen “worthwhile” buildings. These properties could be identified on the District Plan and the “community” interest registered against the title. Maintenance could be the responsibility of the TLA. That way the most notable and architecturally important structures are retained and the inhabitants kept safe. For the rest – let the market decide. Existing legislation can force owners to take action. The average minimum time of 9.9 years to strengthen earthquake prone buildings is, in the light of Christchurch, probably too long. We all ultimately want to see important Heritage buildings identified, strengthened, retained and kept safe. Heritage Buildings.amended as at Jan12.PVl.doc Page 5 of 6 For the balance, parts of the central business area of our towns and cities will inevitably be “gutted” freeing up land for new development. By‐laws can be created to ensure that the character of our towns is retained by old style facades e.g. Darraghs building, Feilding. Safety must be a priority. Christchurch has shown us the risks are real and the outcomes can be severe. 10. SUMMARY Christchurch has shown us what the “new normal” will look like. Action going forward needs to be decisive. There will be losers, there will be winners. The end objective has to be kept in mind that is; our buildings are safe and our prime Heritage structures are retained for the next generation and beyond. Prepared by: Paul van Velthooven Registered Valuer FPINZ FNZIV BA BComm September 2011
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