Council to consider quake impacts in Annual Plan

Chief Executive Tony Marryatt says the earthquakes have had a huge impact on the city and the Council has a challenging job ahead to rebuild what was damaged while keeping rates affordable.

“Staff have prepared a good plan for the future that we are pleased to recommend to the Council. We want to deliver the best for Christchurch, but we’ve only got a limited pot of money. Insurance coverage only goes so far, and it does not cover bringing our buildings up to new building standards,” he says.

As well as a huge repair job on earthquake-damaged roads and underground services, the Council has also identified 10 major community facilities that need to be repaired or rebuilt. The Council has committed to bringing these buildings up to 100 per cent of the new building standard codes, and extra funding over and above insurance coverage will be required to make these buildings safe for public use.

“Basically, earthquake repairs will see the Council carry out the equivalent of 20 years worth of standard maintenance work in the coming five years. In order to achieve this without burdening residents with large rates increases, we will have to borrow to fund the work and pay it off over time. Fortunately, this Council has always maintained a strong financial position and our debt levels are the lowest per capita of the country’s metropolitan centres,” Mr Marryatt says. “We can afford to borrow now and repay over coming years – that means that future residents who use the services and facilities are paying their share through their rates.”

“The Council will also consider a proposed rates increase for the coming year to help rebuild the city and there are a number of projects that staff are recommending we hold-off on so funding can be used for the rebuild. In addition, as a result of growing demand for new subdivisions, staff are recommending we bring forward service and infrastructure projects in areas of population growth.”

Recommended rates increase

Staff are recommending total rates increases of 7.47 per cent to cover three specific areas:

• an increase of 3.71 per cent to cover standard services and projects
• an increase of 1.76 per cent, as agreed last year to fund loss of revenue following 22 February
• a one-off increase of 2 per cent to fund the additional costs of rebuilding our major community facilities to today’s safety standards.

The rates increase forecast in the 2009-19 Long Term Plan, prepared before the earthquakes damaged infrastructure and facilities, was 4.19 per cent.

“There is no doubt that our residents are facing challenging times and any increase in rates is going to affect them. Staff have been very mindful of this in preparing recommendations for the draft plan. Given the scale of the task ahead, I believe staff have done a good job of budgeting for a massive rebuild while keeping rates as low as possible,” Mr Marryatt says.

Earthquake response and recovery costs

The cost of the emergency responses immediately after the earthquakes and ongoing repairs to our roads, underground services and facilities is estimated at $3.373 billion.

These costs will be covered in part by insurance (estimated $821 million) and also through an estimated Central Government contribution based on existing policies (estimated $1.547 billion). The cost of earthquake response and recovery to the Council is estimated to be $982 million.

Staff have recommended that the $982 million earthquake response and recovery costs be met in 2012/13 by pushing-back around $50 million of planned projects to be considered in future budgets, and through the 1.76 per cent rates increase introduced last year for a five-year period to cover borrowing.

The recommended financial strategy would see the $982 million of earthquake response and recovery cost paid off over 20 years.

In addition, the Council will repay over 30 years the $330 million cost of repairs to 10 major community facilities – which is required over and above insurance payments for these facilities. This will be repaid partly through response and recovery costs outlined above and with an additional, one-off rates increase in 2012/13 of 2 per cent. For the average ratepayer, a 2 per cent increase in rates works out to around $3 extra a month.

Under this strategy, at the end of the 2012/13 financial year the Council would have debt of $800 million, against assets worth $5.4 billion. To give this some context, it would be the same as a mortgage of $51,000 on a $350,000 house – and the Council still has $200 million of additional cash and investments.

Options for major community facilities

The Council has identified 10 key city facilities that need to be repaired or rebuilt because of earthquake damage. Staff have prepared options for the future of these buildings, based on engineering reports, costs and the community’s ideas for Christchurch that were shared as part of the Central City Plan process. The options the Council will consider next week are outlined below. More details about considerations and plans for these facilities will be discussed with the community as part of the Draft Annual Plan community consultation process.

Christchurch Town Hall – options include repairing the existing facility to 100 per cent of the building code or replacing the facility with a new building.

Convention Centre – options for the Convention Centre range from rebuilding a similar building on the same site, to building a bigger centre on a new site with a request for financial assistance from Central Government.

Christchurch Art Gallery – the Gallery can be repaired to 100 per cent of the new code with additional earthquake stabilisation work.

Former AMI Stadium – options include replacing the existing facility with a like-for-like stadium, or building a new facility with different stand/seating configurations.

QE II and Centennial Pool – options include developing a multi-sport hub in the Central City and building a community leisure facility on the QE II site or another site.

Central Library – the library can be repaired to 100 per cent of new building standards.

Lichfield Street Carpark – the carpark can be repaired to 100 per cent of new building standards, with consideration of a new façade.

Manchester Street Carpark Repairs – the carpark can be repaired to 100 per cent of new building standards, with consideration of a new façade.

Sockburn Service Centre – options include repairing the existing facility to 100 per cent of the new building standards, building a new centre on the existing site, or replacing the facility with a larger service centre and library facility in the south west, bringing forward funding proposed in the 2017 budget.

What happens next?

The Mayor and Councillors will consider staff recommendations on 10 and 11 April before adopting a Draft Annual Plan. Residents and other groups in the community will then have the opportunity to talk about what’s in the plan through the community consultation process. The Council is planning a series of Open Days where people can come in, find out more about the plan, discuss the issues and make a submission. Community drop-in sessions will also be held in your area during the four weeks of consultation. More details will be available soon.

10 – 11 April Draft Annual Plan adopted by Council at public meetings

20 April Public consultation opens

21 May Public consultation closes

5 – 9 June Council hearings on public submissions

25 – 27 June Final Annual Plan adopted by Council