New Zealand Offers to Pay 5,000 to Leave Quake-Hit Homes

New Zealand’s government said Thursday that it will offer to pay thousands of homeowners to leave areas of the country’s second-largest city that were hardest hit by recent earthquakes.

Christchurch was struck by a magnitude-7.1 earthquake in September and a devastating magnitude-6.3 quake in February that killed 181 people and crippled much of the city.

The government said that, over the coming weeks, it will offer to pay about 5,000 Christchurch homeowners to leave and have their homes razed, with certain swaths of land remaining too unstable for rebuilding. The future of an additional 10,000 homes, many of which may also need to be destroyed, is still being assessed.

The government estimated the cost of moving the first 5,000 homeowners at up to $500 million, even after insurance clawbacks.

Prime Minister John Key said the total cost of the earthquakes amounted to more than $15 billion – about 8 percent of the country’s annual economy. He compared that with Hurricane Katrina, saying the damage from that disaster amounted to about 1 percent of the U.S. annual economy.

Key said recent months have been tough for residents of Christchurch, which continues to be rattled by large aftershocks.

“The people want to know what the future holds, and they’ve been through so much and shown such great resilience,” he said at a news conference in Christchurch.

He emphasized that Thursday’s announcement did not signal an end of efforts to help the city bounce back from the quakes.

“The government remains fully committed to rebuilding Christchurch,” he said.

Officials also said they have divided the city into four zones: red, orange, white and green. Red indicates homes will likely be destroyed and the land won’t be rebuilt upon any time soon. Orange means homes may need to be destroyed and land cleared. White indicates officials are still assessing the land, and green means the land has been given the all-clear sign and people can begin to rebuild or repair their homes.

Much of the so-called red zone is clustered around the Avon river, which winds through the city’s Eastern suburbs toward the central city.

Under the scheme’s plan, red zone homeowners will get offers for their homes within the next 10 weeks. The plan only covers those who have homeowners’ insurance. For those who accept the offer, the government will pay them immediately to walk away, then take over their insurance claims and try and claw back some of the money from the insurance companies.

Home owners have nine months to decide whether to accept the government’s offer or to continue seeking redress through private insurers. Those who choose to stay are likely to be forced off their land. Officials said they would come up with another plan for the few owners who lacked insurance.

On websites and in interviews with local media, many residents seemed to welcome the plan. However, question remain. The plan doesn’t address the hardship and uncertainty that scores of business owners and thousands of homeowners outside the red zone continue to face. What will become of the evacuated land also remains unclear.

The government has set up a website to help residents figure out which zone they fall in.