Council has insurance headache

jack.montgomerie@fairfaxmedia.co.nz Tenants in some Timaru District Council buildings might face higher rents if the council increases insurance cover on the buildings.

Geraldine’s medical centre and social housing built before 2007 are among the buildings currently insured for indemnity value only.

A report to the council’s audit and risk subcommittee states increasing insurance for one of the buildings in question would raise its annual premium 375 per cent.

At present, the former Century Pool building costs South Canterbury Gymsports $400 a year to insure for its indemnity value, which would provide the council with the building’s market value if it were ever destroyed.

One option councillors face is increasing insurance on the building to the amount it would cost to replace. Paying that premium would cost Gymsports $1500 a year.

However, the biggest cost would come from raising insurance levels for council flats, whose total premiums would rise from $38,000 yearly to $95,000.

Rental costs in the units range from $87 to $142 a week. Although the report suggests the increased costs ‘‘will generally be recovered from the tenants’’, it says tenants are usually ‘‘reluctant’’ to pay extra costs, and suggests maintenance levels on the flats would have to drop to minimise rent increases from any increase in cover.

However, the report from corporate services group manager Rural halls Gleniti Art buildings Old Century Pool building Washdyke farm buildings Geraldine’s medical centre Former army building on Timaru’s Barnard St Shop and historic cottage on Geraldine’s Wilson St Pleasant Point camp cabins Various small buildings on former yards or domains Social housing units built before 2007 Tina Rogers states the council has not ‘‘specifically’’ sought tenants’ views on the matter.

The council is obliged to replace social housing built after 2007 as part of an agreement with Housing New Zealand but the report suggests older social housing would not be rebuilt after a disaster.

Although it notes ‘‘there might, however, be public expectation that some buildings would be replaced’’, Rogers’ report states the council does not have enough money in its reserve and disaster recovery funds to replace older council flats if a disaster destroyed them.

District mayor Damon Odey and councillors Tracy Tierney and Tony Brien are scheduled to discuss the matter on Tuesday with Rogers, chief executive Peter Nixon and co-opted subcommittee member Kieran Horne.

If the subcommittee recommends the higher insurance cover, it would be up to the policy and development committee, which includes all councillors, to approve the policy change at a meeting on April 26.