Ultimate capacity: (f) The definition of 'ultimate capacity' is currently undefined in the Building Act, but this term is critical to determining whether a building is earthquake-prone. (g) MBIE proposed that ultimate capacity would relate to the probable load-resisting ability of a building to withstand actions caused by a moderate earthquake, and to maintain vertical load-carrying capacity. However, details remain to be seen and the extent to which it imposes additional buildings to be earthquake-prone will be extremely important. Substantial alterations: (h) As mentioned above, the criteria for 'substantial alterations' are being developed by MBIE. These criteria will be utilised by territorial authorities to identify when alterations to an earthquake-prone building trigger requirements for earlier seismic upgrades. This will in theory promote more progressive and earlier upgrades of earthquake-prone buildings, which in turn helps achieve improved building safety. Whether this plays out in practice will be another matter. (i) The proposed criteria for a 'substantial alteration' would capture work requiring a building consent that has a value that is more than a set percentage of the rateable value of the building (excluding land value). Consents will be withheld if owners fail to undertake the required remediation work early. The substantial alterations provisions will apply to earthquake-prone buildings in all seismic risk areas and priority buildings, which may provide a headache for building owners in Auckland and Dunedin who would not otherwise have to strengthen their buildings for 35 years. Exemptions: (j) MBIE also considered proposals for regulations on exemptions under the Amendment Act. Exemption provisions will allow owners of earthquake-prone buildings to be exempted from upgrading their buildings if the consequence of failure is low. (k) It is expected the exemption provisions will apply primarily to small town buildings that are used infrequently by a small number of people (e.g. small rural community halls and rural churches, where the cost of strengthening would not be viable and would instead likely result in demolition). The exemptions will not apply to priority buildings, but particular heritage buildings may meet the required characteristics. In addition to the main regulations, and in the wake of the Kaikōura earthquake in November 2016, the Government passed additional regulations to urgently deal with the risks associated with unreinforced masonry. These regulations, which formed part of the Hurunui / Kaikōura Earthquakes Recovery Act regulations, came into force on 28 February 2017. Under these new regulations: (l) territorial authorities in Wellington, Lower Hutt, Marlborough and the Hurunui district must notify building owners if their buildings have unreinforced masonry that needs to be secured by the end of March 2017; and (m) if a building owner is notified that they must secure unreinforced masonry, they must secure the unreinforced masonry within 12 months of receiving notice. If a building owner fails to carry out the work required to secure the unreinforced masonry within this 12 month period, the territorial authorities may do the work themselves and seek reimbursement from the building owner. Fines of up to $200,000 may be imposed on building owners who fail to comply with the