Council aims to get best deal for city

Last updated 12:57 05/04/2012

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OPINION: Christchurch City Council is considering how it will fund the rebuild of earthquake-damaged facilities. General manager corporate services Paul Anderson says the council is working with insurers to secure the best outcome for the city.



Insurance cover and getting the best out of earthquake repairs and rebuilds is at the forefront of almost every Cantabrian's mind right now - and it's no different for the Christchurch City Council.

Council staff have been working for some months now to prepare a recommended budget for the next year that gets the city's earthquake repairs moving, while keeping rates affordable for residents.

Just like you, we are going through a process of negotiation with insurers while we work out how best to repair our damaged facilities.

And just like you, we have found that the process is not always straightforward.

On Tuesday afternoon, the council released the details of a recommended draft annual plan for the coming year.

The mayor and councillors will consider these recommendations next week, then ask the community for feedback on the plan in late April and May before adopting a final plan for the city by the end of June.

The recommendations include repair and rebuild options for 10 major community facilities, based on engineering reports, costs and the community's ideas for Christchurch that were shared as part of the central city plan process.

In all cases, the options include repairing or replacing damaged facilities to 100 per cent of new building standards - the council wants to ensure that these city-owned buildings are safe for public use and has committed to building stronger facilities.

This comes at a cost, however, and insurance coverage only goes so far.

In many cases, we also want to take this opportunity to improve our facilities by making new additions to address needs that were not met before the earthquakes.

Once again, our insurance does not cover these "nice-to- haves" and the council, informed by feedback from residents, will decide if now is the time to carry out this work.

Before the earthquakes, the council's assets were insured for close to $1.9 billion on a full reinstatement basis per asset. This is based on the advice of professional valuers and we rely on them to give an accurate account of each building's value.

The latest valuation was carried out in 2010 and it has been adjusted for inflation, so it is as near to accurate as is possible at any given time.

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The estimated cost of staff recommendations for the repair or rebuild of the 10 major community facilities is $767 million over six years.

Of this, we expect to receive $367m from insurance settlements; the rest will be funded by pushing back other projects that had been planned before the earthquakes and a proposed one-off rates increase in the coming year of 2 per cent, which works out to about $3 extra a month for the average ratepayer.

Looking at the numbers alone, this may seem a significant difference, but in actual fact the extra cost is what's required to make our buildings meet 100 per cent of standards and introduce improvements.

Unlike your usual household insurance coverage, which can be based on open-ended replacement value, our buildings and facilities are covered to a set value based on repairing to the existing regulations of the day - which right now is 33 per cent of new building codes.

The council has said that this is not good enough for our 10 major community facilities, where children, families, residents and visitors work and play. Armed with firsthand knowledge of the damage an earthquake can cause, they want to build strong, reliable facilities for our community.

At this stage, the options being discussed for these 10 facilities remain staff recommendations and it may be that, based on feedback from residents, the council chooses different options.

That's why we are going through this process and why we want to know what the community thinks of the plan.

Even now, we have not finished our negotiations with insurers, and residents can be assured that we will continue to seek the best deal for the city.

The figures above are based on the best estimates on final settlements from our insurance and legal advisers. Talks will continue over coming months for these 10 facilities and it will be years before negotiations end on all our buildings and infrastructure.

Just as most of you will have come to realise over the past year, it takes time to work through the insurance process.

There are some hugely technical aspects to getting the best out of your insurance policy, and there are often some extras you want to include because it makes sense to do it now.

The council's insurance policy was based on the technical advice of professional valuers before the earthquakes; the package that the council and community is about to consider for the rebuild of our 10 major community facilities delivers a lot more than what's covered by insurance.

That's a decision for the council to make and we have a process to follow through that ensures the mayor and councillors can be guided by the opinions of the community, so they can make the best decisions for the city.

WHAT NEXT?

* April 10-11: Draft annual plan adopted by council.

* April 20-May 21: Community consultation process including open days where residents can talk to senior council staff, find out more about the draft annual plan and make a submission.

* June 5-9: Council hearings on public submissions.

* June 25-27: Final annual plan adopted by council.

- The Press

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