New Zealand: Earthquake prone buildings – a new era approaches

It is anticipated that the new national framework for managing earthquake prone buildings (EPBs) will take effect on 1 July 2017. This will bring with it a national register and set timeframes for assessment and strengthening in order to ensure that the way buildings are managed for future earthquakes is consistent across New Zealand.

The Building (Earthquake Prone Buildings) Amendment Act 2016 (Amendment Act) was passed in 2016, and consultation on the regulations (Regulations) and methodology (EPB methodology) that will set the approach Councils will take when dealing with EPBs has been completed. While the final Regulations have not yet been released, the proposed commencement date is fast approaching and the Ministry of Business, Innovation and Employment (MBIE) has commenced its build up to implementation. Therefore, now is the time to be getting to grips with how the new regime will work.

Overview

Councils, engineers and commercial building owners are each assigned key responsibilities in connection with the implementation of the new system. These can be summarised as follows:

Councils Engineers Building Owners
  • Identify potentials EPBs and notify owners
  • Review engineering assessments provided by owners.
  • Determine if a building is an EPB and, if so, assign an earthquake rating.
  • Issue EPB notices to owners as required.
  • Publish infromation about EPBs on the national register.
  • Undertake assessments on potentials EPBs in accordance with the set EPB methodology.
  • Provide technical support to Councils.
  • Get engineering assessments if notified by Council that their building is potentially an EPB.
  • Display an EPB notice if relevant.
  • Take action to undertake seismic work on EPBs within specified timeframe (unless an exemption is sought and granted).

The initial identification of EPBs by Councils will not involve a detailed engineering assessment of the buildings. Councils will be required to look at building features at a high level in making their initial assessments (as set out in the EPB methodology). It will be up to building owners to undertake detailed engineering assessments as required.

What commercial building owners need to know

The Amendment Act brings with it significant changes to the way EPBs will be identified and managed. Final information on some aspects of the new framework cannot be confirmed until the Regulations and EPB methodology are released. However, the following is an overview of the principal aspects.

What will happen once the new rules come into effect?

Councils must identify potential EPBs within their regions. They must do this using criteria and building profile categories established in the EPB methodology (which must be published in final form within one month of the Amendment Act coming into force).

This identification process must take place within the timeframes established for low risk (15 years), medium risk (10 years) and high risk (5 years) seismic areas. Priority buildings (such as schools and emergency facility buildings) in high and medium risk areas must be identified in half the time. Councils can also take steps to identify EPBs not fitting within the categories set out in the EPB methodology at any time

Owners of buildings identified as potentially earthquake prone must be notified of this fact by the Council and must also be informed of the basis on which that assessment has been made.

What must I do if I receive a notice that my building may be earthquake prone?

The Council will request that you provide them with an engineering assessment of your building. If you receive such a request, you must either:

  • Within 12 months, provide an engineering assessment that meets the requirements of the EPB methodology (this may be a previous assessment that meets the criteria set out in the methodology). An extension of time may be granted in certain circumstances; or
  • Provide evidence to the Council of a factual error with respect to the building's identification as being potentially earthquake prone; or
  • Notify the Council that an engineering assessment will not be obtained, in which case you will effectively be accepting the classification of the building as earthquake prone by default.

In the event of a dispute with the Council over the earthquake status of a building these issues can be addressed through the determinations process in the Building Act 2004 which in itself can also be appealed to the courts.

How will a final decision be made about whether my building is an earthquake prone building?

The Council will use the information provided in the engineering assessments and its property files, and will seek any additional engineering support that it may need, in order to make a decision whether the building is in fact to be classified as earthquake prone. Generally speaking, as is currently the case, an existing building will be required to achieve at least 34% of the new building standard (NBS) in order not to be regarded as earthquake prone.

What happens if my building is determined to be an earthquake prone building?

If the Council decides that your building is an EPB, or if you don't provide an engineering assessment and the building is determined by default to be earthquake prone:

  • The Council must assign an earthquake rating for the building. The earthquake rating system aims to provide a measure of a building's expected performance during an earthquake. Two possible ratings are currently proposed one being for buildings 20-33% of NBS and the other for buildings less than 20% NBS or where the percentage of NBS is unknown;
  • An earthquake prone building notice will be issued to you as the building owner and you must display this notice prominently on the building until the building is upgraded or otherwise determined not to be earthquake prone. The notice will be bold and contain information about the earthquake status of the building (percentage of NBS), the earthquake rating and the deadline for earthquake strengthening work to be completed (among other things); and
  • Information about the building will be published on a national earthquake prone buildings register to be developed and managed by MBIE.

Earthquake ratings, earthquake prone building notices and the earthquake prone buildings register are key features of the new framework. They are designed to disclose risk to the public so that individuals can make their own risk assessment. Commercial building owners may find that the display of an earthquake prone building notice has a negative impact on the ability to tenant the building and on the value of the building. In order to have their building tenanted it may be necessary to strengthen earlier and to a higher standard than the legally imposed requirements.

What strengthening work must I do?

If your building is an EPB, you must take action to either demolish your building or strengthen it within the defined time frames. The timeframes are for low risk areas – 35 years; medium risk areas – 25 years; and high risk areas – 15 years. This timeframe runs from the date upon which the Council issues you with an earthquake prone building notice.

You may apply for an extension of time if your building is a heritage building, or for an exemption from having to undertake strengthening work if you have a building with low risk characteristics to be set out in the Regulations. If an exemption is granted your building must still display a notice on the building identifying it as earthquake prone.

It is open to building owners to undertake strengthening work earlier than the required time frame. You may also be required to undertake seismic upgrades earlier in circumstances where you are planning to undertake "substantial alterations" to the building or where there is a change in use of the building.

What happens if I don't do anything within the required time frame?

Councils are provided with powers to take action regarding seismic strengthening where a building owner does not. In particular, Councils may apply to the courts for orders allowing them to carry out the required work if it is not completed on time or is not proceeding with reasonable speed in light of the relevant deadline. This might include demolishing the building, rather than upgrading it.

In addition, non-completion of required seismic work within the deadlines set is an offence with a maximum fine of $200,000.

The new EPB framework will give commercial building owners lots to factor into their decisions going forward. In relation to any building stock that is earthquake prone, owners will need to consider the timeframes for and costs involved in strengthening those buildings against projected periods where the buildings may not be tenantable, rental returns and on-going insurance costs. Once the EBP methodology is released, owners should also check the status of any engineering reports they have already commissioned to determine if they would continue to stand up under the new regulatory requirements. As always, landlords and tenants of commercial buildings should act to ensure that their lease arrangements deal with any strengthening requirements and that they understand their obligations, both under the Building Act and in terms of health and safety. Parties should seek early advice on the potential impact of these changes to the regulatory environment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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