Residents of Christchurch's Red Zone now have two offers they can choose from. But they really do have to choose one or the other.

The Government's response to the Christchurch Earthquake is out, introducing Christchurch to the new reality of Red/Orange/Green/White Zones. If nothing else, the announcement should institute a change to that stand-by Christchurch opening conversation gambit: "what school did you go to?" Now it will be; "what Zone is your place in?"

How this response works is going to vary individual by individual. Over at Public Address, David Haywood has already posted on the hole it appears to leave him in. I suspect there'll be a lot of others with similar tales.

But here's the question for today. Let's say you are unlucky enough to be in the "Red Zone" (which likely will expand, note, as the "Orange Zone" and "White Zone" land gets looked at more closely). And let's say neither of the Government's two offers work for you ... in that you think they leave you in such a bad financial state that you can't afford to take them. What then?

Well, one prospect is that you will end up as a lonely hold-out in a largely deserted area of demolished houses with little in the way of services. That in itself will be enough, I suspect, to get most people moving out irrespective of the financial hit they have to take.

But let's say that, although it is in the Red Zone, your house is in reasonable shape, it still has services, and you just don't want to (or really feel you can't) leave. What then?

Well, at the moment, the Government is speaking the language of offers. According to the press release, "Residents will then have nine months to consider the offer of purchase." Which may make it sound like the decision rests with the land owner - if you don't like the offers, then you can just stay on living there.

Except ... probably not. Because lurking behind the Government's offers is the Canterbury Earthquake Recovery Act 2011, and in particular section 54. Under that section, "The Minister may acquire land compulsorily by causing a notice of intention to take land in the name of the Crown to be published in the Gazette and twice publicly notified ... ."

Now, we can't say for absolute certain, and the Minister himself may not yet know for sure, but I think it's pretty clear that there won't be anyone allowed to stay living in the Red Zone. That's certainly the implication of this news story. So folks who won't sell voluntarily will, I suspect, find themselves selling involuntarily after 9 months.

Except, here's the rub. If your land is acquired compulsorily under the Canterbury Earthquake Recovery Act 2011, you get compensation under subpart 5. And that compensation is determined by the Minister in accordance with s.64.

And s.64 makes it crystal clear that "in the case of the compulsory acquisition of land, [compensation is determined] as at the date of the compulsory acquisition"; meaning "the Minister must determine compensation having regard to its current market value as determined by a valuation carried out by a registered valuer."

So, here's the position those in the Red Zone face. They can accept one of the Government's two offers of compensation at 2007-values. Or, in nine months time, they can face the high probability that the Government will force them to sell at the present value of a quake-ravaged piece of land on which no-one may build in the midst of a sea of demolished houses.

Your choice.

Comments (10)

by Simon on June 24, 2011
Simon

Andrew,

thanks for the analysis. Its good to understand what the mechanisms are.

Before the announcement, in a conversation with a friend who is a geo-technical engineer, I said I thought there would have to be an element of coercion as well as bail-out in whatever package was announced for the unredeemable land. Key and Brownlee have successfully it seems presented the package as "giving options". My friend thought I was criticising the Government (again!) and quizzed me on what I would do if I was Key and Brownlee. My response was a bit of umming and arring before admitting I largely agree with "bail-out and coercion" approach.

I thought CERA may have to issue another regulation. But from you analysis, it appears they don't have to. However, could CERA the authority use CERA the Act to change s 64?

PS I moved from Wellington to Christchurch in 1995 and people at my new work really did MEANINGFULLY ask me what school I went to! And what suburb I lived in!

PS#2 Later in 1995, I sounded out real estate agents about buying an investment property in Christchurch. The quietly-given consensus advice was "Don't buy anything in east Christchurch - the soil is marshland that will be unstable in an earthquake - and you will just get bad tenants who will not pay rent and will damage property".

It was like learning Christchurch's two dark secrets at once and why they really do ask you where you went to school.

 

by Simon on June 24, 2011
Simon

3. The other thing that strikes me is that in the extensive media coverage and commentary on the failed land, I am not aware of anyone asking who were the engineers who gave the expert opinions that said "Yep, this subdivision on top of a former wetland will be stable in the long-term"?

Also, why did the City Council accept this advice at face value when issuing subdivision consents?

 

 

by Andrew Geddis on June 24, 2011
Andrew Geddis

"However, could CERA the authority use CERA the Act to change s 64?"

In theory, section 71 could be used to change section 64 through an Order in Council. But why would the Government want to do this? The fact that compulsory acquisition would be on far, far worse terms than the "voluntary" deal on the table is the stick that will drive people to take it.

by on June 25, 2011
Anonymous

@Simon

I believe the council refused consents for eastern subdivisions like Bexley initially, but the developers took them to court and had the decisions overturned - it could be interesting to ask where the developers are now.

by on June 25, 2011
Anonymous

oops - should have looked into that a bit before I repeated and urban myth - just found this in an article by Tony Wall in the Sunday Star Times:

"Christchurch mayor Bob Parker had to apologise last week after he wrongly said the council opposed such subdivisions because of concerns over land quality, taking cases to the Environment Court.

There was no court case, and it was Bexley residents who opposed plans by the council, which had proposed more of the wetland for housing.

The Planning Tribunal eventually reduced the area available for development."

 

by on June 25, 2011
Anonymous

Here's an article from NBR from last September which is interesting -  Bexley residents may sue Christchurch council - which says:

"...But a perusal of the records shows the city council never objected to any developments over concerns about liquefaction.

The private developers who bought the council land sought rezoning in 1992. The only objectors were environmentalists concerned about the loss of wetlands. The Environment Court acceded to their requests to reduce the area for housing.

...At issue in any court case will be the foundation requirements of the council at the time. Early reports suggest that only minimal reinforcing of concrete foundation slabs was required (by contrast, new building in other peat-profile suburbs has required extensive pole foundations underneath concrete slabs and it is unclear why these were not mandatory at Bexley)."

by Simon on June 26, 2011
Simon

@Susan,
Here is the Sunday Star Times article by Tony Wall (http://www.stuff.co.nz/the-press/news/4168804/Quake-hit-residents-may-sue). Sounds like Bob "miss-spoke" quite a bit.  As well as it not being true that CCC opposed the consents, Bob says "Fifty percent of Christchurch is built on land potentially subject to liquefaction" I am sure that 50% is completely wrong. Where is that teleprompter when you need it?
The council acted as both a land vendor and as a consent authority for the subdivision consents. Messy. What if the council had to prosecute the developer for lack of compliance. The developers would probably be able to rely on a defence of mixed messages from the council as vendor.  It all sounds just too similar to their relationship with Dave Henderson. We should be very wary when the regulator has a cozy relationship with the developer.
Then Bob says "According to the knowledge we have around liquefaction, you can build successfully, you can remediate the land and improve it.". Great in theory, Bob, but it didn't happen in practice.
My geotech engineer friend said Bexley had a 40cm layer of 'aggregate' (thats gravel to us) dozed on top the peat.

@Alison,
Interesting NBR item by Chris Hutchings. If a "friends of the wetlands" group appealled the subdivision consents to the Environment Court over wetland loss as a biodiversity issue, then the Court may not have even considered geo-technical stability. The trouble with the RMA process is that applicants (developers) are expected to do an honest and complete job of identifying all relevant effects in their 'Assessments of Environmental Effects'. Such as the risk of liquefaction. The $$$ incentive is however to do the least-cost assessment. Councils have the role of back-stopping this - by saying upfront what affects should be assessed, to what standard and using their own experts to check the least-cost assessments.

My engineer friend said it was common knowledge that the land stabilisation for Bexley, 40 or 50 cm of aggregate (gravel) over the peat, was very inadequate. Thats borne out by Hutchings noting Environment Canterbury (who as a regional council would not always consent subdivisions) ensuring the Pegasus township consents included stringent compaction and stabilisation conditions. He's not normally a fan of Ecan.    
I'd love to know who the consultants were who obtained the Bexley consents!

@Andrew,
Roger Sutton says (http://www.stuff.co.nz/national/christchurch-earthquake/5193646/Quick-fi...)  "You'll have nine months to decide, and 12 months after that before you'll have to move out." So after 12 months, any hold-out land owners will get "the offer they can't refuse" under s 64 CERA.

by danniel on October 16, 2013
danniel

You make some good points here. I really wouldn't want to find myself in a red zone; it's just too hard to handle these maneuvers. Yet, I don't afford nice house in a nice zone. What kind of options do I have to be able to reach the preferred properties in my lifespan? Are there any chances for that?

by rickk on January 04, 2014
rickk

This is what I call power abuse. You can't just force people out of their homes like that. If this happened to me I would go crazy, I love my home too much and no money could buy it. Besides, I found out some great deals on furniture and I've just improved some of the rooms, I would hate to be forced out.

 
by rickk on January 04, 2014
rickk

Unless they pay me a great deal of money, I wouldn't move out. Even though I got some great deals on furnishing, if they wouldn't pay the right price I would keep defying them. These people might be powerless but if they unite, I'm sure they could keep living in their homes.

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