The crisis at the Christchurch City Council has deepened with news its credit rating has been downgraded.
The downgrade from AA- to A+ on Monday comes on the same day the new Crown manager to oversee the granting of building consents at the council was named as Douglas Martin.
The international credit-rating agency Standard & Poor's says the downgrade is because the council has lost its accreditation to issue building consents, there's a perceived risk of future legal action, and chief executive Tony Marryatt has been placed on indefinite leave.
The downgrade will push up borrowing costs for the council, which is about to embark on a major round of borrowing to help pay for anchor projects and underground infrastructure costing $1.9 billion.
Corporate and financial services committee chairperson Helen Broughton says she's been assured by staff that borrowing costs are not about to increase dramatically but admits the latest news has left her wondering what's next around the corner. She says action is needed to improve the council's performance.
"I think we need a proper investigation by an external person on the building consents failure. I know a lot of councillors are very concerned about it and we feel we've been put in a compromised position ... it's a basic core service of council and this should never have happened."
New Crown manager
Douglas Martin will begin work in a week's time, on 15 July, and until 31 December 2014 he will oversee the council's building control functions while working to regain its accreditation as a building consent authority.
The Government says he will focus on implementing broad performance improvements.
Earthquake Recovery Minister Gerry Brownlee says Mr Martin is one of New Zealand's most experienced and respected advisers on improving public sector agencies.
Mr Martin has previously worked on reviews of the Canterbury Regional Council's performance and the implementation of NCEA.
Work continues
The council is continuing to process building consents, despite its accreditation being revoked as of Monday, 8 July, and despite losing its insurance cover for the consents.
International Accreditation New Zealand revoked the accreditation after the council failed to assure it the consents were being issued correctly.
And on Friday, the council's insurer, Riskpool, pulled the professional indemnity cover the council has in case the buildings for which it grants consents are found to have problems.
The council is still registered as a consenting authority and it's understood that any consents issued from now on will simply not carry the same weight they did when the council was accredited.
Any claims against the council will be met out of its own funds instead of through insurance.
