The Earthquake Commission (EQC) wants to determine how much flood-prone Christchurch properties have dropped in value and settle claims for that amount.
However, whether the money is given to homeowners or used to help pay for area-wide mitigation will be decided by Earthquake Recovery Minister Gerry Brownlee and the outcome of a High Court judgment.
Computer-generated modelling of land and river systems across the city has identified about 9000 properties that may fall into the increased flooding vulnerability (IFV) land damage category.
EQC head of land settlement Zac Berry said there were two options for settling these claims - one would leave the homeowner out of pocket and with uninsured land, and the other would compensate homeowners for the loss of value to their properties because of increased flood risk.
The preferred option is using a loss of value system but because this form of settlement has never been tested, EQC has asked the High Court to rule on whether it is legal.
Berry said the next phase would involve "ground truthing", where engineers would physically inspect the damage. Once this was completed, EQC was expecting closer to 7000 properties to be in the IFV category.
Land could not be remediated on a property-to-property basis because raising one person's land would only create more trouble for surrounding homeowners, he said.
The preferred settlement option being explored would result in homeowners being compensated for the loss in value of both their land and dwellings.
Berry said that if a house was worth $400,000 before the earthquakes and was now valued at $350,000, the claim would be settled for $50,000.
He hoped the court case would deliver a "favourable outcome" by the end of August but admitted claims could not be resolved if there were any delays.
"This is where we get to the point where . . . we will look to central and local government for direction.
"I don't want to use terms like ‘lap of the gods' but ultimately there are some external factors that will give us direction of just how that will play out."
Engineers have been told to prioritise the Flockton Basin for physical inspection and all claimants in the IFV category will receive letters detailing the next steps by early June.
Repairs to 309 homes now in the IFV category are on hold and customers have been given the option of having their property repaired ahead of confirmation of their land damage, receiving a cash settlement or remaining on hold until land damage is confirmed.
EQC did not have figures on how many properties in the IFV category had already been repaired.
"Without doubt there will be properties that have been repaired that are now going to find themselves in this category," Berry said.
Brownlee said EQC would contribute to an area-wide fix in areas such as the Flockton Basin but said the total amount might not be "anywhere near as significant as some would like".
"But that court case is important because it sets the precedent going forward," he said.
Brownlee was angry the council had still not approached the Government with a mitigation proposal.
"I can't believe it's been eight or nine weeks since they said they would come to us with a proposal," he said.
"I'm sick of it, to be honest."
A council spokesman said yesterday the proposals would be discussed with the Government after being considered at a council committee meeting on June 5.
Carrick St homeowner and spokeswoman for the Flockton Cluster Residents Group Jo Byrne said the loss of value option meant homeowners were not left with uninsured land.
"But we're still stuck between a rock and a hard place because there's no way of remediating our land on a property-by-property basis but we don't even know if this [form of settlement] is legal and we don't know what is happening with area-wide mitigation," she said.
- The Press