RESEARCH NOTE DEADLY HERITAGE THE NEW ZEALAND INITIATIVE DELOITTE NEW ZEALAND MAY 2016 DR ERIC CRAMPTON LINDA MEADE www.nzinitiative.org.nz www.deloitte.co.nz 1 RESEARCH NOTE ABOUT THE AUTHORS Dr Eric Crampton is the Head of Research at The New Zealand Initiative and co- author of The Case for Economic Growth. Dr Crampton served as Lecturer and Senior Lecturer in Economics at the Department of Economics & Finance FOREWORD at the University of Canterbury from While most of the fatalities in Street, and Lichfield Lanes: blocks of November 2003 until July 2014. the February 2011 earthquake in older buildings with masonry facades He is also the creator and author Christchurch occurred in two relatively overlooking busy pedestrian areas. of the well-known blog “Offsetting modern buildings, collapsing facades History shows how it is important that Behaviour”. on heritage buildings also contributed these buildings can be made safe at substantially to the death toll. reasonable cost. Linda Meade is Partner at Deloitte The most prominent example was the The risks posed by the kinds of New Zealand. failure of a listed building at 605-613 unreinforced masonry facades typical Since joining Colombo Street, which fell on a transit of many heritage buildings were Deloitte twelve bus, resulting in the loss of twelve also acknowledged by Building and years ago, Linda lives and leaving one survivor. That Housing Minister Nick Smith in his has played a lead role in the delivery building’s owner had been served proposed remediation of the proposed of public sector and infrastructure with notice under the Building Act earthquake strengthening legislation. engagements, with particular that the building needed to be made Facades and parapets will now have emphasis on central government safe. The owner found that the priority over other strengthening departments, the transport sector, building could not be made safe at works.2 But remediating many of these education and housing. She also is a any reasonable cost and, in December dangerous features is made more trustee with Wellington Zoo. 2010, consequently proposed difficult by heritage listings. demolition. Despite Christchurch Council’s having been empowered by Wellington’s earthquake-prone stock ACKNOWLEDGEMENTS Parliament to allow speedy demolition of heritage buildings is a microcosm of of unsafe buildings, Council insisted a problem facing New Zealand more The authors thank Boniface Molnar, on a resource consenting process generally. In short, too few public who interviewed many of Wellington’s that would take at least six months. resources are devoted to protecting owners of listed buildings as part of The earthquake of 22 February 2011 too many heritage-designated this research. We thank Angie Geor- intervened.1 buildings. While the public enjoys giou for her assistance in pointing us the benefits of a pleasant urban to building owners whose experiences Much of Wellington’s streetscape, environment featuring many older shaped our research. Finally, we also from the perspective of a recent buildings, those buildings’ owners are thank the many building owners and migrant from Christchurch, looks left to bear the cost of owning listed developers who generously provided like pre-quake Colombo Street, High buildings. their time. 1 See survivor Dr Ann Brower’s discussion in Harvey, Justine, 2012, “Colombo Street’s lone survivor discusses reasons behind the building collapse”, Architecture Now, March. Available at http://architecturenow.co.nz/articles/luck-played-no-part-in-this/ 2 Jenny Ruth, “Some critics of earthquake strengthening legislation win their arguments.” The National Business Review 3 September 2015. 2 DEADLY HERITAGE While heritage-listed buildings are risk where earthquake strengthening hardly the only buildings at risk during regulations can change and can Deloitte’s survey identified six earthquakes, their heritage designation disproportionately affect the cost of primary issues hindering the timely makes the problems common to many owning heritage buildings. remediation of earthquake-prone other buildings more intractable. heritage buildings. The result of this, both in Wellington Apart from anything else, listed and increasingly in the rest of the National Building Standard guidelines buildings are more expensive to country as new earthquake standards 1 seem fundamentally arbitrary. renovate or strengthen because works are promulgated, is a stock of buildings Competent engineers looking at must be respectful of the building’s of relatively low heritage value but high exactly the same data can come to heritage character. The nature of the earthquake risk that are difficult to different estimates of the building’s space and their location can limit the make safe given the constraints placed rating relative to the current building rentals that are able to be achieved on heritage buildings. And, even if code. This is especially true when after the work is done. Challenges also they are made safe, the economics of assessing older buildings. Surveyed arise when buildings are held under it can be quite difficult. While there are owners also had difficulty in finding unit title which require consensus many heritage buildings that are vital competent engineers to inspect their across multiple owners. Finally, where to save, available resources are spread buildings, and many did not know demolition is an available option to too thinly. their building’s current rating. building owners where available repair strategies are uneconomical, that Nowhere is this more clear than in 2 Building owners often have little option is often unavailable for listed Wellington, both because of the information about the rules buildings. earthquake risk facing the city and applying to their heritage buildings. because of the substantial stock of Interpreting the set of regulations can People buying heritage-listed heritage-listed buildings. be daunting. And while assistance is properties generally know, or ought available, few owners know about it. to know, the responsibility that they We worked with Deloitte to investigate Both initial investigations and are taking on with their purchase. If the barriers facing owners of heritage 3 subsequent remediation are the designation is costly for building buildings in making their properties exceptionally costly. Financial owners, it should be factored into earthquake-safe. Our investigation constraints loom large, as do barriers their purchase offer for the building. was primarily undertaken in late to loan financing for difficult-to-insure Anecdotally, that is more happening 2014 and early 2015; we have seen buildings or those held under unit now than happened before the little change since then. The report titles. devastation in Christchurch. points to substantial problems if the government wishes to make progress Earthquake repairs are unnecessarily But even where risks are suitably on remediating unreinforced masonry 4 expensive due to like-for-like factored in, owners face additional facades on heritage buildings. heritage replacement specifications. Many owners are unable to find economically feasible repair strategies. While commercial tenants avoid 5 hazardous buildings, residential tenants are often even less willing to pay a premium for strengthened premises. Consequently, more expensive repair options in that context can become unviable. Owners unable to find economically 6 viable repair strategies for heritage buildings are also forbidden from tearing them down. 3 RESEARCH NOTE Barring those more systematic changes, there are other measures Council could undertake that would mitigate the burden it imposes on the owners of heritage buildings. We detail these at the end of this report. The Final Report of the Canterbury Earthquakes Royal Commission argued that securing dangerous buildings “should not be impeded by the consent process and that life safety should be a paramount consideration for all buildings, regardless of heritage status.”3 Deloitte explored some potential Under such an approach the public They recommended specifically that policy responses in their submission benefit derived from the heritage where demolition or protective works on Wellington’s Long Term Plan (www. status is funded by the public. This are needed to prevent injury or death, deloitte.com/nz/wcc-ltp). ensures that rational decisions are no consenting should be required to made balancing heritage value effect such works regardless of the While heritage buildings are a vitally against costs where there may exist building’s listing under a council’s important part of the city’s landscape other heritage buildings that can be district plan, or protection under the and culture, they often impose a large improved more economically. Historic Places Act 1993. and uncompensated burden on their owners. Someone today buying a Switching heritage preservation to Where Council is unable to make the heritage building should understand an annual budget item would also changes necessary to the District Plan to the encumbrances posed by such encourage Council to weigh carefully remove the least valuable earthquake- ownership. But owners of newly listed which buildings really provide prone buildings from heritage buildings and long-time owners who the most heritage value, and how designation, and to better facilitate have seen strong escalation in the costs the city can provide the greatest the strengthening of particularly of owning a heritage building provide amount of heritage preservation