Insurance fears over Westport flood protection 'reset'

A majority of Westport submitters have voted for a revised flood protection scheme costing $40 million for the town, but concerns remain over the insurance implications of scaling back the level of protection.

Last month the West Coast Regional Council offered two alternatives to the original scheme, after admitting the cost had blown out by $70m.

It conducted a public hearing in Westport yesterday [Tuesday] and revealed that 68 of the 80 submissions received had supported the 'optimised hybrid' scheme option.

However, submitters still raised concerns over the affordability of the scheme and the implications for insurance in the town.

The scheme to ringfence Westport township with floodwalls has been under way following Government co-funding in June 2023.

The two revised options, both costing $40m, were put to the Westport public last month, for a 'core protection scheme and an 'optimised hybrid'.

Both provide 1:67 year flood protection, but with exceptions, after the council announced its proposal to pull back the scope from a larger 1:100 year flood due to cost overruns.

Westport resident Andrew Dunlop said the council should seek more clarity about the insurance implications of paring back the level of protection.

"I feel that the council needs to get a letter of understanding from insurance companies with the reset flood protection scheme and what it will do to the cost of house insurers."

He also said the ongoing cost of the project to ratepayers had gone unanswered by the regional council.

Mr Dunlop's own estimates were that Westport ratepayers may end up paying $223m over the life of the proposed 80-year loan term.

"That brings into the question the cost of affordability," he said.

"On top of that, if there is no relief from the insurance companies, they are going to get a double-whammy. They are going to be paying for a scheme for 80 years, plus they have got insurance that they have to pay."

Mr Dunlop also criticised the rating for the scheme, saying people who benefit the most from the flood protection should be paying more.

"When you are inside the flood protection walls you are protected by it -- your property does not get flooded, you have got re-sale value.

"If you sit outside the scheme, your property can be potentially flooded, your resale value does not go up, your insurance costs may increase, and you do not get any benefit from it."

The community-owned aged care facility for Westport, O'Conor Home Trust also expressed serious concerns about future insurability, and meeting its loan obligations with Health NZ.

O'Conor Home is in the midst of a multi-million dollar expansion, with chairman and former Buller mayor Garry Howard suggesting the proposed scheme reset will breach the loan conditions it has with Health NZ.

"Part of the condition for Health NZ providing $1.73m over five years is that we do not have a one-in-100-year flood protection, we have a one-in-500-year flood protection," Mr Howard said.

"When we come to sign-off, it is critical that our flood protection is in place. It will cause us issues around ... getting sign off from Health NZ. They are the certifier for the facility once it is completed."

In a personal submission, Mr Howard suggested a three-tier rating system in zones for those outside the core Westport protection scheme including Carters Beach and Snodgrass Road, Northern Buller, and south to Charleston.

Cr Peter Ewen agreed with the principle of having a rating system applied to other areas in Buller, given the benefit to them of protecting Westport.

But he suggested it would be difficult to manage.

"Some of these rating districts are going to overlap and how many times one may be acceptable, there may be triple overlaps, four overlaps."

Cr Andy Campbell asked what would happen for O'Conor Home getting Health NZ sign-off if the flood protection work is not completed within two years.

Mr Howard said the consequences "could be rather dramatic".

"If we do not get the operational consent from Health NZ, we will have no income, and we are borrowing $7m, and that starts upon completion of the facility."