July 14, 2016 Print

There is artistic and cultural value in maintaining historically significant buildings, but preservation efforts can also lead to public safety risks. Earthquakes threaten the older foundations and facades of heritage-designated buildings in New Zealand, explains “Deadly Heritage,” a recent joint report of Deloitte New Zealand and the New Zealand Initiative (NZI), an Atlas Network partner based in Wellington.

Local councils in New Zealand designate sites as “heritage buildings” that are deemed to have historical value, and the owners of heritage-listed buildings are responsible for the costs associated with renovating or strengthening them. These costs are typically higher than usual because any work done must respect the heritage character of the buildings. The owners are charged by law with providing a public good — a pleasant urban environment full of older buildings — yet they must personally shoulder the costs.

“We worked with Deloitte to produce a research note looking at heritage regulations and earthquake strengthening in Wellington,” said Eric Crampton, NZI head of research and one of the authors of the report. “We found a complicated mess of regulations, all of which impinge on owners’ rights to use their property as they see fit, but some of which are justifiable. If a building falls over in an earthquake and injures or kills people on the sidewalk outside, New Zealand’s legal system makes it difficult for those victims or their families to seek proper compensation for their loss. Regulations mandating earthquake strengthening then help to protect passers-by. But that strengthening work is made far more difficult than it needs to be for owners of heritage buildings.”

In their analysis of a few notable cases, NZI and Deloitte identified specific causes for concern. Navigating the labyrinth of regulations, however, increases the time needed to finish truly necessary work on the buildings.

“Heritage overlays on neighbourhoods in Auckland looked like they were materially contributing to housing shortages in Auckland by preventing developers from putting up terraced housing in desirable suburbs close to downtown, but those too were just one of many silly things Auckland Council was doing to cause a housing shortage,” Crampton said. “The Christchurch earthquakes showed that things were a bit worse than that. After the 2010 earthquake, owners of listed buildings could not fix or demolish buildings quickly enough.”

When this morass of regulation causes delays in safety renovations and demolitions, it puts the public at an extended risk. Earthquakes are, by nature, unpredictable.

“Months of consenting processes were needed to make sure that heritage values were given ‘appropriate’ consideration,” Crampton said. “Unfortunately, the February 2011 earthquake happened faster than Christchurch’s consenting processes, and a building that the owner wanted to demolish because it was unsafe wound up falling on a bus. The only survivor was a friend of mine who lectures at Lincoln University. People died because some heritage bureaucrat decided that some older brick buildings of dubious heritage value could not be demolished when the owner wanted to demolish them.”

The report recommends having local councils appoint an engineer to assist owners of heritage-listed buildings during their process of complying with regulations, thereby shifting the burden of cost from the shoulders of building owners to those who are inclined to make public donations toward heritage preservation as a part of local council budgets.

“More fundamentally, this is only one example of what happens when councils and governments can do things through regulation rather than through on-budget expenditure,” Crampton said. “If heritage preservation had to have an annual line-item in the city’s budget, councils would be forced to make hard choices about which buildings are the most important to protect. There is then a real constraint and real trade-offs. When councils can instead impose those costs on others simply by listing the building on the district plan, there is no budget constraint and councils can be very prolific in their listing decisions, with little consideration of the cost then imposed on owners. In the absence of the kind of regulatory budgeting measures that the Mercatus Center in Virginia has been calling for, it will always be easier for governments to foist costs on the private sector through regulation. ... We are optimistic that we have shifted Council’s thinking in this area and hopeful to see action after the coming Council elections.”