Cost blow-out row over Govt-funded ‘ghost village’
Contractors who worked on a Government-funded community housing project held up as a model for others to follow have downed tools, furious that they haven’t been paid. Blair Ensor and Tony Wall report.
At a rural housing development north of Christchurch, the only residents are nesting birds and a pair of paradise ducks.
Llamas and horses graze quietly in nearby paddocks.
The windows of the six, brandnew houses on this Ma¯ori land at Tuahiwi near Woodend are caked in dust, having sat empty for more than eight months.
The homes are almost finished, with just landscaping and interior fittings to come.
Instead of the thriving community for low-income wha¯nau that this was supposed to be, it has a ghostly feel.
The project is in limbo as the trust behind it and the developer squabble over a major cost blowout that rises by the day.
The development was commissioned by the Mana Waitaha Charitable Trust (MWCT), the role of which is to help solve the chronic housing hardships endured by members of Nga¯i Tu¯a¯huriri, a hapu¯ of Nga¯i Tahu.
The idea is that low income kauma¯tua and families will come back to the site, which is near the Tuahiwi marae, and wrap-around services will eventually be included. The project has received $2.3m from Te Puni Ko¯kiri (TPK) the Ministry of Ma¯ori Development, as part of its papaka¯inga community housing scheme. The Nga¯i Tu¯a¯huriri Ru¯nanga, which owns the land, contributed $ 330,000 of its own funds.
The Sunday Star-Times understands the budget blew out by hundreds of thousands of dollars because of additional council infrastructure demands.
Ma¯ori Development Minister Nanaia Mahuta, who turned the earth on the development in April last year, says she has asked TPK to do ‘‘robust due diligence’’ of papaka¯inga projects and is confident the problems at Tuahiwi won’t impact scores of other such projects.
‘‘We continue to refine the way we work with wha¯nau to achieve their aspirations in this area,’’ she said.
Caught in the middle of the dispute at Tuahiwi are subcontractors, who are owed thousands of dollars for work already completed.
‘‘It’s pretty disgusting, really – especially when we were told at the start of the project that all the funding was in place,’’ says Craig Stevenson, whose Nor West Contracting is owed $76,000 for drainage, earthworks and roading.
Mason Wairau, who was contracted to paint the houses, is also out-of-pocket.
He doesn’t want to point the finger of blame publicly, but says ‘‘when things go wrong, someone has to be accountable’’.
‘‘ As contractors, we do the hard yards … and it hurts when … you don’t get paid.’’
MWCT engaged building com
pany Homeco to manage the project – each side blames the other .
Homeco boss Rhys Head says the project was completed on budget except for ‘‘ significant’’ additional civil infrastructure costs imposed by the Waimakariri District Council.
The fees were largely paid by Homeco, he says, but Mana Waitaha ‘‘ elected not to reimburse Homeco for the costs incurred’’.
The trust, on the other hand, says the contract was for a fixed price but Homeco failed to keep within budget and didn’t tell the trust about it until the houses were almost complete.
‘‘Mana Waitaha has paid part of this amount but [we] have been advised that many of the amounts that Homeco has claimed for are not payable at all or are overstated,’’ chairman Dr Te Maire Tau says.
The trust has instigated an independent review of the costs, but Head indicates he is getting towards the end of his tether.
‘‘This has been dragging on now since December, with no contact or engagement from MWCT ... from February to June and minimal contact over the duration,’’ he says. ‘‘ Patience is wearing thin.’’
It’s understood a clause in the building contract means Homeco is being stung with daily penalty fees.
Head says his company has ‘‘foregone income’’ in order to pay some of its suppliers, but is now in a position where it hasn’t been able to honour some payments.
‘‘We need MWT to progress payment on settled items within the claim so we can pass that on.’’
Tau says the ‘‘ key concerns’’ for the trust are ‘‘to get the homes completed for our people and to ensure that sub-contractors are paid’’.
‘‘This may not be fast enough for some, but we are ... ensuring completion of the project takes place in a responsible way. We will complete this housing project for our people as intended.’’
Tau says there has been speculation among hapu¯ members that the ru¯nanga land could be lost in the dispute, but ‘‘ this is legally incorrect’’.
The purpose of the project, he says, is to act as a test case for building on Ma¯ori land in the area.
Nga¯i Tahu had been prohibited from building on their reservations since 1965 because Ma¯ori land had been converted for rural development.
In 2015, the trust, the Crown and the Waimakariri District Council agreed to new zoning regulations that allowed iwi to build on their land.
A spokesperson for the council says the additional infrastructure costs slapped on the Tuahiwi project are not unusual.
‘‘They are typical of such developments through the engineering design and resource consent approval process.’’
Karen McGuinness, acting director of investment for Te Puni Kokiri, also says that delays to building developments are not uncommon and the department will support the trust through the process ‘‘ to achieve its housing dream’’.
She says Te Puni Kokiri provided an extra $160,000 to the project in March to cover some of the additional council costs.
The trust assured the department it would cover any further costs to complete the project.
McGuinness says the department is holding back $50,000 to be paid on completion of the homes and receipt of code of compliance certificates.
Nicole Manawatu-Brennan, the granddaughter of late ru¯nanga upoko Tani Manawatu, has long held concerns about the fairness of the process that saw Homeco appointed as the main contractor.
In emails to Te Puni Kokiri’s South Island regional manager David Ormsby in February last year, she said many wha¯nauowned companies wanted to be involved but it wasn’t put out for public tender.
‘‘I am of the opinion that the best price might not have been achieved,’’ she wrote.
Ormsby, a founding member of the MWCT, who has since stood down, responded saying that the project costs ‘‘fall within our benchmarks’’.
Any calls for a review of the selection of the builder should be directed to the trust as it was ‘‘accountable to its stakeholders for the decisions it’s made’’, he said.
What’s transpired since then, Manawatu-Brennan says, is ‘‘embarrassing’’.
Despite asking lots of questions, she still doesn’t know the reason MWCT decided to engage Homeco.
She remains firmly of the view that those involved with the trust lacked knowledge of the construction industry, rushed to get the project off the ground and didn’t run a proper procurement process.
‘‘I do think Mana Waitaha are at fault here. I just think that they didn’t take duty of care and they were quite negligent and I actually think ... there was a level of arrogance in thinking that this is just going to be easy.’’
‘‘It’s pretty disgusting, really, especially when we were told at the start of the project that all the funding was in place.’’ Craig Stevenson