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Chch building owner: CERA demolition charge is 'highway robbery'

NBR has been keeping tabs on Christchurch businessman Ben Kepes since the first quake hit Christchurch. Most recently, Keallhauled relayed Mr Kepes' allegation (subsequently also picked up by Radio New Zealand), that a demo crew looted valuable native timber from his building (or what was left of it after its deconstruction).

The $4 million Litchfield Street building co-owned by Mr Kepes housed the factory for his outdoor equipment business (since relocated; Mr Kepes also co-owns an IT consultancy, Diversity).

In a post today, reproduced below - Mr Kepes updates us on the latest developments, and his anger over a $54,000 demolition quote (which he solicited with a view to voluntarily demolishing the Litchfield St property) that exploded to a $240,000 bill when the Christchurch Earthquake Recovery Authority (CERA) moved in for an emergency demolition - the need for which Mr Kepes disputes.

The entrepreneur's experience mirrors that of one of his neighbours. Apex Car Rentals managing director Phil Lennon told The Press he successfully fought a Cera attempt to take over demolition of the company's Lichfield St building in June, the paper reported. Mr Lennon said Cera had quoted him $448,000 to demolish the building. An independent contractor quoted $194,000.

According to an October 10 update from CERA chief executive Roger Sutton:

  • 1227 buildings have been signed off for either full or partial demolition since February 22 .
  • Of those, 933 have been approved under CERA with the rest under Civil Defence.
  • So far there have been 663 completed demolitions – 513 full and 150 partial demolitions with another 112 works underway.
  • 21 significant building demolitions are underway and another 16 are being tendered or reviewed.

NBR is seeking comment from CERA on Mr Kepes' invoices. - CK

Earlier entries in the Kepes saga:
Chch building owner: demo crew 'looted' native timber
For a Kiwi hard bastard, an overwhelming sense of hopelessness
Yellow card for NBR's Christchurch quake hero
We don't want your help - Christchurch businessman
 


Something rotten in the state of Christchurch, part II

By Ben Kepes

In March I wrote a post that garnered pretty widespread attention telling a tale of what appeared to be at the time exceptionally underhanded actions by a number of companies involved in emergency demolition work subsequent to the February 22 earthquake.

Suffice it to say I alleged that contractors involved in the demolition had stolen materials recovered from our building.

After lots of spreading the word (including an interview on National Radio), and despite protestations from the official apparently tasked with supervising the demolition that “no salvageable items remains”, we miraculously found some of the purloined material back on site. It seemed that someone had been a little spooked by my stirring.

At the time we mentioned, in passing, that we had had zero contact from either Civil Defence or the council (CERA hadn’t been formed at that time). That was still the case until recently – unless been on site ourselves, we would have had zero official confirmation that our building had actually been demolished. The other day however, I was advised that one of the co-owners had received a letter from CERA. The issues around delivering that letter are worth telling, if only to show the ineptitude of the process.

The letter was posted to the address for service of one of the directors of the company owning the building. It appears that CERA went to the Companies Office website, picked the first person appearing in chronological order – and sent them a letter. This is a little odd considering we had registered with both Civil Defence and the Council, including giving accurate addresses and contact details. CERA chose not to use these details and rather picked a means of contact that was ineffective – ah well.

In order to explain the astonishment we felt at receiving the letter (and the invoice it contained) it is important to set the scene. Subsequent to the September earthquake, but prior to the February event, we had made the difficult decision to demolish our building. We actually obtained a quote from a demolition company for effecting the works for the sum of $54,000 and these works had been started the week before the February quake. The demolition company spent a week or so on site, before being forced to move off by the February 22 quake.

After February 22, Civil Defence decided that our building was a significant risk (a fact that could readily be disputed) and ordered an emergency demolition. Once the emergency demolition had happened we understood that there was the possibility that we may be charged for this work. And we even expected that, given the changing situation, the price might rise a little. What we were wholly unprepared for was receiving the invoice shown below (click to enlarge):

Yes, we were being charged 400% more than the price quoted by the original demolition company. 400%! Highway robbery anyone?

Wanting to dive deeper into this travesty, we looked into the breakdown for the invoicing, the following is a breakdown of work by the companies involved – Frews, Dormer, Paul Smith and March construction (click to zoom):

We can see some pretty astronomical charges for waste disposal, and some interesting contracting charges. Frews salvage in particular was on site with a couple of excavators for around three days. They have seen fit to charge nearly $36000 for this work – I have friends in the general contracting industry and they would be supremely excited to be able to charge anything close to these sorts of rates.

We’re lucky that we had taken a subsequent insurance policy out, only a week before the February event, to cover the costs of demolition should there be another event. While it looks like our particular costs will be covered, that is entirely not the point. There is a moral obligation to try and get to the bottom of this situation as many other people don’t have the luxury of insurance and are being bled dry by CERA-mandated over-charging with seemingly no right of appeal. All this renders somewhat laughable the comment that one demolition worker left on my original post when he said;

We came to CHCH days after earthquake and have been risking our lives, 10hr days 6 days a week, near, above, or in(after strengthening) [sic] condemned [sic] buildings for months. We know if there is a major aftershock we are in trouble unless we can get under crane/digger immediatly [sic], but are willing to take risks as some of us were born in Canterbury.

The issues here are legion, but for a start;

  • While it sounds a minor point, why does CERA refuse to use the communication channels that were put in place subsequent to the February event. How many other business owners have massive invoices that they have no knowledge of, only because CERA has been using old address details?
  • What was the process for ordering emergency demolitions following February 22nd. While our building was obviously doomed, it wasn’t a time critical demo. Some might think that demolition companies had a hand in advocating that some buildings be demolished.
  • Whatever happened to independent supervisors on-site during demolitions to ensure these contracting companies were being honest with their invoicing?
  • Will CERA be investigating or peer reviewing these invoices or will they simply hand them over to building owners and “damn the torpedoes”?
  • On a much more fundamental level, what is central Government doing about this? We run the real risk of cleaning building owner’s insurance cover out just on demolition costs and that may well lead to a greatly reduced appetite to rebuild Christchurch as a whole


I always knew that bad things were happening in the weeks and months following the earthquake, I’m not lying the blame for what went on at CERA’s door, clearly they’re the face of a system that is completely broken and that, alas, some parties have decided to manipulate for their benefit. This story needs to be told, if for no other reason than to show the reality of what is happening in Christchurch.

Email: ben@diversity.net.nz

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Comments and questions
5

"a system that is completely broken"
Ben you are a hero, dont let the b*stards grind you down!

Where the rest of us of are only occassionly forced to deal with Central and Local Govt incompetence. The poor people of CHCH are in for there worst nightmare come true, costs, and if there is any, future entirely being determined and in the hands of beaurocrats.
This will be one of many similar stories.
You all have my deepest sympathy.

Time for a class action.

Sutton, Frews and another growing group are all gansters. Pay them the quote that you got and tell them to go F...themselves

Will not your insurance cover this?