A whopping $7.7 million of Queenstown ratepayers’ money was earmarked for leaky building cases last year.
That’s the equivalent of $340 on every rateable property in the district. But City Hall is keeping schtum on the details.
Finance boss Stewart Burns won’t reveal how much of the money has already been paid out or how much is set aside for unresolved claims.
And he also won’t say how many claims the council is currently facing for signing off on dodgy builds in the last decade.
“It is in the interest of the community generally that the council retains the ability to effectively defend these claims and negotiate settlements where appropriate,” he says.
Last September, the council said it had reached a confidential settlement over a $7m leaky building claim involving Heritage Heights apartments on Queenstown Hill.
The $7.7m was identified as a budget overspend in the 2015/16 financial year.
It was used to “defend and resolve a number” of leaky building claims in the year to June 2016.
Four claims were settled in the year, costing $500,000 in lawyers’ fees.
But Burns says the $7.7m also covers claims received but not yet resolved.
“Council’s liability in relation to these claims has not been established.
“A loss provision has been recognised based on current knowledge of historic settlement of claims.”
Claims have a 10-year time limit.
In the 2014 and 2015 financial years, Queenstown’s council received 19 new claims. Three were settled in 2014.
Settlements are often bound by confidentiality agreements.
But Queenstown’s council is understood to have paid at least $1m towards the rumoured $14m cost of repairing Frankton Road’s Greenstone Apartments alone.
All councils sign off on building work.
So when owners find mouldy walls, waterlogged basements or other leaky evidence, they can make a claim against a developer, builder, designer, and council.
In many cases, the other liable parties have shut up shop, gone bust, or have their assets protected by trusts and the like.
Burns: “This often means that council is ‘last man standing’ and is required to contribute a high proportion of the settlement despite only having a small proportion of the liability.”
The council ensures wherever possible those responsible for the defects are pinged, he says.
Any claims post-2009 are not covered by insurance.
Leaky building claims have dogged councils for years. It’s estimated repairs for poor designs, workmanship and materials will total more than $11 billion nationally.