The Eye of the Fish

Maximus
February 27, 2013

Harcourts decision

For those that are interested, the following is the text of the final paragraphs of the decision on the Harcourts building:

(302) In the end, for the reasons we have outlined, we have concluded that the demolition of the Harcourts building would not constitute sustainable management of an important physical resource, namely a heritage building of considerable significance.

DECISION

(303) Consequently, having regard to the evidence presented, and the relevant statutory criteria under s104(C) and Part 2 of the Resource Management Act 1991, and for the reasons set out below, the Independent Commissioners DECLINE consent to demolish the listed heritage building at 30 Grey Street / 203-213 Lambton Quay, Wellington Central…

REASONS FOR DECISION

(304) Section 113(1)(a) of the Act requires that we state the reasons for our decision. Although it will be clear from the body of our report, for the avoidance of doubt we confirm that the principle reasons for declining consent are:

1. The Harcourts building is a heritage building of city and regional significance. Demolition of the building will result in a significant loss of historic heritage resulting in adverse effects that cannot be avoided, remedied or mitigated if demolition occurs.

2. In relation to the matter of the building having been identified as an earthquake-prone building under the Building Act 2004 and consequential ‘public safety’ issues, we agree that peoples’ health and safety is a matter we should have regard to, and we have.

3. Based on the evidence before us, we have concluded that not every ‘reasonable alternative solution’ for retaining the building has been considered. This includes strengthening to a standard of less than 100%NBS.

4. With regard to the positive effects, we have not taken into account those positive effects that might result from the construction of a new Central Area building, including any positive effects in relation to CBD vitality and vibrancy. These effects we consider fall outside our discretion, which is restricted to an assessment of ‘historic heritage’.

5. In relation to Part 2 matters we have concluded that the demolition of the Harcourts building would not constitute ‘appropriate’ use and development – rather, based on the possibility that the building is equal or greater than 42%NBS (and here we draw on the evidence of Win Clark) we consider that its demolition would be inappropriate within the meaning of s6(f) which directs that we should have regard to the ‘protection of historic heritage from inappropriate subdivision, use and development’ as a matter of national importance.

6. The demolition of the Harcourts building would be inconsistent with regional policy, as expressed in the Regional Policy Statement, and with District Plan policy, in relation to historic heritage.

7. For the reasons above we have concluded overall that the demolition of the Harcourts building would be inconsistent with Part 2 of the Act which promotes sustainable management of natural and physical resources, including historic heritage resources.

CONCLUDING COMMENT

(305) We have found our decision-making on the application to be challenging. We acknowledge the significance of the issues we have been asked to consider and determine. On the one hand there are important matters of historic heritage, and on the other important matters of public safety and costs.

(306) It may be that this is one of the first, if not the first, publicly notified resource consent applications in the post-Canterbury earthquakes ‘environment’ where consent is being sought under the Resource Management Act 1991 to demolish a significant heritage building, principally on the grounds of public safety, given that the Applicant has been served with an Earthquake-Prone Building Notice under the Building Act 2004. We acknowledge that the applicant has also addressed the issue of commercial viability, in addition to public safety.

(307) It was very clear to us that the evidence presented by the Applicant and submitters, both those in support and opposition, drew out the very real ‘tension’ between these two important ‘public interest’ matters.

(308) We fully appreciate the heavy responsibilities that are very clearly falling on the Applicant as the owner of the Harcourts building.

(309) However, in the end result, and based on the evidence before us, and guided by the various statutory responsibilities that flow from the Resource Management Act 1991 and, in this case, the operative Wellington City District Plan, we have concluded that we should decline the application. This is not a decision we have made easily or taken lightly. It is, however, the decision that we consider in the circumstances of this application and the evidence before us to be the ‘correct’ decision.

Alistair Aburn, Chair
Helen Atkins
Rob Jury

Maximus
27 - 02 - 13

So the issue that remains, for me at least, is that in part the real question was not answered. The Council issued a note to strengthen or demolish, given that they believed it was 17-18% of NBS. As it was, turns out that it is nearer 42%, and so the WCC notice is now therefore null and void.

The real question remains to be asked: what happens in a situation like this where it IS below 33%. What then?

Kent Duston
27 - 02 - 13

What happens then is …. the same process. As far as I can tell, there’s nothing that says the EPB issues will automatically trump the RMA or even the Regional Policy Statements. There seems to be this sentiment that owners only have to wave the earthquake-prone flag and a demolition consent will automatically be issued, but in all honesty I can’t see how that would work given the RMA/District Plan legislative constraints.

davidp
27 - 02 - 13

You’d have to be mad to buy a heritage building or an apartment in a heritage building. Other people can pretty much force you to spend money on it, even if you don’t have the money and have no way of recovering the money.

The best outcome for the owner of this one is to get rid of the current tenants and leave the building derelict. Then hope for an earthquake. If there is no earthquake then send in a bulldozer one night, pay a fine, and redevelop.

Of course the root of the problem is the requirement to upgrade earthquake prone buildings. There are a few old dungers around town that represent a real danger to the public and need to go. There are a lot more that will be written off in a large earthquake, but represent no real danger to occupants or the public but the government and council have decided to make these buildings worthless (or worse than worthless) because of the chance of a 1 in 200-400 year earthquake.

Kent Duston
27 - 02 - 13

davidp – This is exactly the situation in Europe, where owners sometimes have heritage obligations that have to be met irrespective of the costs. If we want any of our built heritage to still be standing in 200 years time, it’s something we’ll have to get used to here as well – and the sooner the better, in my view.

Of course, the liabilities that may come with a heritage building therefore needs to be reflected in the price – arguably everyone in the country has been over-paying for heritage structures, Mr Dunajtschik included. By all counts he’s an astute businessman, but the fact of the matter is that he’s probably spent too much on the Harcourts building … and it shouldn’t be up to Wellington to then bail him out of his financial embarrassment by allowing demolition when it’s plainly not required. He’s a professional developer who knew the rules of the game when he bought the building, so he doesn’t have much cause for complaint that the commissioners have enforced them as written.

And for the record, I completely agree with the sentiment that this earthquake carry-on has an air of moral panic about it. Maurice Williamson’s pontificating about earthquake safety on Morning Report today was fascinating, given that he’s part of a government that has pulled money out of road safety initiatives to fund the Roads of National Party Significance, which in turn has seen a reversal of the trend towards a lower road toll. Apparently killing people with falling masonry is an absolute no-no, but knocking them off in car crashes is perfectly acceptable! He gets my vote for Hypocrite Of The Week as a result.

David V. Griffin
28 - 02 - 13

While it varies from state to state and city to city in the US, both New York and the Federal government provide funding for the renovation and restoration of historic buildings; this can be up to 15% of the cost of the work. There are also tax credits and similar incentives as well as the concept of air rights. I don’t know if these are already all widely adopted in New Zealand, but they have been instrumental in encouraging American developers to hold on to significant historic properties. Historic districts also make up significant portions of New York, Boston, San Francisco, Washington DC and smaller cities such as Providence, Richmond, Baltimore, Charleston, New Orleans and Savannah.

Maximus
28 - 02 - 13

David – very useful. Could you tell us more about how the tax credits etc work?

David V. Griffin
28 - 02 - 13

This website might be useful – it’s the Federal website for preservation incentives.

http://www.nps.gov/tps/

Here’s the one for New York State:

http://nysparks.com/shpo/tax-credit-programs/

minimus
28 - 02 - 13

Regarding David Griffin’s comments – so true – I’d forgotten about these schemes. If you go through areas of old town/row houses in older american cities you find the street front historic and preserved, but the real interest is in walking down the alleys. Around the back is where you start to see a whole variety of styles and materials. It’s really interesting. It’s because the street frontage receives tax benefits.

I can’t say I personally know the details of how that works, but one of the other things they do in the US are conservation easements for agricultural land. In many areas near cities prime farm land is under threat as real estate development pays a lot more than growing grain or raising cattle. The easement works by essentially signing over the development rights to a conservation group and the result is a reduction in the taxable value of the land, so it makes it financially viable for the farm to retain productive.

You could imagine a similar situation where a heritage easement could be sold reducing the value of the building from the full value, to just the value that can be altered. Then building owners might turn around and invest the extra capital in seismic upgrades. nah… who am i kidding…

Maximus
28 - 02 - 13

Hey Minimus, you wanna give us a post on the construction progress of the new cardboard Cathedral ? I saw a profile on the Arch Record website the other day on Bans work in Chch and I thought – that should have been us! Can you help with that?

minimus
28 - 02 - 13

i can and will.
do you mean the “waste of time, why the fuck are “we” building this piece of shit cathedral”?
sure.

In all seriousness I had a major argument with a local who was complaining about “why is the council paying for a stupid cardboard cathedral when people don’t have houses?”

my comment #1: “You do realise it’s not financed by the council right”

response: “What? I don’t believe that. Regardless. even if it not council money why are they spending it on that?!”

my comment #2: “It’s financed by private money. So you think the people should be able to dictate how private funds are spent on private land?”

response: “Absolutely not! That’s not what I’m saying! it’s a waste of money. It’s fucking cardboard – it’s going to fall down in the first rain storm”

My comment #3: “So, you know that it’s actually a steel structure and that the thickness is such that it’s waterproof and it’s been used before?”

response: “Well…hmmpph… just…. dumb… hate… grumble… stupid… I just think we could be spending money on things that will actually bring people to the city.”

My comment #4: “So it was just nominated as one of the major projects to see in New Zealand, its done by a significant international Architect and will become an attraction in its own right. And once again “we” are not paying for it. meaing “you”…. so unless you are ready for me to tell you how to spend your money…”

Response: ” Well…. then they’ve done a really bad job of managing their PR for me to not know all of that.”

(I’m not joking about any of this)

My comment #5: “So someone should have to use their private money to create a messsage to make sure you understand how they’re using their private money on their private development? Quite frankly – fuck you.”

in slightly related topic – I’ve found it difficult to make friends here. I hate Gerry Brownlee with a vengeance, but he’s right they’re all a fucking bunch of whingers.

Maximus
28 - 02 - 13

Fantastic! Thanks Minimus – good to know that time hasn’t taken that edge off you! Love the dialogue – sorry that the locals are so thick. Keep it up!

minimus
28 - 02 - 13

i’m afraid not… If the edge wasn’t beaten out of my at childhood it’s certainly not going to leave now!

Sadly… I keep having a lot of thoughts about what to write but finding time to do what I’m thinking about and getting it together is another. I still have a half written critique about the ccdu plan which I started a few weeks after its announcement. not really relevant at this point….

Maximus
4 - 03 - 13

http://www.stuff.co.nz/dominion-post/business/commercial-property/8373514/Owner-may-leave-heritage-block-empty-for-15-years
So, Dunajtschik has basically proved that, No, he does not have to either strengthen or demolish his building, so he is using the threat to leave it vacant for 15 years as grumpiness / a ploy to make the Council feel guilty?

The truth of the matter is that:
A. He does not need to demolish
B. He can’t find tenants in the current market prepared to rent an old building if it hasn’t been strengthened more anyway.
C. He wants to build the tower regardless, and to do that, he has to demolish the podium building, regardless.

Seems to me that he needs to rethink his tower strategy. Seeing as he hasn’t shown the rest of the world the proposal for the tower, maybe he should do that first.

Maximus
4 - 03 - 13

“ACT leader John Banks said the denial of permission to demolish an uneconomic building highlighted the costly and unfair burden posed by the Resource Management Act.”
“I support protecting heritage buildings but councils should do that by working with property owners and coming to a voluntary arrangement, not by putting them in an impossible position.”
“If government – local or central – wants to dictate what a building can be used for, it should either buy the building under the Public Works Act or compensate the owner for losses they suffer as a result of not being able to upgrade their property,” said Banks.

Actually, I don’t give a stuff what John Banks says, as he is a lying little toad with no credibility and no backing. Hop off Banksie.

Kent Duston
4 - 03 - 13

Max – Mr D is probably going to practice that age-old developer approach of Demolition By Neglect. It’s one the Council’s planners are particularly partial to, if history is any guide.

Maximus
5 - 03 - 13

I think he is just having a hissy fit. 15 years is a long time. He’ll lease it before then…

John H
5 - 03 - 13

15 years IS a long time if you are Mr Dunajtschik. At a guess he is in his mid-late 70’s and I doubt he has another spare 15 years up his sleeve.

davidp
5 - 03 - 13

Max>The truth of the matter is that:
A. He does not need to demolish
B. He can’t find tenants in the current market prepared to rent an old building if it hasn’t been strengthened more anyway.
C. He wants to build the tower regardless, and to do that, he has to demolish the podium building, regardless.

B and C appear to be true. A is not a case of “does not need to”, rather “is not allowed to”. So no one wants to rent in it because the government and council have pronounced the building to be dangerous, and the owner has looked at the cost of upgrading and found that the rent won’t cover those costs. I can’t imagine B is going to improve over the next 15 years… I’ve already worked with one government agency that moved to Asteron House because their old accommodation wasn’t up to spec, and I don’t see them moved back to an earthquake prone building.

I don’t think he has many options other than to board up the place and leave it. I suspect there will be a lot of those around town by the time the current panic is over with. And more than a few vacant lots.

Does he need planning permission to rip out the plumbing and recover the copper in scrap?

So what is the solution? If the planners are the ultimate arbiters here, then why don’t they solve the problem? Perhaps the Council could buy the building for its current valuation ($10million?) and move some branches of the council in to the building. They can strengthen it at their leisure. Does anyone else have a better plan that isn’t predicated on the current owner being a charity who’ll spend large amounts of his own money to save an unremarkable building that no one wants to occupy.

Maximus
5 - 03 - 13

davidP – no, I believe that the Council will have to rescind their Earthquake Prone Building notice, as it now clearly does not apply. Council (erroneously) believed the building was under 33%, but Dunajtschik’s engineer (the highly respected Win Clark) has said that it is well over 34% (ie more like 42%) and so therefore the way is now clear for WCC to rescind their notice so that A is again true.

Kent Duston
6 - 03 - 13

It seems pretty obvious that the esteemed Mr D knew both A and B when he bought the building, and was betting on being able to undertake C as a result … unfortunately he lost the bet. Such is the life of the property developer – when you win, you stand to make millions, but you’re not guaranteed to win every time. I can’t see why anyone, least of all Wellington’s ratepayers, should be obliged to bail him out of his bad bet.