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PUB325.1505

Public Comments close 5pm, Tuesday 19 May 2015

Residential Red Zone Offer Recovery Plan: Preliminary Draft

May 2015

Published in May 2015 by Canterbury Earthquake Recovery Authority Christchurch, New Zealand

Contact Canterbury Earthquake Recovery Authority Private Bag 4999, Christchurch 8140 [email protected] 0800 7464 2372 toll-free www.cera.govt.nz

Citation Canterbury Earthquake Recovery Authority (2015). Red Zone Offer Recovery Plan: Preliminary Draft. Christchurch: Canterbury Earthquake Recovery Authority.

ISBN ISBN 978-0-478-39702-4 (Print) ISBN 978-0-478-39703-1 (Online)

Crown copyright © This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. You are free to copy, distribute, and adapt the work, as long as you attribute the work to the Canterbury Earthquake Recovery Authority (CERA) and abide by the other licence terms. Please note you may not use any departmental or governmental emblem, logo, or coat of arms in any way that infringes any provision of the Flags, Emblems, and Names Protection Act 1981. Use the wording ‘Canterbury Earthquake Recovery Authority’ in your attribution, not the CERA logo.

Contents

1. Introduction ...................................................................................................................21.1 What is the purpose of this Recovery Plan? .......................................................21.2 What is a Recovery Plan? .................................................................................31.3 What is the process for this Recovery Plan? .....................................................31.4 What is not covered in this Recovery Plan? .......................................................41.5 What geographic areas does this Recovery Plan cover? ....................................41.6 Who has prepared this Preliminary Draft Recovery Plan? ...................................41.7 EffectoftheRecoveryPlan ...............................................................................5

2. Context and Background .............................................................................................62.1Crownofferstopurchaseinsuredpropertiesintheredzone ..................................62.2 WhatwastheCrownofferforvacant,commercialanduninsured

redzoneproperties? ......................................................................................132.3 Judicial review ................................................................................................162.4 Additional context & factors ............................................................................18

3. Vacant: What Should the Crown Offer Look Like? ..................................................214. Commercial: What Should the Crown Offer Look Like? .........................................235. Uninsured: What Should the Crown Offer Look Like? ............................................256. Other Affected Property Owners ..............................................................................27

6.1 Rapaki Bay .....................................................................................................276.2 Underinsured .................................................................................................296.3 Othersaffected ...............................................................................................29

7. What Next? ..................................................................................................................308. Glossary ......................................................................................................................319. Links to Further Information......................................................................................32

10800 RING CERA I 0800 7464 2372 I Fax (03) 963 6382 I www.cera.govt.nz

1.1 What is the purpose of this Recovery Plan?Thepurposeofdevelopingthe‘ResidentialRedZoneOfferRecoveryPlan’istoassistthe Crown (through the Chief Executive of the Canterbury Earthquake Recovery Authority (“CERA”))todeterminewhetheritshouldmakenewofferstobuyvacant,commercialanduninsuredpropertiesintheresidentialredzoneand,ifso,howsuchoffersshouldbestructured. ThisisthePreliminaryDraftRecoveryPlan,notifiedforpublicconsultationon5May2015.ThisPreliminaryDraftisthefirstopportunityforeveryonetoprovidetheirviews.YoudonothavetobeanaffectedpropertyownerorliveingreaterChristchurchtohaveasay.Thispublicconsultationisanimportantfirststep.ThePreliminaryDraftisinessenceadiscussiondocument,whichsetsoutthekeycontextualinformationanddevelopments. ItfocusesonthekeyquestionstheCrownwillneedtoconsideraboutthevacant,commercialanduninsuredredzoneproperties,anditasksforyourviews.ItdoesnotpredeterminewhatanyfinalCrownofferwillbe.TheCrownwantstoensureithasallrelevantinformation,andhasconsideredallpossibleoptions,toinformthedevelopmentofanyCrownoffertobuyvacant,commercialanduninsuredpropertiesintheredzone.

1. Introduction

The need for such a Recovery Plan has arisen because the majority of the Supreme Court in Quake Outcasts v The Minister for Canterbury Earthquake Recovery concluded that the broadoutlinesofapurchasedecisionshouldhavebeenincludedinaRecoveryPlan,andthat the power to purchase the land “should not have been used unless there had been an antecedentRecoveryPlansettinguptheredzone”.Any decision on this Recovery Plan will be made in accordance with the purposes in section 3oftheCanterburyEarthquakeRecoveryAct2011(“CERAct”),alinktowhichcanbefound at the end of this document. MorethanfouryearsonfromthestartoftheCanterburyearthquakes,theownersofvacant,commercialanduninsuredpropertiesintheredzoneneedcertainty,toassistthemtomoveforward with their lives. It is important to get this right.

Have your say…Howdoesthisaffectyou?What factors are important when consideringanewCrownoffer?ShouldtherebeadifferentCrown offerforthedifferentcategories?WhatoffershouldtheCrownmake?ArethereanyoptionsotherthanaCrownoffer?

We need your feedback by: 5pm, Tuesday 19 May 2015Chapter 7 explains how you can providecomments,orclickonthelink www.cera.govt.nz/redzoneoffer

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1.2 What is a Recovery Plan? TheCERActprovidesfortheMinisterforCanterburyEarthquakeRecovery(“theMinister”)todirectthedevelopmentofdraftRecoveryPlansforall,orpart,ofgreaterChristchurch.RecoveryPlanscandealwithanysocial,economic,culturalorenvironmentalmatter;oranyparticularinfrastructure,workoractivity.ARecoveryPlanmustbeconsistentwiththeRecovery Strategy for Greater Christchurch. ARecoveryPlanallowsforarobuststatutoryprocess,includingtheopportunityforpublicconsultation,andhelpstoensureallrelevantinformationhasbeenconsidered.DraftRecoveryPlansmustbenotified,andthepublicmustbeinvitedtomakewrittencommentsonthedocumentinthemannerandbythedatespecifiedinthenotification.There are two existing Recovery Plans – the Christchurch Central Recovery Plan and the Land Use Recovery Plan. A draft Lyttelton Port Recovery Plan is being developed. ThescopeandprocessforthisResidentialRedZoneOfferRecoveryPlanaremuchmoretightlyfocusedthanfortheotherRecoveryPlans.ThisRecoveryPlanisnotlikely,forexample,todirectchangestoResourceManagementActdocumentsortheotherinstrumentsrelatingtolocalgovernment,transportandconservationmatterswhichcanbespecificallyamendedbyaRecoveryPlan.TheMinisterhasdirectedtheChiefExecutiveofCERAtodevelopthisRecoveryPlanusingastreamlinedprocess.ThismeanstheRecoveryPlanwillbedrafted,consultedon,andfinalisedwithinamuchshortertimeframethanthoseforthepreviousRecoveryPlans.Affectedredzonepropertyownerswillknowtheoutcomeassoonaspossible.

1.3 What is the process for this Recovery Plan? ThedirectionfortheResidentialRedZoneOfferRecoveryPlanwasgazettedon 23April2015,andthisPreliminaryDraftRecoveryPlanpubliclynotifiedon5May2015.Thefirstroundofpublicconsultationwillbecarriedoutoverthenext10workingdays,toseekthepublic’sviewsonthekeyissuesandanyrelevantinformationtohelpdeveloptheoptions.Theclosingdateforthefirstroundofcommentsis5pmTuesday19May2015.Chapter 7 outlines how comments can be made. CERAwillthenreviewallthecommentsandinformationreceived,aswellastheinformationwealreadyhave,tohelptheChiefExecutiveofCERAdeveloptheDraftRecoveryPlan,which will set out the proposed options. Input from the public and all of the earthquake recovery strategic partners will be an important part of this process. TheDraftRecoveryPlanwillbepubliclynotifiedon26May2015.Thepublicwillthenbeinvitedtoprovidewrittenfeedback,inaccordancewithsection20oftheCERAct.ThatfeedbackandtheDraftRecoveryPlanwillbeconsideredbytheMinisterwho,inaccordancewithsection21oftheCERAct,willdecidewhethertomaketheRecoveryPlananoperativedocument.Ifso,thatwillguidetheexerciseofpoweroftheChiefExecutiveofCERAtomakedecisionsaboutnewofferstobuyvacant,commercialanduninsuredpropertiesintheredzone.


1.4 What is not covered in this Recovery Plan?TheMinister’sdirectiontodevelopthisRecoveryPlanstatedthatanumberofissueswillnotbe covered by this Plan. These are:• Revisitinglandzoningdecisions(thatis,thebasisonwhichpropertieswerezonedas

redorgreenandthedecisiontomakevoluntaryofferstopurchasepropertiesonlyintheredzone);

• ThevoluntaryCrownoffertopurchaseinsuredredzoneproperties;• Remediationormitigationoflandornaturalhazards;• Interimorfutureuseoftheredzone;and• DistrictPlanzoningandprovisions.

1.5 What geographic areas does this Recovery Plan cover?ThisRecoveryPlanfocusesonareasofgreaterChristchurchidentifiedasthe“residentialredzone”bytheCrown,includingtheflatlandandPortHillsredzoneareas.

1.6 Who has prepared this Preliminary Draft Recovery Plan?The Chief Executive of CERA has prepared this Preliminary Draft Recovery Plan. The nextstepistoseektheviewsofthepublicthroughwrittencomment,includinggreaterChristchurchcommunitiesandCERA’searthquakerecoverystrategicpartners.Thiswill help inform the development of the Draft Recovery Plan.

Timeframe

Month

Directiongazetted

PreliminaryDraftRecoveryPlannotified

Public consultation (round one)

DraftRecoveryPlannotified

Public consultation (round two)

Minister’sdecision

April May June

23 April

5 May

19 May

26 May

10 June

Mid 2015

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1.7 Effect of the Recovery PlanThisRecoveryPlanwillbedevelopedundertheCERAct,andifapprovedbytheMinisterwill be a statutory document. (A statutory document is prescribed under an act of ParliamentandapprovedbytheGovernorGeneralorMinisteroftheCrown.)IfapprovedbytheMinister,noticeofitsapprovalwillbepublishedintheNew Zealand Gazette and The Press and a copy will be presented to the House of Representatives. It will be available on the CERA website and hard copies will be available through CERA. TheeffectoftheapprovedResidentialRedZoneOfferRecoveryPlancannotbeknownatthisstage.Itseffectwilldependonitscontents.ItspurposeistoguidetheMinisterandtheChiefExecutiveofCERAinrelationtowhatoffer,ifany,willbemadetotheownersofvacant,commercialanduninsuredpropertiesintheredzone.

Mid 2015


2. Context and Background

Timeline of key decisions and developments 2010-Now

2.1 Crown offers to purchase insured properties in the red zone

Whatisthe‘residentialredzone’?Howwasitimplemented?Asaresultoftheunprecedentedandwidespreaddamagecausedbythe2010-2011Canterburyearthquakes,therewasanurgentneedfortheGovernmenttoassistpeopleintheworstaffectedareaswhowereotherwisefacingprotractednegotiationswiththeirinsurers,andtheprospectoflivingondamagedland,withdamagedinfrastructureforprolonged periods. Inparticular,withoutGovernmentintervention,propertyownerswerelikelytofacesignificantdelays resolving insurance issues. The earthquakes also meant insurers had become wary ofinsuringpropertiesingreaterChristchurch,andtheGovernmentwasconcernedinsurersmay not renew existing policies. Action was needed to understand the land damage and ensure that insurance would continue to be available in greater Christchurch. TheGovernmenthadgatheredasignificantamountofgeotechnicaldataonthedamagethathadoccurredandtheconditionoftheland,initsroleasinsurerthroughtheEarthquakeCommission (“EQC”). The aim of gathering this information was to enable the Government to meet its liabilities in respect of land damage.Intheworstaffectedareas,whichwouldbecomeknownastheflatland“residentialredzone”,thelanddamagewasextensiveandarea-wide.Theoptionsforarea-widesolutionswere either:

Sep2010Earthquake

June2011Zoning

decision flatlandred

zones

Aug2012Crownofferfor Port Hills

insured properties

Sep2012Crownofferforflatlandvacant,

commercial & uninsured properties

Dec2013Port Hills zoningreview

announced

Apr2015CERA directed to develop a

Recovery Plan

Feb2011Earthquake

Aug2011Crownofferforflatland

insured properties

Aug2012Flat land zoningreview

announced

May2013Quake Outcasts judicial review proceedings

begin

March2015Supreme Court

judgment

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1. Toundertakelargescale,extensivecivilworkstoenableremediation.Thiswouldinvolvethe removal of all built structures and preparation of the land – similar to what would be requiredforanewsubdivision,includingfilling,OR

2. To provide an alternative option to assist property owners. Therewasintensepublicpressure,exacerbatedbytheJune2011earthquakes,fortheGovernmenttoassistpropertyownersurgentlyintheworstaffectedareas.MinistersagreedinJune2011thatthefirstoption–largescale,extensiveremediationrequiredfortheseareas,wouldbeuncertain,disruptive,nottimelyandnotcosteffective.Thelevelofdamagemeantthatresidents’healthandwellbeingwereaffected.TheGovernmentagreedtoanemergency social policy response which included:• Anarea-wideprocessforcategorisingproperties,whichresultedinpropertiesbeing

categoriseddifferent‘zones’,includinggreenandred;and• Termsforofferstopurchaseinsuredpropertiesintheredzone.Areaswhichwereoutsidetheredzonewereknownasgreenzone.Thegreenzoneindicatedwhererebuildingcouldgenerallyoccurwithouttheneedforarea-widerepairoflanddamage.Theworkcarriedouttoidentifythegreenzonesmeantinsurancehascontinued to be available for properties. Thearea-wideprocessforcategorisingpropertiesasgreenzoneorredzonewasnotaformalResourceManagementActzoningorhazardmappingtool.Theaimwastoquicklyprovide the public with information that was easy to understand about the damage to the land,andtheperformanceoflandinfutureearthquakes.ThezoningwouldalsoidentifywheretheCrownwouldoffertopurchasetheaffectedlandandbuildings.InAugust2012,aflatlandzoningreviewwascompleted.(Thepurposeofthereviewwastoconfirmwhetherthered/greenzoningcriteriaagreedbyMinistershadbeenconsistentlyapplied,andthatboundarylinesweredrawnsensiblywhentakingon-goinginfrastructureserviceability into consideration.) Intotal,oversixsquarekilometresofland(approximately7,400properties)ingreaterChristchurch,includingintheWaimakaririDistrict,werezonedredduetolanddamage.TheseareasextendalongtheAvonRivercorridor,Southshore,Brooklands,Kaiapoi,PinesBeachandKairaki.Themapsbelowshowthegeographicalspreadofthese‘flatland’areas–thetermusedtodescribealltheredzoneareasapartfromthePortHills.


Map 1: Kaiapoi, Pines Beach, Kairaki and Brooklands red zone areas

Map 2: Avon River corridor and Southshore red zone areas

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WhatwasthebasisoftheJune2011Crownoffertobuyredzoneproperties?InJune2011ownersofinsuredresidentialproperties(thisdidnotincludevacant,commercialanduninsuredproperties)intheflatlandredzonewhowantedtoselltheirpropertytotheCrownweregivenachoiceoftwoofferpackages:

TheCrownwouldoffertopurchase the property (land and buildings) but only pay the2007/08rateablelandvalue (less any EQC land payments already made). The Crown would also take an assignment of the EQC land claim. The landowners keepthebenefitoftheirprivate insurance claims for the damage to their buildings.

The2007(ChristchurchCity)or2008(WaimakaririDistrict)ratingvaluationswerethebasisfor theoffers.Thesewerethevaluationsinplaceimmediatelyprecedingthe4September2010earthquake.TheseratingvaluationswerechosenasthebasisfortheCrown’sofferbecausetheyareanindependentfigurewhichcouldbereadilyapplied,andtheydeterminethevaluefor all properties in an area at the same point in time.

In many cases this value was higher than what had been anticipated for the next valuation duein2010/2011.AdjustmentstothepurchasepriceoftheCrownofferwerepossibleinsomesituations,forexample the addition of a new room which had not been included in the rating valuation. TheCrownofferalsocoveredpropertieswheretheownerhadinsuranceatthetimeoftheSeptember2010earthquake,buthadsincesettledtheinsuranceclaimonthebasisthatthe house was beyond economic repair.

TheCrownwouldofferto purchase the property (land and buildings) at the2007/08rateablevalue-lessanylandand dwelling insurance payments already made. The Crown would also take an assignment of all earthquake related insurance claims.

Option 1

Option 2

A rating valuation reflects the property’s market value at the date of the valuation. This is then broken down to:

• Land value:definedastheprobablepricethatwouldbepaidforthebareland.This includes any development work carried out.

• Improvements value: calculated by subtracting the land value from the rateable value.Itrepresentstheextravaluegiventotheland,forexamplebyanybuildingsor other structures.


Theofferwaslaterextendedtopropertyownersofnot-for-profitorganisationswhoheldinsurancefortheirimprovements,andtoownersofdwellingsunderconstructionwhoheld building or construction works insurance. Neither of these categories could get land insurance cover. The Crown took into account the fact that the majority of the dwellings under constructionwerefinishedornearlyfinishedbeforetheearthquakesstruck,andsomewereoccupied but could not get residential insurance due to the timing of the earthquakes. And mostofthenot-for-profitorganisationsprovidedcommunitysupport/developmentfunctions.TheCrownofferwasnotcompensationorwelfare.Itwasanoffertopurchaseproperty.Acceptanceoftheofferwasvoluntary.Forpropertyownerswhowouldotherwiseexperienceverydifficultlivingconditions,andmayhavefacedlongandcomplicatednegotiationswiththeirinsurers,itwasintendedtoprovideanopportunitytomoveonfromtheworstaffectedareaswithcertaintyandconfidence.However,manyownerstoldCERAtheyfelttheyhadlittlechoicebuttoaccepttheofferbecauseofthewidespreaddamageanduncertaintyaroundremainingintheredzoneareas.Atthetimetheofferwasmade,theCrowndidnotknowwhattheuptakeoftheCrownofferwouldbe.TheredzonehasnolegalstatusanddoesnotchangetheResourceManagementActzoningofaproperty.Thezoningwasintendedtoidentifytheworstaffectedareas,andindicatewheretheCrownwouldmakeanoffertopurchasepropertiesbecausethelanddamagemeantitwouldbedifficultforownerstorepairorrebuildtheirhousesintheshorttomediumterm.PropertyownerswhohavechosennottoaccepttheCrownofferhaveretainedallrightsandresponsibilitiesfortheirproperty,aswithanyotherprivatepropertyowner.TheCrownoffertobuyflatlandredzonepropertiesexpiredon31March2013.Asat 1May2015,ofthe7,194eligibleproperties,theownersof7,053properties(around98%)hadacceptedtheCrownoffer.TheoriginalobjectivesofthezoningdecisionsandCrownofferswereagreedbyMinistersinJune2011.Theyare:

• Certaintyofoutcomeforhome-ownersassoonaspracticable.Certainty

• Createconfidenceforpeopletobeabletomoveforwardwiththeirlives.• Createconfidenceindecision-makingprocesses.Confidence

• Use the best available information at the time to inform decisions.Best Information

• Have a simple process in order to provide clarity and support for land-owners,residentsandbusinessesinthoseareas.Simple Process

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What about the Port Hills? The consequences of the earthquakes for thePortHillsweredifferentfromthoseinthe low-lyingflatlandredzoneareas,wherethe land damage was generally from liquefaction and lateral spreading. InthePortHills,theworstaffectedpropertieswereatriskfromrockroll,cliffcollapseand land slippage. The Crown used geotechnical reports commissioned by the Christchurch City Council to identify the worstaffectedpropertiesinthePortHills.Removingorreducingtheriskwasdifficultor,insomecases,impossibletoachievethroughengineeringsolutions.Inmostcaseseffectiveengineering solutions would not be practical oreconomictoconstruct,particularlywhenallfactors,suchastheeffectsonotherland,aretaken into account.InAugust2012theCrownofferthatwasmadefortheflatlandredzonewasmadefor insured residential properties (this did not includevacant,commercialanduninsuredproperties)inthePortHillsredzoneareas.InDecember2013,azoningreviewwascompleted. (The purpose of the review was to confirmwhetherthered/greenzoningcriteriaagreedbyMinistershadbeenconsistentlyapplied,andthatboundarylinesweredrawnsensiblywhentakingon-goinginfrastructureserviceability into consideration.)

What does ‘life risk’ mean?

ScientificmodellingbyGeologicaland Nuclear Science (GNS) was used to identify areas in the Port Hills at a high risk from natural hazardsofrockroll,cliffcollapseand debris inundation. The GNS models assess the risk of a person being killed as a result of geotechnicalhazards,basedonacombination of the following factors:

1. The likelihood of the hazardeventuating;

2. The likelihood of a person beingpresent;and

3. The likelihood that they will be killed.

Whereareaswereidentifiedtohave a risk of a person being killedworsethan1in10,000perannum,andothercriteriawere met (e.g. engineering solutionswerenotdesirable),thatpropertywaszonedred.

Forperspective,the1in10,000risk is comparable to the risk of a person being killed in a motor vehicle accident in New Zealand.

Intotal,over700propertieswereultimatelyzonedred,duetotheunacceptablelevelofrisktolifefromrockrollandcliffcollapse.Unliketheflatlandredzoneareaswhichconsistofthousandsofadjacentproperties,redzonepropertiesinthePortHillsarespreadoutoveraverylargearea,coveringareasfromHillsborough,SumnerandLyttelton,toCharterisBay,andeverywhereinbetween.ThePortHillsredzoneareas(over197hectaresofland)consistofmorethan50clustersofadjacentproperties,eachcontainingbetweenoneand25properties.TheCrownoffertobuyinsuredresidentialpropertiesinthePortHillsredzoneareasexpiredon27February2015.Asat1May2015,ofthe455eligibleproperties,theownersof406(92%)hadacceptedtheCrownoffer.


Map: Port Hills red zone areas

What about underinsured properties? ThisCrownoffertopurchasewasalsomadetoredzonepropertyownerswhowereunderinsured–atotalofaround25propertiesacrosstheflatlandandPortHillsareas.Manyprivateinsurancepoliciesprovideafixedsumorindemnityvalue(sum-insured)insurancecover,orinsureasetfloorarea.Suchpoliciesmaybeinsufficienttocoverallofthelossessufferedfordamagetobuildingsinadisaster.IntermsofEQCcoverforlanddamage,underinsuredpropertieshadthesamelevelofcoverasfullyinsuredproperties.Thesepropertyownerswereinaverysimilarpositiontofully-insuredredzonepropertyownersinthattheytoosufferedsignificantpropertydamage,reductioninassetvalueandpersonalstress.Theonlydefiningdifferencewasthelevelofprivateinsurancecoverageeach group held for their improvements.The Government decided to adjust the purchase price for underinsured properties where theproperty’simprovementswereunderinsuredbymorethan20%.Whereapropertywasinthissituation,thepurchasepricefortheimprovementsvaluewasreducedonaproratabasis,relativetotheamountofinsurance.Thosewhowereunderinsuredby20%orlessweremadethefulloffer.

ThemapbelowshowsthegeographicalspreadoftheredzoneareasacrossthePortHills.

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TheGovernment’sconcernwasthat,if100%hadbeenofferedtotheseunderinsuredproperties,theCrownwouldrisk:• Subsidisingtheinsurancecoverpurchased;• Being perceived as removing the incentive on property owners to insure themselves

adequately;and• Creatingadisincentivefortheinsurancemarkettoofferadequateinsurancecover.

WhathappenedaftertheCrownpurchasedaredzoneproperty?CERAisresponsibleformanagingtheCrown-ownedpropertiesintheredzone.Nodecisionshavebeenmadeaboutthelong-termfutureuse,ownershipormanagementofthis land. AfterpropertiesintheredzonehavebeensoldtotheCrown,allbuiltstructuresareremoved and the land is tidied up as soon as is practical. This work is done to minimise risksandcostsassociatedwithowningtheland,andtoimprovetheenvironmentuntildecisions are made about the land for the long term.ThisinterimmanagementofCrown-ownedpropertiessupportskeepingspecificindigenoustreesandshrubs,andestablishedhealthytreesthroughouttheredzone,wherepracticalandcosteffectivetodoso.Publicsafety,measurestoaddresswaterpondingandrunoff,dustissues,amenityvalueandillegaldumpingarealsofactorsthatareconsidered.ForthePortHillsredzoneareas,theCrownisfocusedonretainingestablishedtreesandindigenousvegetation.Thisisanimportantstep,astheestablishedrootsystemsprovideerosion protection for hill areas.

2.2 What was the Crown offer for vacant, commercial and uninsured red zone properties?

InSeptember2012avoluntaryCrownoffertopurchasewasmadetotheownersofvacant,commercialanduninsuredpropertiesintheflatlandredzone.TheCrowndidnotoffertopurchasevacant,commercialanduninsuredpropertiesinthePortHillsredzoneareasatthesametime,becausetherewasaseparateprocessunderway for the Port Hills. TheoffermadeinSeptember2012becamesubjecttojudicialreview.Asaresult,anydecisiononanofferforthePortHillsvacant,commercialanduninsuredpropertieswasputon hold until the Court proceedings were resolved.Forthethreecategoriesofvacantland,insuredcommercialproperties,anduninsuredproperties,theSeptember2012offerwassetoutasfollows:


TheobjectivesofthisCrownofferwerethesameasthoseforinsuredredzoneproperties–providingcertaintytopropertyownersassoonaspracticable;creatingconfidencefor peopletobeabletomoveforwardwiththeirlives;andusingthebestavailableinformation to make decisions.

Whywas100%notoffered?Aswiththeoffertopurchaseinsuredredzoneproperties,theSeptember2012Crownofferwasnotcompensationorwelfare.Itwasanoffertopurchaseproperty,andassuchneededto take into account what the Crown was purchasing. Theredzoneareasweretheworstaffectedbytheearthquakes,andthedamagetolandwasextensiveandarea-wide.Thelandvaluewasgreatlydiminished.Whenitpurchasedinsuredredzoneproperties,theCrownreceivedthevalueoftheinsurancerecoveries.Whenitpurchaseduninsuredproperties,therewerenoinsuranceclaimstotransfertotheCrown.

• Apurchasepriceof50%oftherateableland value(2007/08),onthe basis that the land was damaged and uninsured.

• Inreturntheownertransferredthelandonly,astherewerenoinsurance claims to be transferred.

• ModelledontheCrownofferforinsuredproperties-therateableimprovementsvalue,butwithareducedofferof50%oftherateablelandvalue(2007/08).Thisreflectedthatthelandwasdamaged and that there was no EQC cover for commercial properties.

• Twooptionswereavailable;thepropertyownercouldchoosetoreceive a sum equivalent to: - 50%ofthelandcomponent,and100%ofthe improvements

oftheproperty’sRV,inreturntheownerstransferredthelandandimprovementstotheCrown,plustheinsuranceclaims;OR

- 50%ofthelandvalueonly,andownerspursuetheirowninsurance claim. In return the land and improvements were transferred to the Crown.

• Apurchasepriceof50%ofthemostrecentrateable land value (2007/08rateablevalue)fortheland.

• Theofferrecognisedthatthelandwasdamagedanduninsured.There was no payment for uninsured improvements. There were nobenefitsunderanyinsuranceclaimstogivetotheCrown.

• Inreturn,theownerstransferredthelandandimprovementsto the Crown. Owners had the option of relocating the improvements before settling with the Crown.

For vacant land

For insured commercial properties

For uninsured properties

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Thescenariosinthetablebelowshowthedifferences.

Scenario A

Insured 3 bedroom residential property

• Whentheearthquakesstruck,theownerhad been paying insurance premiums and had insurance cover.

• TheowneracceptedtheCrownoffer,and chose option 1. The Crown became the owner of the property and kept any payment for land and building damage from the insurer and EQC.

• Inreturn,theCrownpaid100%ofthe2007rateablevalueoftheproperty(boththeimprovementsandlandvalues),andthe cost of demolishing the house.

Scenario B

Uninsured 3 bedroom residential property

• Whentheearthquakesstruck,thepropertywas uninsured.

• TheowneracceptedtheCrownoffer.TheCrown became the owner of the property but there was no insurance money to claim.

• Inreturn,theCrownpaid50%ofthe2007rateablevalueoftheland(notforanyimprovements),andthecostofdemolishing the house.

Thedecisionnottoofferapurchasepriceof100%oftheratingvaluationwasbasedonfivemain considerations: • Fairnesstootherpropertyowners,including:

- insuredredzonepropertyownerswhohadpaidtheirinsurancepremiumsandhadinsurance cover. These property owners were required to transfer their insurance claimstotheCrowniftheywantedtoaccepttheoffer.

- uninsuredpropertyownersinthegreenzone,manyofwhomlostsignificantequityintheirproperty,andwerenoteligibleforanyCrownoffer.Thesepropertyownersmay now also face the high cost of remediating their land.

• The absence of insurance claims for damage to land and buildings that the Crown would acquire together with the property.

• The Crown would also need to cover the demolition costs with no reimbursement.• Therisksthatpaying100%couldreducetheincentiveforpropertyownerstoinsurein

thefuture,ordownplaytheriskofowninguninsurableland.• The greatly diminished value of the land.Takingintoaccounttheseconsiderations,theCrowndecidedthatanofferat50%wouldbefairandconsistentwithpreviousCrownoffersandwhatotherredzonepropertyownershadbeenoffered.TheseconsiderationswerediscussedbytheSupremeCourt.


UptakeoftheofferTheuptakeoftheSeptember2012Crownofferwasasfollows:CERAindicatedthatacceptingtheofferwouldnotpreventownersfrombringingjudicialreviewproceedings,andthatiftheofferwasreconsideredandsubsequentlyincreased,theCrown would make top up payments to former owners.

Accepted Crown offer• 55 vacant• 15 commercial• 62 uninsured

Did not accept Crown offer• 25 vacant• 5 commercial• 31 uninsured

Manyoftheresidentialpropertyownerswhohavenotacceptedtheofferhavechosentoremainlivingintheredzoneareas.TheCrownhasnotmadeanoffertopurchasevacant,commercialanduninsuredredzoneproperties in the Port Hills. The owners of those properties were waiting on the outcome ofthePortHillszoningreview,whichinturnwasdelayedbythejudicialreviewoftheSeptember2012Crownoffer.

2.3 Judicial review TheSeptember2012Crownoffertopurchasevacant,commercialanduninsuredredzoneproperties was challenged through the Courts by way of judicial review. TheinitialcasewasbroughtbyFowlerDevelopmentsLimited,acompanyowningelevenvacantsitesinBrooklands.Agroupof45individualorjoint-ownersofvacant,commercialanduninsuredredzonepropertiesalsobroughtproceedingsinthenameof“QuakeOutcasts”,atitletheychose.Thesetwocaseswereheardtogether.TheHumanRightsCommissioner also joined the proceedings. InAugust2013theHighCourtissuedadecisionwhichheldthatthecreationoftheredzone,andthemakingofanoffertoownersofvacantlandanduninsuredimprovedpropertiesintheredzonewereunlawful.TheCrownappealedtotheCourtofAppeal,andtheCourt’sfindings,releasedinDecember2013,werethattheGovernment’sdecisiontoidentifythemostdamagedpartsofgreaterChristchurchasredzonewaslawful.TheCourtofAppeal,however,declaredthattheoriginalofferof50%oftherateablelandvaluewasnotlawfulastherewasnothingtoindicatethatthepurposesoftheCERAct(specificallytherecoveryobjectives)hadbeenconsidered when making the decision. The Court of Appeal found that a distinction could be made on the basis of insurance status. TheChiefExecutiveofCERAwasreconsideringtheofferwhentheQuakeOutcastsandFowler Developments Limited appealed to the Supreme Court.

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Initsjudgmentreleasedon13March2015,themajorityoftheSupremeCourt (threejudgesoutoffive)heldthattheCrownoffertothe“uninsuredanduninsurable” hadnotbeenlawfullymade.TheCourtdirectedtheMinisterandChiefExecutiveofCERAtoreconsiderthedecisionsabouttheCrownofferinlightofthemattersconsideredintheCourt’sjudgment.ThemajorityalsoheldthattheredzonemeasuresshouldhavebeenintroducedunderaRecoveryPlanbut“itisobviouslytoolateforthistooccur.Inpracticalterms,adeclarationastotheunlawfulnessoftheJune2011decisionswouldnotserveanyusefulpurposeandnone is made”. Onthebasisofthatdecision,theMinister’sdirectiontodeveloptheResidentialRedZoneOfferRecoveryPlanspecificallyexcludedthelandzoningdecisions.Initsconclusion,theSupremeCourtrecommendedanumberoffactorsshouldbeconsideredinpreparingaCrownofferforvacant,commercialanduninsuredredzoneproperties. These factors are set out in the table below (see Chapter 9 for a link to the full judgment):

“As to the September 2012 decisions and related offers, we have concluded that, although insurance was not an irrelevant consideration, other relevant considerations weighed against this being a determinative factor. Those factors include the fact that the offers to the insured, not-for-profits and to owners of buildings under construction allowed for payment above that which was insured or insurable. In addition, if some of the uninsured or uninsurable individual properties fared reasonably well and suffered little damage, the harm to their owners has arisen, at least to a degree, because of government policy of facilitating voluntary withdrawal, rather than their insurance status. These factors and the other factors discussed above should have been taken into account in deciding whether or not there should have been a differential between the insured and the uninsurable and uninsurable and, if so, the nature and extent of any differential.” (paragraph 196)

“We have also concluded that, in making the decision as to any differential treatment of the uninsured and uninsurable, the recovery purpose of the Act which, among other things, is to restore the “social, economic, cultural, and environmental well-being” of Christchurch’s communities, was not property [sic] considered. The area-wide nature of the decisions on the red zones suggests an area-wide community approach to recovery where practical”. (paragraph 197)

“We have also accepted the submission of Quake Outcasts that the failure of process and consultation in June 2011 and the delay in extending offers to the uninsured and uninsurable were relevant to the decisions relating to the appellants.” (paragraph 198)

“Finally, we have concluded that, when making the September 2012 decisions, the current very difficult living conditions in the red zones was a relevant factor that should have been taken into account.” (paragraph 199)


2.4 Additional context & factors Sincethetimewhentheoriginaloffersweremadetovacant,commercialanduninsuredpropertyowners,thereisnowadditionalcontextandfactorstoconsider,including:thehighuptakeoftheCrownoffer,thecostofinfrastructureprovisionintheredzone,andmoreinformationabouttheestimatedvalueofredzoneland.

UptakeoftheCrownofferTheuptakeoftheCrownofferbyinsuredredzonepropertyowners(98%intheflatlandand92%inthePortHills)wasextremelyhigh,andmuchhigherthanoriginallyanticipated.ThevastmajorityofredzonepropertyownerselectedtoaccepttheCrownofferandselltheir properties. Overthelastthreeyearsthishashadmajorimpactsontheredzoneareas–includingincreasing their isolation. This raises a number of social and cultural wellbeing concerns for anyremainingpropertyowners,particularlythosewhoarealsoresidents,aswellashealthand safety issues. Weneedtoconsidertheseimpactsforvacant,commercialanduninsuredpropertyowners,especiallyforthosestilllivingintheredzone.

Infrastructure provision ThehighuptakeoftheCrownofferhasalsoincreasedthealreadydisproportionatelyhighcosts of infrastructure provision per household in badly damaged and sparsely populated areas. We need to consider to what extent this should be taken into account in developing anynewCrownofferforvacant,commercialanduninsuredredzoneproperties.The Christchurch City Council and Waimakariri District Council (“CCC” and “WDC”) are legally required to supply services to properties in their areas. They are also responsible for the maintenance of roads and infrastructure (including drains) in their respective red zoneareas.• Thehorizontalinfrastructurenetwork(suchaspipes,roads,telecommunicationsand

electricity)intheredzoneisdamagedandneedstoberepairedtofunctionoptimally.Sofar,thepartsofthenetworkthatarenecessarytocontinueserviceforgreenzonepropertieshavebeenorarebeingrepaired,butlittlehasbeendonetorepairpartsofthenetworkthatonlyserviceredzoneproperties(apartfromsomerepairsinKairakiandPines Beach).

• Fornow,infrastructureprovisionforremainingoccupiedredzonepropertiesacrossgreaterChristchurchisachievedthroughtemporarymeasuressuchassurfacepipes,manualremovalofwasteviatrucks,andcontinueduseofinadequateinfrastructure.Thesemeasuresproduceasub-optimalserviceforusers,increasetheriskofcontamination,andaresignificantlymoreexpensivethanserviceprovisionforgreenzoneproperties.

Provisionofinfrastructureservices(stormwater,wastewater,potablewater,roadingand solid waste) to isolated properties is always expensive. As well as the damage to infrastructurecausedbytheearthquakes,therearealsoveryhighcostsassociatedwithrepairandmaintenanceofredzoneinfrastructure.Thesecostsdivertfundsfromalternative

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usesthatcouldcontributetoafocused,timelyandexpeditedrecoveryforgreaterChristchurch communities. The costs are shared between ratepayers locally and taxpayers nationally. Theindicativeaveragecostisaround$25,000perpropertyannuallytoprovideinfrastructureservicestoimprovedprivately-ownedredzoneproperties,comparedtoapproximately$1,200pergreenzonepropertyannually.Thisisanaveragecost,and costs for servicing individual properties will vary. Thelatestratingvaluationsforredzonepropertieshavedroppedsignificantlycomparedtotheir2007/08ratingvaluationandsurroundinggreenzoneproperties’2013ratingvaluations.Thismeansthatredzonepropertyowners’rateshavedroppedtoo;wideningthe gap between what the user pays and the actual costs of provision.

Current land values – how do these compare? SincetheCanterburyearthquakes,changesinlandvaluesacrossgreaterChristchurchhavevarieddramatically.Someareashaveincreasedsignificantlyinvalue,whileothershavedecreased,presumablyduetofactorssuchasthequalityoftheland,thecostofbuildingwithappropriatefoundations,andconcernsaboutlackofinfrastructure.Accordingtothe2013CCCandWDCratingvaluations,theredzoneareas(flatlandandPortHills)haveanaveragerateablelandvalueof9%ofthe2007/08rateablevalue.In2014,CERA commissioned independent valuation work that indicated the average value of red zonevacantlandis28.6%ofthe2007/08rateablevalue,andlandforredzonecommercialpropertiesis26%ofthe2007/08rateablevalue.The2013ratingvaluationsundertakenfortheCCCandWDCshowthatthecurrentaveragevalueoflandinareaswhereitisnowknowntobemorecomplextobuild,forexampleTechnicalCategory3(TC3)landandthePortHills,hasdropped.Forexample,TC3propertieshaveanaveragecurrentlandrateablevalueof70%ofthe2007/08rateablelandvalue.Thereisnogovernmentassistanceforpropertyownersinthegreenzonewhohavelost equity as a result of the earthquake. WhileTC3landhasdroppedinvaluegenerally,thereisstillamarketforit,andthelatestvaluationsprovideausefulbenchmarkforassessingafairoffertouninsuredlandownersintheredzone.Thereislittlemarketforredzoneland–anditisdifficulttoassessthetruemarket value because there have been no sales except to the Crown.Forresidentialbuildingsintheredzone,newratingvaluationsundertakenin2013showasignificantdecreaseinvalue–8%ofthe2007CCCrateableimprovementsvalue,and5%ofthe2008WDCrateableimprovementsvalue.Anotherwayofmeasuringthevalueofresidentialimprovementswithintheredzoneisbycalculatingsalvagevalue.Onaverage,thesalvagevalue(forexample,doors,windows,kitchensandbathrooms)ofimprovementsinredzonepropertiesisestimatedat$3,500 per property. The Crown needs to consider to what extent these values need to be taken into account indevelopinganynewCrownoffertovacant,commercialanduninsuredpropertyowners.WithoutaCrownoffer,thesepropertyownersnowhavesignificantlyreducedequityandmayfinditverydifficulttosell.


HumanRightsCommission2013reportTheHumanRightsCommissionpublishedareportinDecember2013on‘MonitoringHuman Rights in the Canterbury Earthquake Recovery” (see Chapter 9 for the link to the full report).Thereporthighlightedtheneedfora“people-centredearthquakerecoveryprocess,onethatinvolvespeopleaffectedbytheearthquakesinproblemidentification,solutiondesignanddecision-making”.The process for the Recovery Plan will enable community involvement at each stage – identifying theissues,providinginformationtoassistwithdesigningtheoptions,andinvitingviewsontheproposedoptionsforanyfinalCrownofferforvacant,commercialanduninsuredredzoneproperties.WearebeginningthediscussionwiththisPreliminaryDraft,andinvitinginputfrom everyone–thepropertyowners,thewidercommunity,communitygroupsandorganisations.

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Vacant PropertiesFlatland=80Port Hills = 68

Crown Offer UptakeFlatland=55(68.8%)

PortHills=Noofferreceived

Average 2007/08 Land ValuationFlatland=$191,968PortHills=$239,904

Average 2013 Land Valuation

Flatland=$38,785(-80%)PortHills=$49,926(-79%)

3. Vacant: What Should the Crown Offer Look Like?

Thereare148vacantpropertiesintheredzone.Ofthese,80vacantpropertiesarelocatedintheflatlandareas,and68arelocatedinthePortHillsareas.ItisnotpossibletoinsurevacantlandinNewZealand,oranyothercountry,either throughtheEQCschemeorprivately.Vacantlandownerscanbedistinguishedfrom otherpropertyownerslivingintheredzone,astheywerenotaffectedbydevastationtohouses on their land. Thisisnottosaythattheyhavenotsufferedconsiderablelossand,insomecases,distressasaresultofthereductionofvalueinthelandandthelostopportunitiesthelandoffered.Theownersofvacantlandintheresidentialredzonemayalsohavehaddifferentintentionsfortheirproperty.Acommercialdeveloper,forexample,mightownanumberofvacantproperties,intendingtodevelopthemtosellforprofit.Ontheotherhand,anindividualperson might own one vacant section intending to build a family or retirement home. Other situationscouldfallsomewhereinbetween;forexampleanindividualmightownlandtobuildahousetosell,butmightnotconsiderthemselvestobeapropertydeveloper.WealsoneedtothinkaboutwhetheradifferentapproachshouldbetakenforvacantlandinthePortHillsredzoneareas,becauseoftheuniqueliferiskissuesintheseareas.InconsideringtheshapeofanyfinalCrownoffer,weneedmoreinformationonthiscategoryof properties. The questions on the next page are about starting the discussion. We want to hear your viewsonwhattheCrownmustconsiderindecidingaboutanynewCrownofferforvacantredzoneproperties.

Vacant


Keythingstothinkabout:

We need your feedback by 5pm, Tuesday 19 May 2015

Impact of zoning decisionsWhat has been the impact oftheGovernment’szoningdecisions for these property owners?

Property valueHow should property value be measured? Is the 2007/08RVthebestbasisforanewCrownoffer,orshould a new value be considered?

Fairness and consistency What should be considered in order to ensure fairness and consistency in relation tootherCrownoffers;for all property owners in greaterChristchurch;andfor New Zealand taxpayers?

Insurance statusShould a distinction be made between uninsured and uninsurable? Should the Crown make a distinction based on the ability to recover some of the cost of the purchase?

Vacant red zone properties - considerations for

any new offer

Intended purpose of the landShould the Crown distinguish between the land owners based on the intended purpose of theland-e.g.propertydevelopments and private residential builds?

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4. Commercial: What Should the Crown Offer Look Like?

Thereare20commercialpropertieslocatedintheflatlandareas.144commercialpropertiesarelocatedinthePortHillsareas–140ofthesearestorageunitsorgarages.ItisnotpossibletoinsurecommerciallandinNewZealand,oranyothercountry,eitherthroughtheEQCschemeorprivately.Theownersofcommercialredzonepropertieswereabletoinsuretheirbuildingsunderprivateinsurancecontracts,butwerenoteligibleforEQC cover. The owners were therefore not able to insure the land. All of these owners had insurance for their buildings and were able to claim from their insurance company or be paid 100%oftheimprovementvalueundertheCrownoffer.Asidefromthe140storageunitsandgarages,theother24propertiesaremainlysmalloperators,reliantonlocalsupportandpatronage.Mostarecornerstores,takeawayshops,veterinaryclinicsandcafes.Thebusinessesarepredominatelyowner-operatedandservicelocalcommunities.Assuch,theircustomerbasemayhavebeendiminished,atleastfortheredzoneareas,evenifthebusinessesarestillabletooperate.Asthesearecommercialpremisestherearedifferentconsiderationsabouttheseownersremainingintheredzone,comparedwithresidentsofprivatehomes.Weneedabetterunderstandingofthiscategoryofproperties.Forexample,theimpactsoftheearthquakesandtheGovernment’sdecisionsaroundtheredzoneandCrownofferare likelytobequitedifferentforownersofastorageunit,comparedwithanowner-operatedcafe.WealsoneedtothinkaboutwhetheradifferentapproachshouldbetakenforcommercialpropertiesinthePortHillsredzoneareas,becauseoftheuniqueliferiskissuesintheseareas.The questions on the next page are about starting the discussion. We want to hear your viewsonwhatyouthinktheCrownmustconsiderindecidingaboutanynewCrownofferforcommercialredzoneproperties.

Commercial PropertiesFlatland=20Port Hills = 144

Crown Offer UptakeFlatland=15(75%)


Average 2007/08 Rateable ValuationFlatland=$663,100PortHills=$67,545

Average 2013 Rateable Valuation


Commercial





Property valueIsthe2007/08RVthebestbasisforanewCrownoffer,or should a new value be considered?



Commercial red zone properties - considerations for

any new offer

Types of commercial propertiesShouldaCrownofferdistinguish between thedifferenttypesofcommercialproperties-e.g.storageunitsandowner-operated businesses?

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5. Uninsured: What Should the Crown Offer Look Like?

Thereare102uninsuredproperties(thiscategoryincludesonlytheuninsuredimprovedproperties,i.e.theyhaveeitheraresidentialorcommercialbuilding,andarenotvacantland)intheresidentialredzone.Ofthese,93uninsuredpropertiesarelocatedintheflatlandareas,andninearelocatedinthePortHillsareas.Propertyownerswithnoinsuranceintheredzoneareinadifferentsituationtosimilarpropertyownersinthegreenzone.Particularlyfortheflatlandredzone,thereissevereinfrastructuredamagethroughouttheareas;manysurroundingneighboursandcommunitieshaveleft;andthereisconsiderableuncertaintyaboutwhatwillhappentothese areas in the future. Weneedabetterunderstandingofthedifferencesamongthiscategory.Thismightincludethe following:• Those who did not have insurance – and on what basis? • Should consideration be given to the individual reasons why property owners did not

have insurance? For example – those who made a conscious decision not to insure comparedwiththosewho,forvariousreasons,lettheirinsurancelapse?

• Were there any property owners in this group who could not insure? WealsoneedtothinkaboutwhetheradifferentapproachshouldbetakenforuninsuredpropertiesinthePortHillsredzoneareas,becauseoftheuniqueliferiskissuesintheseareas.The questions on the next page are about starting the discussion. We want to hear your viewsonwhatyouthinktheCrownmustconsiderindecidingaboutanynewCrownofferforuninsuredredzoneproperties.

Uninsured PropertiesFlat land = 93Port Hills = 9

Crown Offer UptakeFlatland=62(66.6%)


Average 2007/08 Rateable ValuationFlatland=$308,551PortHills=$281,256

Average 2013 Rateable Valuation


Uninsured





Property valueValuationsfortheseproperties?Isthe2007/08RVthebestbasisforanewCrownoffer,orshouldanew value be considered?



Uninsured red zone properties - considerations for

any new offer

Circumstances of uninsured property ownersShouldaCrownofferdistinguish between the differentcircumstancesof this group of property owners,andthereasonswhy they did not insure?

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6. Other Affected Property Owners

Map: Rapaki Bay, with the red zone area highlighted

6.1 Rapaki Bay Therearetenredzonepropertiesat Rapaki Bay in the Banks Peninsula,whichwereallpartofMāoriReserveNumber875.ThatReserve was established from the Port Cooper purchase agreement signedbetweenNgāiTahuandthe Crown in 1859. By around 1886 the Reserve had been partitioned into individual titles. WherethelandisMāorifreeholdland,itissubjecttotheTeTureWhenuaMāoriAct1993.ThisActis the guiding legislation for the MāoriLandCourt,recognisingthatthelandisataongatukuiho(handeddownfromeachgeneration).TheActpromotestheretentionofMāorilandanditsuseforthebenefitofitsownersandfamily(whānauandhāpu).Allofthepropertieswerezonedred,aspartofthePortHillsredzoneareas,becauseoftheunacceptable risk to life from rockfall. Boulders dislodged from the mountain above Rapaki Bay duringtheearthquakesdamagedonehouseirreparably,andareanon-goingthreattotheproperties. As such the properties have been assessed as unsafe for residential use. Fiveofthesepropertiesareeithervacantand/oruninsured,andthereforearepartofthemainfocusofthisRecoveryPlan.Therearealsofiveotherinsuredredzoneproperties,whichwereeligiblefortheCrownofferwhichexpiredon27February2015.TheownersoffourofthesepropertiesdidnotaccepttheCrownoffer.Theremainingproperty(Generalland) has been settled with the Crown. AuniqueconsiderationfortheredzonepropertiesatRapakiBayisthattheyarealleitherGenerallandownedbyMāoriorMāorifreeholdland.MāorifreeholdlandcanonlybelegallysoldinaccordancewiththeTeTureWhenuaMāoriAct1993.ThismeansthatiftheownerswishtoacceptaCrownoffer,thelandstatuswillneedtobechangedbytheMāoriLandCourt,beforetheCrowncanpurchasetheproperty.Beforeagreeingtochangethestatus,theMāoriLandCourtfirstneedstobesatisfiedthiswouldnotresultinMāorilandalienation–i.e.landchangingfromMāoriownership.TosatisfytheCourt,theCrownandthepropertyownerswouldneedtoreachanagreementaboutthefuturelong-termuseandgovernanceofthisland.ItwasthereforenotpossiblefortheownersoftheinsuredMāorifreeholdlandtoaccepttheexpiredCrownoffer,iftheywishedtodoso.SomeoftheownersoftheredzoneGenerallandatRapakiBayalsofeltunabletoaccepttheCrownoffer,duetotheirancestralconnectiontothelandandtheuncertaintyaroundthelong-termuseandgovernanceoftheland,ifitchangedtoCrownownership.Thequestionnowishowthesepropertiesshouldbeconsidered,aspartofanyfinalCrownoffer.Theownersofthefivevacantand/oruninsuredpropertiesatRapakiBaywillbe considered under this Recovery Plan. We also need to keep in mind that the other four



insuredprivately-ownedredzonepropertiesatRapakiBaymaybeaffectedbyanewCrownoffer.If,forexample,theCrownweretoincludeanundertakingaboutthelong-termuseofthelandatRapakiBay,wewouldalsoneedtoconsiderthesefourinsuredproperties,toensureafairandconsistentapproach.Aswellasthequestionsinthepreviousthreechaptersforvacant,commercialanduninsuredproperties,therearesomespecificconsiderationsfortheredzonepropertiesatRapakiBay.Theadditionalquestionsbelowareaboutstarting the discussion.


Rapaki-specific informationWhat information about theRapakiBayredzoneproperties should the Crowntakeintoaccount,and why? E.g. the history of Rapaki.

Long-term useWhat should the Crown consider in making any decisions around the possiblelong-termuseandgovernanceofthisland,ifthe owners wish to accept aCrownoffer?

The Crown offerIf the property owners cannot accept a Crown offerwithoutanundertakingonthelong-termuseofthelandatRapaki,doesthisrequire an early decision on its future use?

The purposes of the Te Ture Whenua Māori Act 1993 including promoting the retentionofMāoriland.How could a new Crown offermeetthesepurposes?

Types of landDoyouthinkadifferentapproach should be taken fortheredzoneMāorifreehold land and the General land at Rapaki?

Rapaki Bay properties -

additional factors to consider for any new offer

28

6.2 Underinsured The100%Crownofferappliedtounderinsuredproperties–atotalofaround25propertiesacrosstheflatlandandPortHillsareas.TheGovernmentdecidedtoadjustthepurchasepriceforunderinsuredpropertieswheretheproperty’simprovementswereunderinsuredbymorethan20%.Whereapropertywasinthissituation,thepurchasepricefortheimprovementsvaluewasreducedonaproratabasis,relativetotheamountofinsurance.ThesepropertyownersmaybeaffectedbyanewCrownofferforvacant,commercialanduninsuredproperties.If,forexample,theCrownweretooffermorethan50%oftherateablevalueofimprovementsforuninsuredredzoneproperties,theCrownwouldalsoneedtoconsidereachofthese25underinsuredproperties,toensureafairandconsistentapproach.

6.3 Others affectedTherearestillsomepropertyownerslivingintheredzonewhowereinsuredanddecidednottoaccepttheinitialCrownoffer.Thatwastheirchoiceandastheofferwasvoluntarytheywereentitledtomakethatchoice.Itis,however,possiblethattherealityoflivingin theredzonehasnotequatedtotheirexpectationsandtheymaynowwishtosell.TheAugust2011Crownofferhasexpired.AlthoughthesepeoplearenotdirectlycoveredbythesubjectmatterofthisRecoveryPlan,thisisarelatedissue.ShouldtheCrownagainoffertopurchasetheseproperties?Ifso,shouldtheofferbeonthesamebasisaswasfirstmade?


7. What Next?

The previous chapters of the Preliminary Draft Recovery Plan have helped to set the scene. They set out the various developments and decisions that led up to this point: theCanterburyearthquakes,thereasonswhytheGovernmentcreatedtheredzoneandCrownoffers;theSupremeCourtjudgment;andsomeoftheimportantfactorsweneedtoconsiderforvacant,commercialanduninsuredredzoneproperties.Thenextstepistofindoutwhatyouthink.TodevelopanewCrownoffer,weneedtoensurewehavealltherelevantinformationandunderstandthepublic’sviews.

For more information call 0800 RING CERA (0800 7464 2372)

You can provide comments on this Preliminary Draft in a number of ways:»Goonlineat:www.cera.govt.nz/redzoneoffer»Viaemailto: [email protected]» By post to: Preliminary Draft

ResidentialRedZoneOfferRecoveryPlanFreepost CERACanterbury Earthquake Recovery AuthorityPrivate Bag 4999Christchurch8140Feedback is due by 5pm, Tuesday 19 May 2015

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8. Glossary

Term Definition

Canterbury earthquakes Thiscoverstheearthquakesbetween2010and2012,includingthemajorearthquakesof4September2010,22February2011,and13June2011.

CCC Christchurch City Council

CER Act CanterburyEarthquakeRecoveryAct2011

CERA Canterbury Earthquake Recovery Authority

EQC The Earthquake Commission

Flat land red zone TermusedtodescribetheresidentialredzoneareasingreaterChristchurch,includingWaimakaririDistrict,butexcludingthePortHills.

Greater Christchurch ThedistrictsoftheChristchurchCityCouncil,theSelwynDistrictCouncilandtheWaimakaririDistrictCouncil,andincludesthecoastalmarineareaadjacenttothesedistricts.

Infrastructure Includesroads;stormwater,drinkingwaterandseweragepipes;telecommunications;and electricity.

Māori Land Court ThespecialistcourtthathearsmattersrelatingtoMāoriland.ItalsohasjurisdictiontohearcasesundertheMāoriFisheriesAct2004,theMāoriCommercialAquacultureClaimsSettlementAct2004andanumberofotherstatutes.

Minister for Canterbury Earthquake Recovery

TheMinisterwhoholdstheCanterburyEarthquakeRecoveryportfolio.CurrentlythisisHon Gerry Brownlee

Port Hills red zone TermusedtodescribetheresidentialredzoneareasinChristchurchthatareinthe PortHills(i.e.excludingtheflatlandresidentialredzone)

Rating valuations and rateable values

Aratingvaluationreflectstheproperty'smarketvalueatthedateofthevaluation.This is then broken down to land value and improvement value. The value of the land isdefinedastheprobablepricethatwouldbepaidforthebareland.Thisincludesany development work that may have been carried out. The value of improvements is calculatedbysubtractingthelandvaluefromthecapitalvalue,andrepresentstheextravalue the buildings and other developments give to the land.

Recovery Strategy RecoveryStrategyforGreaterChristchurch:MahereHaumanutangaOWaitaha;preparedundertheCERActbyCERA,astatutorydocumentwhichsetsouttheprinciples,priorities,visionandgoalsfortherecovery.

Residential red zone or ‘red zone’

AnareaofresidentiallandwhichsufferedseverelanddamageduetotheCanterburyearthquakesequence,andwheretheAugust2011Crownofferwasmadetoownersofinsuredproperties.TheresidentialredzonewasthetermusedtodistinguishbetweenthesuburbsandtheChristchurchcentralbusinessdistrictredzonecordon.

Strategic partners CERA,TeRūnangaoNgāiTahu,NZTransportAgency,EnvironmentCanterbury,ChristchurchCityCouncil,SelwynDistrictCouncilandWaimakaririDistrictCouncil

Technical Category and TC3 AlandclassificationdevelopedbytheMinistryforBusiness,InnovationandEmploymentthatrequiressitespecificgeotechnicalinvestigationstodetermineappropriatefoundationtypeforresidentialconstruction.Therearethreecategories,withTC3 land requiring the most extensive investigations.

Waimakariri District IncludesKaiapoi,KairakiandPinesbeaches,andsurroundingareas

WDC Waimakariri District Council


9. Links to Further Information

Recovery Strategy for Greater Christchurch

TheRecoveryStrategyforGreaterChristchurch:MahereHaumanutangaOWaitahaisanoverarching,long-termstrategyforthereconstruction,rebuilding,andrecoveryofgreaterChristchurch.http://cera.govt.nz/recovery-strategy/overview/read-the-recovery-strategy

CanterburyEarthquakeRecoveryAct2011

TheCanterburyEarthquakeRecoveryAct2011(CERAct)cameintoforceon19April2011.ThepurposeoftheCERAct is to support and facilitate the recovery of greater Christchurch following the Canterbury earthquakes.http://www.legislation.govt.nz/act/public/2011/0012/latest/DLM3653522.html

LandzoningandCrownofferdecisions

A whole range of information and Cabinet papers can be found on the CERA website at the following link http://cera.govt.nz/cabinet-papers. Some relevant papers are listed below.· Cabinet paper – Land Decisions, June 2011 SetsoutthepolicydecisionsthatweremadeinrelationtolanddamagefromtheCanterburyearthquakes,including

theformationofthered,greenandorangezones.· Cabinet paper – Canterbury orange zones, October 2011 SetsoutaprocessandtimeframeforrezoningtheremainingorangezonesinCanterbury,includingSouthshore

West,KaiapoiWestandBrooklands.· CERA briefing, Red zone residential properties under construction and non-residential properties

owned by not-for-profit organisations, May 2012 ExtendstheCrownoffertopurchaseredzonepropertiesunderconstructionandnon-residentialpropertiesowned

bynot-for-profitorganisations.· CERA briefing, Considerations for the Crown offer to eligible property owners in the Port Hills Red Zone,

August 2012 SetsouttheelementsofaCrownofferforredzonepropertyownersinthePortHills.Noteitdoesnotincludean

offerforownersofvacant,uninsuredorcommercialproperties.· Cabinet Business Committee paper – Red zone purchase offers for residential leasehold, vacant,

uninsured and commercial/industrial properties, August 2012 SetsoutthepurchaseofferforpropertiesthatwerepreviouslyineligibleforaCrownpurchaseoffer:insured residentialleaseholdproperties,propertieswithnoinsurance(vacantlandandotheruninsuredproperties),and insuredcommercial/industrialproperties.NotethispaperdoesnotapplytothePortHillsredzone.

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Supreme Court Judgment

TheCrownofferforvacant,commercialanduninsuredredzonepropertieswaschallengedbywayofjudicialreviewandwasappealedtotheSupremeCourt.Initsjudgmentreleasedon13March2015,theSupremeCourtheldthattheCrownofferhadnotbeenlawfullymadeanddirectedthattheMinisterforCanterburyEarthquakeRecoveryandtheCERA Chief Executive reconsider the decision in light of the requirements and factors outlined in the judgment. This judgmenthasledtotheMinister’sdirectiontodeveloptheResidentialRedZoneOfferRecoveryPlan.https://www.courtsofnz.govt.nz/cases/quake-outcasts-and-fowler-v-minister-for-canterbury-earthquake-recovery/at_download/fileDecision

Human Rights Commission Report

Thisreportprovidesahumanrightsanalysisofkeyissuesthathaveemergedintherecoveryrelatingtohousing,healthandproperty.Ithighlightsparticularhumanrightschallengesintheseareas,instancesofgoodprogress,andareasinwhichchallengesremain.ItwasreleasedinDecember2013.http://www.hrc.co.nz/your-rights/social-equality/our-work/canterbury-earthquake-recovery/

DirectiontodevelopResidentialRedZoneOfferRecoveryPlan

Undersection16oftheCanterburyEarthquakeRecoveryAct2011theMinisterforCanterburyEarthquakeRecoverymaydirectaresponsibleentitytodevelopaRecoveryPlan.ThisDirectionspecifiesthematterstobedealtwithintheResidentialRedZoneOfferRecoveryPlanandthattheresponsibleentitytodeveloptheRecoveryPlanisCERA.Itwaspublishedon23April2015inissueno.41oftheNewZealandGazette.https://gazette.govt.nz/notice/id/2015-go2411


0800 RING CERA0800 7464 2372

Comments can be madeOnline at: www.cera.govt.nz/redzoneoffer

Via email to: [email protected]

By post to: Preliminary Draft Residential Red Zone Offer Recovery Plan Freepost CERA Canterbury Earthquake Recovery Authority Private Bag 4999 Christchurch 8140

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