Earthquake Issues for Commercial Buildings

[Davo36]

There have been a couple of threads mentioning the earthquake strength of existing buildings. Since this is mostly a commercial property issue, I thought it would be good to start a thread on it here.

I expect my building to be listed as earthquake prone (or whatever the term is) if it hasn't been already. Part of it was built in 1955 and the other part in 1963, or thereabouts.

I am no expert in this area and don't know what the councils will do but what might happen is that the councils of all parts of NZ go around and basically just look at the age of a building and whack a note on the file saying something like "Earthquake Prone." or "May require seismic strenthening" or even "Seismic strength not Established."

And notes like this could be a real barrier to selling your building or refurbishing it or what have you.

And many of these buildings may be totally fine but because they were built before a certain date, they may get tarred with the same brush. And so then it may be a matter of getting a structural engineer along to assess it and either give it the all clear or specify what works need to be completed to bring it up to standard. So lots of work for the engineers it would seem.

I wonder what sort of strength buildings have to be brought up to? And over what time? I've heard 12 years but have no real info on this.

So please post here with what you know guys and gals.

[Tan]

Hi Dave

I have had several of these letters for various properties from Tauranga City Council, and it's got to the stage that I just take a quick look & file them.

Some of the properties we manage haven't had 'the letter' yet, but we are expecting it. Some that we thought wouldn't get 'the letter' have got it. They seem to come randomly.

The first letters came in April 2009. They said for example, that one building had been assessed at 16% of building code standards, and 33% or less was earthquake prone. Then a bit about what could happen if the building collapses (I think they can leave that part out now).

We had 6 months to prove the strength was higher. On a sample property we got an engineers report that said they agreed with the council. We let the 6 months lapse on all buildings as we have nothing new to say.

We also got a Notice To Fix dated 10 years and 6 months from the notice date. This is November 2019. There was a recommendation to make them at least 67% of the building code while we are at it.

If we don't fix it we could be fined $200,000, then $20,000 per day.

The second letters came the other day and had several properties on each letter under the owners name. They said the building/s were built before 1976, had been assessed as less than 34% of the strength of buildings built to the current building code and were on the earthquake-prone buildings register.

Over the next 5 years the council is looking into it in more detail and will then let us know if they are considered earthquake prone. We then have 6 months to prove otherwise (hey, didn't we have that chance already?).
We will be given 5-15 years to carry out remedial works.

The enclosed pamphlet says:

Tga city council adopted the policy in March 2006

• Looking at buildings built before 1976, particularly with less than 33% of current Code strength
• The policy affects all types of buildings except those wholly or mainly used for residential purposes (except if they are over 2 stories & have more than 3 houehold units)
• If it is sold the new owner becomes responsible
• If you alter the building now, it will need to be bought up to standard

These letters have gone out to all stakeholders in the property. This includes all owners & trustees of trusts, banks if there's a mortgage, tenants, etc.

The policy doesn't affect us much as yet as we are not planning on doing works to or selling any of the buildings. We are keeping it in mind as R&M crops up, and putting a bit extra into the LTSFs.

We feel it is likely that with the amount of buildings needing work and the long time frame that newer and cheaper options will become available in the future.

NB: No notices from Auckland yet.

In September after the first Christchurch quake I heard that the policy could change with shorter time frames & higher strengths required.

[Davo36]

Tan, thanks for sharing.

Sounds like Tga council are really onto it. They must be really proud to have listed so many buildings as earthquake prone!

I wonder how long it will be before they starting cottoning on to the fact that they aren't making any money doing this. And how they will soon start charging for 'inspections' and 'issuing notices' etc. Can't have activity going on in the city without the council clipping the ticket in some way!

Man I'm getting cynical about councils... lol.



How do you think these notices affect the properties in question? Like could they still be sold? Or would people steer well clear of them?

[Tan]

If I was buying a property I wouldn't touch an earthquake prone one with a barge pole. First because it might actually fall down in an earthquake (which I wouldn't have thought of a couple of weeks ago), and second because of the cost of repair. A bit like the stigma of a leaky house with less emotion attached.

If you really want it, it is worth the current value less possible strengthening costs, taking in to account that the policy could become stricter. The strengthening cost will be a lot easier to work out than leaky homes.

Since the company I work for has quite a few properties, good contacts with other building owners and contractors and already has the buildings it is not such a problem for us. Also,the LTSF goes a long way to reassure. We also never sell.

I think it could be a real problem for Mum & Dad investors.

I'd be interested to hear other opinions. How would you feel Davo?

[Keithw]

I think this is going to become another "leaky homes"
Huge industry in engineering reports, council notifications, legal liability issues, & building strenghtening companies.
As I read your comment:
"The policy affects all types of buildings except those wholly or mainly used for residential purposes (except if they are over 2 stories & have more than 3 household units)"
I immediately thought of all the townhouse units and apartment blocks that are suddenly going to have this issue thrust upon them (on top of new maintenance plans etc under the new Unit titles act)
& of course - being structural improvements, no doubt IRD will class the cost as capital not R&M, therefore no claiming the expense (for residential- is it the same for commercial ?)
(This whole business of not being able to depreciate buildings suddenly takes on a whole new light)

[Re@der]

This is the same in Wellington and Lower Hutt. Except that I think you get 12 years to come into compliance so you can set up sinking funds etc. How ever I have noticed in Lower Hutt that some multi occupant buildings for sale have not had the strengthening done within the period. Council doesn't seem to have taken action. New owner would become immediately liable so a read through those council files for older buildings is absolutely mandatory before purchase.

[tickytickid]

The insurance companies will cause a significant increase in the speed of this strengthening work as they will put the premiums up we just had the insurer of our contents require a thermograph of the buildings wiring not just the part of the buildings that we occupy but the entire building .We have 2 shops in different locations one landlord paid for the test one refused however when the test came back ON ONE PREMISES as fail it cost somewhere in the order of 10,000 to rewire the entire place the insurer would not renew our contents insurance for fire until the building passed the test. We still paid the 1500 for the test still arguing this one.. So no doubt that on our next renewal the insurer will
want a structural report. We'll see

[Davo36]

I'd be interested to hear other opinions. How would you feel Davo?

Well I think I'd feel rather pissed off. Like you say, it would make it very difficult to sell the building. I'm not intending to sell, but it's always good to be able to!

And of course, like KeithW says, it'll just become another big industry with the only people winning being the bureaucrats - again.

Seems to make money in this country (in the property area) you need to do something like:

• Do traffic management.
• Provide safety equipment.
• Provide environmental monitoring services or equipment (especially in the global warming area).
• Have an insulation installation business.
• Do building certification/compliance schedule stuff.
• Be an engineer providing reports on noise, fire, structural etc. You can hold off giving out producer statements until the customer pays!
• Be in the leaky home remediation area.

i.e. it's all about compliance and safety now.

[Keithw]

.

Seems to make money in this country (in the property area) you need to do something like:

• Do traffic management.
• Provide safety equipment.
• Provide environmental monitoring services or equipment (especially in the global warming area).
• Have an insulation installation business.
• Do building certification/compliance schedule stuff.
• Be an engineer providing reports on noise, fire, structural etc. You can hold off giving out producer statements until the customer pays!
• Be in the leaky home remediation area.

i.e. it's all about compliance and safety now.

But dont forget the liability issues that also accompany these

• Do traffic management. liability for causing accidents thru poor design
• Provide safety equipment. liability for injury caused by incorrect use of your safety equipment
• Provide environmental monitoring services or equipment (especially in the global warming area). future liability- "you told us sea levels would rise & we spent money based on your info"
• Have an insulation installation business. future liability builidng rot caused by blocking up airflow passages with insulation
• Do building certification/compliance schedule stuff. Current & future liabilities - leaky building certifiers in the gun - no way would you want to take on that job !
• Be an engineer providing reports on noise, fire, structural etc. You can hold off giving out producer statements until the customer pays!
  Future liability- "your designs failed" just look at the earthquake strenghtening work that has failed in CHCH
• Be in the leaky home remediation area.
  Future liability - "your remedial work failed "

Yes- all rippoff jobs right now, but each of them with huge liabilities

[CJ]

Yes- all rippoff jobs right now, but each of them with huge liabilities

But just strip the profit out, liquidate and start up again. repeat as necessary. What do you think all the builders/architechs have done.

The lawyers are the only ones in trouble as they cant be a limited liability company so have to have indemnity insurance.

Back to the question at hand, there was an article in the past couple of days refering to this in relation to Auckland as the super city has put them behind schedule. The timeframes and % sound similar to Tauranga (from memory) but the risk is with the Chch EQ, that they will shorten the timeframe and increase the %.

[Tan]

Todays BOP Times

In the BOP Times today (swear swear swear). This WILL affect us via our tenants.

9th March 2011

Hundreds of Tauranga people working in buildings that would not survive a moderate earthquake will be told of the risks they face.

Assessments on the downtown's older commercial buildings have revealed 110 are likely to collapse in a moderate-strength earthquake.

Tauranga City Council yesterday instructed staff to prepare a report on compiling a public register of information on earthquake-prone buildings.

Lessons from the big loss of life in Christchurch spurred Mayor Stuart Crosby to say that people had a right to know about the earthquake standards of the buildings they worked in.

"It is an issue that we need to talk to the community about."

The 110 at-risk buildings constructed prior to 1976 had less than a third of the strength needed to conform with modern building codes.

Mr Crosby said today that the release of the list was mainly for people who worked in the buildings but if the building was used by the public, such as a shop, then the public had a right to know as well.
He will consider issuing the list, once he was satisfied that it was not breaching confidentiality, and that it was released with appropriate background information.

and the editorial

9th March 2011

In some respects, it should not be a surprise that Tauranga's CBD has 110 buildings that are likely to collapse in a moderate earthquake.

After all, there are a number of old downtown buildings.

But, having said that, the figure is nevertheless a substantial one and it is sobering that these buildings have less than a third of the strength needed to conform with modern standards.

In a worst-case scenario hundreds of lives could be lost.

The council yesterday revealed the number of risky buildings built before 1976 and its intention to tell people who work in them following Christchurch's tragedy.

The mayor and councillors believe workers have a right to know - even though there is nothing in the council's policy or the law that requires this. They are considering releasing it through the media to the wider community.

The task of assessing earthquake risks began five years ago. City centre assessments were completed at the end of last year and other commercial areas will now be looked at.

Most downtown buildings need to be strengthened within 10 years, although some owners have been resisting this.

One lesson for Tauranga out of the Christchurch tragedy is there is no room for complacency or secrecy when it comes to earthquake safety and people's lives.

The council should be commended for its intention to communicate with workers in these old buildings and it is imperative the full list of risky buildings be made fully public.

It is not only workers in danger but also customers and members of the public who use these buildings.

[Davo36]

Yes this is quite a serious thing really. Will tenants value the rent of a building based on it's earthquake risk? Will they not occupy a building that has a very low safety rating?

[spurner]

I've had a number of notices from WCC re potentially earthquake prone buildings.

Basically they will pay an engineer to do a drive-by and make a rough estimate as to the strength of the building, making a bunch of worst case type scenarios as to the type of construction method using when constructing the building.

The council sends a letter saying it may be earthquake prone, and then puts the onus (and cost) on you to make more detailed research into the plans and seismological calculations to determine whether it really is or not.

It's bit of a con, having to pay all this money just to prove your building is up to scratch, when in reality it meets the requirements already.

It is going to be a big issue however, there are a lot of buildings affected in Wellington. Even strengthening buildings is not going to cut it. There are buildings around which have already been strengthened, but the council keeps shifting the goalposts so once it's been done, they have to restrengthen it as little as 7 years later.

I was seriously looking at 1 building which the agent said was totally fine and fully strengthened; only to discover that it was only partially strengthened, and even that part was no longer up to current code. And that one wall was "likely to fall down in a moderate earthquake causing serious injury and death", according to the engineers report held on the council file.

So buyer beware...

[Tan]

More council letters today for the ones deemed earthquake prone (not the bulk which have yet to be assessed and got letters last week). Basically says:

• Christchurch & Japan have heightened public interest
• TCC are publicising a list of earthquake prone buildings
• Ours is confirmed as earthquake prone
• This info is on the LIM
• A Notice To Fix is in each building
• Local media will be advised
• It will be on the council website after 18 March
• Could we please inform any joint owners
• Our requirements under the Notice To Fix are not altered in any way by the releasing of the list
• Good luck (only kidding, this was not in the letter )

[Davo36]

Far out, what a nightmare Tan.

The councils are acting like little goody-2-shoes running around telling everyone what buildings are earthquake prone or not.

So what are you going to do in respect of fixing the buildings?