Brownlee cut payout for owners

MICHAEL WRIGHT
Last updated 05:00 28/01/2013

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Canterbury Earthquake Recovery Minister Gerry Brownlee disregarded advice from officials to give some red-zoned Cantabrians a full payout for their quake-damaged land, instead offering them half.

Documents obtained under the Official Information Act show the Canterbury Earthquake Recovery Authority (Cera) recommended to Brownlee that property owners in the residential red zone who did not qualify for the initial Crown compensation deal have the same offer extended to them.

Brownlee rejected the advice, choosing to offer those in limbo half the rateable value (RV) of their land and avoid the "moral hazard" of a government safety net for the uninsured.

The Crown offers for flat-land red-zone properties that cannot be economically repaired were an RV payout for the land and property, or just the land.

In many cases, such as vacant and commercial property, it had not been possible to insure the land, leaving owners stranded when the offer was linked to a property's house insurance policy.

Property owners, through a house policy, pay an Earthquake Commission levy, which insures against land damage.

Five categories of land were ineligible for the initial Crown offer:

- Residential properties with dwellings under construction.

- Vacant residential land.

- Commercial and industrial land.

- Non-residential properties owned by not-for-profit organisations.

- Waimakariri District Council leasehold properties.

An April 2012 Cera report recommended all categories "are extended a Crown purchase offer". In many cases, it said, compensation should be the same as the initial Crown offer.

"Cera does not consider that the Crown would set unmanageable precedents for the treatment of any property which lies outside the red zones if it accepts the suggestions in this paper. Nor does Cera consider that the risks to insurance payouts are significant."

It estimated 141 properties could come into the fold at a maximum cost of $47 million. However, that included white-zone properties on the Port Hills, since rezoned red or green but which have yet to receive any offer.

The paper frequently cited the Crown's "recovery objectives" and that without compensation property owners "may have difficulty re-establishing themselves and moving on with their lives with certainty and confidence".

It did not discuss reduced RV payouts - the offer Brownlee opted for in all cases except the Waimakariri District Council leasehold properties, which the Government extended full RV offers on.

In an August 2012 Cabinet paper, Brownlee said a 50 per cent offer for vacant land "would support the Government's rebuild objectives ... while acknowledging the land is damaged and not insured".

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On insured commercial properties: "Simply extending the residential offer to commercial owners would set a bad precedent - the land is uninsured and has a reduced value post-earthquake."

He declined to comment further to The Press on the issue.

Dallington resident Richard Clark, whose property and the vacant site he had planned to build on were both red-zoned, was "very disappointed" Brownlee did not adopt Cera's suggestions.

"They've employed [Cera chief executive] Roger Sutton and his team to do a job and they've not listened to them,'' he said.

"We're still stuck in limbo. If [Brownlee] had gone with [Cera's recommendations], we could have moved on with our lives."

Labour earthquake recovery spokeswoman Lianne Dalziel said the Government's offer despite Cera's advice was "outrageous".

"Because they chose to make this voluntary offer to insured properties ... they felt that they couldn't offer the uninsured people as well," she said.

- The Press

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