Chateau Tongariro will continue to deteriorate despite taxpayers forking out almost $2 million a year on the historic site, officials have warned the minister responsible.

Documents obtained by Checkpoint show the heritage building at the base of Mt Ruapehu, which opened in 1929, needs critical work to make it weathertight and halt further deterioration.

The hotel has sat empty and in increasing disrepair since closing in February last year, when hotel operator Kah New Zealand quit its lease.

That came after the hotel received an E grade seismic assessment - which puts the earthquake risk at 25 times greater than expected for a new build.

The land is owned by the Department of Conservation, which is spending about $2m a year on maintenance.

In a DOC briefing to conservation minister Tama Potaka late last year, released under the Official Information Act, officials made clear that even that amount would not be enough to stop the building deteriorating further.

Potaka is taking advice to assess the chateau's future, whereas Ruapehu mayor Weston Kirton told Checkpoint he wants to see the building opened again as soon as possible.

A spoke in that wheel could be the length of lease, however, with only a short-term deal likely to put off potential investors.

The Chateau's long-term future remains unclear, but in the briefing officials listed six options for Potaka to consider.

One option, "the current situation", was to carry out minor maintenance, at a projected cost of $2.02m a year. This week, DOC confirmed it has spent $1.82m as at March 31.

However, this came with disadvantages: "Weathertightness issues won't be resolved and further damage will occur... Does not meet heritage obligations".

Elsewhere in the briefing, DOC reiterates the problems with this option, saying despite the sums already spent on maintenance, the building is still deteriorating.

Another option would be to decommission the building, at a cost of $1.27m.

The disadvantages for this are: "Building will deteriorate rapidly. Core building systems will not be operational or compliant (including fire sprinklers). Insurance will no longer be valid. Public, iwi and stakeholders, including Heritage NZ, will hold DOC to account for damage caused. Does not meet heritage obligations."

Another option is to spend a minimal amount on maintenance, while retaining the building's warrant of fitness, at a cost of $1.73m. Under this option, the building is expected to deteriorate rapidly.

DOC withheld the projected cost of three options: Completing critical repairs, making the building weathertight, and "appoint a team to complete future options".

For each of those three options, DOC says its budget "is unable to support this cost pressure", and the option of making only critical repairs wouldn't fix the weathertightness problem. "[It] doesn't make the building weathertight and leaks will continue to appear, causing damage".

The cost of consultants to assess the work required would be about $1.2m and take six months.

In its briefing to Potaka, DOC says its responsibility for the chateau, and 26 ancillary buildings in Tongariro National Park, is having an "ongoing and significant impact" on its finances.

There were only two cars in the chateau's parking lot when we visited. Photo: RNZ / Matthew Theunissen.

Checkpoint asked Potaka's office this week for an update on the future of the property, and whether decommissioning it is an option.

In a statement he says: "I am currently taking advice and considering options on the future of the chateau, and discussions about the end-of-lease obligations are ongoing.

"It is essential that we appropriately identify the best outcome for the area, and so a timeframe for decisions cannot yet be confirmed."

DOC tells Potaka it's doing basic, ad hoc repairs and keeping core building systems running.

"Despite this investment significant deterioration of the building is still occurring and will accelerate without required additional weathertightness repairs."

That weathertightness work is urgent, and DOC says its view is seeking funding for that is the best option to preserve the chateau.

DOC deputy director-general organisation support Mike Tully says they have not yet presented the minister with long-term options for the chateau.

"We will need to discuss matters with our treaty partners to ensure we make a well-informed and considered decision on the future of the chateau."

He says he's unable to comment on whether there has been further deterioration of the chateau since the briefing to the minister was written late last year, nor could he say how much weathertightness work would cost.

"The department has not commissioned any work to determine all the work required to complete any weathertightness issues and cannot comment further on matters related to the ongoing end-of-lease negotiations with Kah New Zealand Ltd."

Senior vice-president of commercial and digital strategy for Kah's Singapore-based parent company, Bayview International Hotels and Resorts, Kevin Peeris confirms end-of-lease negotiations are continuing.

"From the beginning we have kept all discussions private and there has not been any change in that stance."

Protection of heritage assets in the chateau, such as paintings, would cost about $100,000.

DOC was asked what work it's undertaking for this. Tully says: "All the chattels within the building were the property of Kah NZ, who purchased these items when they took over the lease on the building in 1991. Kah remains responsible for these chattels."

Peeris says Kah has intended to provide a new operator for the hotel with the option of buying the chattels, therefore allowing artworks to remain at the chateau.

"However, with no new operator confirmed thus far, we have just started exploring other options, including selling the artwork.

"Our preference is for the artwork to remain within the hotel, and this has been communicated to the NZ Department of Conservation."

Correspondence released to Checkpoint also shows concerns about the fire resistance of the chateau, and a building compliance inspector earlier this year recommended DOC call in a fire engineer to assess the building.

"From there, a programme of remedials can be implemented over a period of time as, potentially, there is some very significant works required. It would be unreasonable to force a quick fix to these issues," says the inspector.

The building has sprinklers and smoke detectors, so is well protected, however, other fire-related problems were raised in 2015 and have not yet been fixed.

The DOC briefing to Potaka also says it's planning to complete an expression-of-interest process for possible future leaseholders by the middle of this year.

"In terms of any future concession on the chateau, iwi have informally indicated it would need to align with the views they have provided on the concession for Ruapehu Alpine Lifts.

"The view is that concessions in the Tongariro National Park should be for a term of no longer than 5-10 years while the treaty settlement negotiation process for this area is undertaken."

The issue of 5-10 year licences to operate was highlighted by Whakapapa Holdings Ltd, when it withdrew from consideration to run the Whakapapa ski slopes on Mt Ruapehu, despite being the government's preferred bidder to replace Ruapehu Alpine Lifts. It sought a longer arrangement.

Tully says DOC has not begun discussions with interested parties for the chateau, and needs to consider all options, including discussing matters such as lease terms with its treaty partners.

Ruapehu District mayor Weston Kirton says locals want to get the chateau open again as soon as possible.

"We need to have a conversation with the government as to what's holding this up and what barriers are in place for this to be stalled for so long."

He's considering options for his next move, especially how to deal with the issue of leases, as a short-term one could put off perspective operators, who would likely have to spend millions to upgrade the building.

"The whole issue around the chateau is evolving into a big dinosaur and it's created a lot of problems around our community because we have no certainty as to when the chateau will open."

Kah NZ's 30-year lease of the chateau expired in 2020 and it kept running the hotel on a monthly lease until February 2023.

Kah cited a downturn in tourism and uncertainty about Mt Ruapehu's ski fields when it pulled out.

-RNZ.