The exterior cladding of the former ASB Tower is being repaired. Photo / NZ Herald

Major repair costs to council's HQ may have been unavoidable

Author: Michael Sergel,
Publish Date: Tue, 12 Apr 2016, 3:56pm

UPDATED 5.35PM Auckland councillors have been told a cost blow-out on repairs to the council's headquarters may have been unavoidable and is a risk many building owners face.

Councillors met behind closed doors this afternoon to discuss the cost of recladding the Albert Street building, which has increased from $4 million to $31 million.

The council finance committee agreed to a budget and course of action, but the details remain confidential until a contractual agreement has been completed.

A range of options and legal avenues may be available to councillors, including seeking costs from third parties involved in assessing the building.

Council property general manager Kevin Ramsay said the council commissioned due diligence reports before it purchased and renovated the former ASB Building next to Sky City in 2012.

The building is structurally sound, but the assessments failed to identify “spotty” issues with the stone cladding throughout the building.

Mr Ramsay told councillors a full invasive testing of cladding issues could have cost millions of dollars more and may not have identified any of the issues.

He said the cladding is always an issue for such buildings and the recladding work was always going to be needed at some stage.

However, councillor Chris Darby told the New Zealand Herald councillors weren’t made aware the building might need repairs when it was purchased in 2012.

Council quizzed over repeat mistake

Questions are being asked about how Auckland Council allowed a major cost blow-out to happen for a second time.

The latest cost blow-out comes a year and a half after the cost of upgrading the council's IT system increased from $71 million to $157 million.

The shortfall was met through the council’s existing IT budget by reallocating ratepayer money from other IT projects and operations.

Carmel Claridge from lobby group Ratepayers Alliance said in both cases people should have been held to account.

She said in the private sector “heads would be rolling” over these sort of mistakes, but the council hasn’t dismissed any staff or held anyone accountable.

Ms Claridge said the way voters will be looking at the way councillors have deal with the cost blow-out when voting in council elections later this year.

She said councillors need to realise many ratepayers are looking for a clear change of direction, and today has been a test for councillors seeking re-election.

What has happened

2010 – The new amalgamated Auckland Council is formed. One of its first tasks is looking for a new headquarters for most staff.

2012 – Auckland Council purchases the ASB Tower at 135 Albert Street for $104 million. Basic due diligence reports find no major problems with cladding.

2013 – The building is renovated and staff begin to move in. The council begins to vacate other buildings, allowing it to reduce costs.

2014 – A review of the building finds some problems with stone cladding that were not originally identified.

2015 – Councillors agreed to allocate $4.7 million in the council’s ten-year budget (long-term plan) to address immediate cladding issues until 2020.

2016 – The council finds many parts of the building will need recladding earlier than expected, and the cost increases to $31 million.

What is happening