Govt spent $1.5b acquiring Christchurch red zone land that's now worth just $21m

One of the last remaining homes in the red zone on Avonside Dr, Christchurch.
ALDEN WILLIAMS/STUFF

One of the last remaining homes in the red zone on Avonside Dr, Christchurch.

The value of Christchurch's residential red zone has shrunk to just $21 million after the Government spent $1.5 billion acquiring the land.

Data provided to Stuff also revealed taxpayers have sunk more than $130m into managing abandoned swathes of red-zoned land.

Land Information New Zealand (Linz) information showed the current book value of the flat-land red zone was $19.047m and $1.839m for the Port Hills red zone.

Regenerate Christchurch chief executive Ivan Lafeta says potential designs for the red zone will be released for public ...
GEORGE HEARD/STUFF

Regenerate Christchurch chief executive Ivan Lafeta says potential designs for the red zone will be released for public feedback later this year.

Of the about $1.5b spent buying nearly 8000 properties in the red zones, the Crown was expected to recoup about $344m in insurance recoveries, mostly from the Earthquake Commission (EQC) for land damage claims.

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Regenerate Christchurch chief executive Ivan Iafeta said it was "prudent to consider" how the investment could be "returned to the country".

Morris St, in Christchurch's red zone. The Crown has spent more than $100 million managing the city's red-zoned land.
ALDEN WILLIAMS/STUFF

Morris St, in Christchurch's red zone. The Crown has spent more than $100 million managing the city's red-zoned land.

No money has been designated to build in the red zone, but political parties were tinkering with ways to fund projects.

Labour said part of its $300m pledge to the city's rebuild, announced at the weekend, could go towards red zone projects.

"$300m will more than likely not cover all projects – there will need to additional funding streams identified and worked through as we work through the process and once Regenerate Christchurch has concluded its consultation," Labour's Canterbury Spokesperson Megan Woods said.

Greater Christchurch Regeneration Minister Nicky Wagner said the Government was "going through a process" to decide how residential red zone land could be used.

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"That will give both the Crown and the [Christchurch City] Council a clearer idea of what funding may be required and what income can be generated."

Evan Smith, co-chair of the Avon-Otakaro Network, said he found Labour's announcement "disappointing".

"There's no way you can fix Christchurch for $300m."

He said the red zone alone needed at least that much.

"I'm much more impressed with Raf Manji's​ proposal," Smith said.

Manji's election pitch was a $1b regeneration fund for the city, $300m of which would be destined for the red zone.

Labour needed to set aside money specifically for the red zone, "otherwise east Christchurch is going to miss out on the lolly scramble", Smith said.

Organisations pitching ideas for the red zone were considering different ways to pay for them, he said.

"We will certainly be asked very hard questions about how we expect to fund these things and it's a good question that needs to be asked.

"But I think what hasn't been asked to date is how much of Christchurch's recovery is to be funded from the taxpayer, from the Crown.

"Has the Crown and the nation really done its utmost to help Christchurch recover? I don't believe it has yet, I think it's done a half-arsed job. And I don't think Labour has yet recognised that in what its policy has been to date."

Figures showed that since the earthquakes, taxpayers had contributed nearly $131.8m to pay for demolitions, red zone security, property management and vegetation clearance in addition to the acquisition costs.

That brought the total cost of the red zone to $1.63b.

Linz spokesman John Summers said the organisation had spent $20.17m on demolitions since it took over responsibility of the red zone in December 2015.

Another $490,993 had been spent on security and $3.78m spent on land treatment.

"Land treatment refers to the work we do to make sure the land is in a park-like state so it's easy to mow and maintain.

"It includes activities like clearing vegetation and any remaining fences, laying topsoil and sowing grass," he said.

Between 2012 and 2016, the now-defunct Canterbury Earthquake Recovery Authority (Cera) spent $107.37m maintaining the red zone – $2.13m on security, $64.86m on demolitions, $11.98m on land treatment and $28.40m on property management.​

Iafeta said it was "important to recognise that the people of New Zealand have contributed more than $1.5b to the residential red zone".

"We are committed to enabling cultural, economic, environmental and social opportunities for regeneration, including opportunities that might offer a financial return to the Crown," he said.

A draft regeneration plan for the Avon River corridor was due to be finalised in June or July next year.

* This story has been updated to include the Crown's insurance pay-out of about $344 million. 

 - Stuff

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