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Some say city’s home rehab loans hurt them

Wednesday, April 18, 2018 by Jo Clifton

Three Austinites have told the Austin Monitor their homes have suffered serious damage at the hands of a specific contractor hired by the city to improve their homes through the Home Rehabilitation Loan Program. And a fourth homeowner has expressed dissatisfaction with work done by that contractor under a separate city program to provide an accessible bathroom.

Funded through federal Housing and Urban Development dollars, the home rehabilitation program is administered by the city’s Neighborhood Housing and Community Development Department, which has been administering the program for about 20 years.

A department spokesperson explained that the city chooses a contractor from a rotation list. The contractor enters into a contract with the homeowner. The homeowner also signs a loan agreement with the city, and the city pays for the work. If the homeowner remains in the rehabilitated house for 15 years, then the city forgives the loan amount.

Director Rosie Truelove said the Home Rehabilitation Loan Program budget for the current fiscal year is $1,275,866. Since 2014, she said, 37 homes have been repaired through the program.

Jeff Patterson, the department’s public information officer, told the Monitor, “The HRLP is our highest-dollar repair/rehab program, but we have a number of repair/rehab programs, like emergency home repair, architectural barrier removal, lateral line repair, General Obligation Bond Home Repair, lead abatement, etc. All total, we manage approximately 600 projects annually.”

All four borrowers who talked to the Monitor described NHCD employees who ignored their repeated calls for help about work done by one contractor, Piatra Inc., whose owner is Mirela Glass.

According to city records, Piatra received 12 building permits in 2017 and two in 2018. Glass told the Monitor on Tuesday that her company had improved the homes of hundreds of satisfied customers during the 12 years she has provided services for the city.

Suzanne Janel, who lives on Hardy Drive in District 7 in Central Austin, has filed a written complaint with the city that alleges, “The city of Austin is turning a terrible contractor into a multimillionaire at the expense of taxpayers, and extensively damaging Austin’s poor and vulnerable homeowners engaged in the HRLP, Homeowner Rehabilitation Loan Program.”

After applying to get a loan to replace windows, siding and a water heater, Janel signed an agreement with the city for a loan of about $38,000, of which the contractor was to receive about $30,000, she said. She also agreed to go to binding arbitration if a dispute arose that could not be resolved through informal mediation.

Because the job was done so poorly, Janel wrote, it “will have to be completely redone at an even greater expense. City inspector Tony Hernandez has verified that it does not meet code.”

She added, “My home is now not only worse off than it was before they started, but it is a matter of time until it is irreparably damaged by mold.” Janel provided signed affidavits from two contractors who looked at her home and concluded that the work had not been done properly.

Janel told the Monitor she is not sure of her next move. She reached an impasse with the contractor that could not be resolved with a city employee trying to mediate. She went to arbitration, as required by her contract, but in the middle of the arbitration session, the arbitrator learned that his wife had been taken to the hospital. Janel has since hired a new attorney.

A city spokesperson said that this is the first time a Home Rehabilitation Loan Program matter has been taken to arbitration. However, a second borrower, Janis Walker, who was assigned the same contractor, has also requested arbitration.

Walker complained about a number of items, but she is especially concerned about the new roof that was put on her home. She pointed out that there were four different types of shingles on the roof, which she said would void the warranty. Walker is expecting to go through arbitration sometime in May.

The Monitor contacted Glass, the owner of the contracting company, for responses to allegations made by Walker, Janel and another homeowner. At first she said, “I think they are getting themselves in bigger trouble by not following their own contractual obligations. That’s all I can tell you. … You should not call me because there is a proper way of doing this. There’s no wrongdoing, so I don’t see any reason to involve a newspaper or a reporter.”

Later, Glass called back to criticize the women who had complained. She said the Monitor should be investigating the women who wanted to go to arbitration and another woman who was dissatisfied with the work done in the city’s program to remove architectural barriers. Glass speculated that the three “are probably taking money and grants away from people that really need it. … They are forgivable loans, so they will end up paying nothing. So the federal government, and you and I,” are paying for these people to have their homes rehabilitated. “People who live in really terrible conditions,” Glass said, should be benefiting from the program, as opposed to those who were complaining.

She concluded, “All of these people are middle class, probably choose not to work – I don’t know – they don’t seem to have any handicap at all. They live in high-tax areas, and somehow they qualified for the forgivable loans – where they expect to have remodels of their homes. They don’t even need it.”

Walker lives in District 4, not known as a high-tax area. According to Zillow, the home is worth about $253,639. The median home value in Austin is $337,600.

Contacted later, Janel said that she does work, but that she is still in the low-income category and must pay her taxes by putting the amount on her credit card and paying the debt that way. She said she was not surprised by Glass’ comments.

Truelove explained that clients must submit an application to be eligible for the program that shows they have an income of 80 percent of the median family income or less. Once they have qualified, they are placed on a list and the loans are given on a first-come, first-served basis.

Another homeowner who was dissatisfied by work done by Glass’ company is Larry Pavia, who lives on Regency Drive in Northeast Austin. Pavia told the Monitor the contractor promised to level the foundation, put in new insulation and install new siding. However, instead, Pavia said, the supposed rehabilitation of his home “hurt me more than it helped me.”

Pavia lives in District 1. Unlike Janel, Pavia, his wife and two kids moved out of their home before construction began. One of his older children provided a place for Pavia, his wife and one child to stay in Kyle, he said, while another child stayed with Pavia’s mother in Austin close to his school. In addition, Pavia said, he had to pay $400 a month to store his furniture and other household items while the work was being done.

The family was out of the house during part of March, April, May, June and most of July, he said. He said that after he noticed that the contractors were not starting work as early in the morning as they should have, he started driving back to his house from Kyle every day to check their progress.

For a loan of $75,000, the Pavia family was supposed to get new insulation and siding. In addition, the house was supposed to be leveled, Pavia said. He said Piatra used old insulation and “just painted the siding,” rather than installing new siding. The sink in the kitchen was also supposed to be repaired.

“The tubing they put in the kitchen sink – it just falls off,” he said, and a new crack has appeared in the ceiling. Pavia said he called the contractor last week to get someone out to level the foundation again. Although Glass promised to send someone to fix it, he said, “she didn’t sound very convincing to me. Things that should have been done weren’t done. For the money I paid, I should have gotten a better home.”

Asked whether he should have protested more, Pavia explained that at one point he had called the city manager’s office to complain after his phone calls went unanswered at the department. Within minutes of that phone call, he said, a department employee called to see how they could help.

He concluded, “You know, I think the program is a good program, but I think that the rules need to change. The city needs to pay more attention. … As far as the program, I don’t see nothing wrong with it.”

Truelove responded to questions from the Monitor in writing on Tuesday. “Coincidentally,” she noted, “Mr. Pavia had an appointment at our offices today about his note modification. He was reminded that his final inspection concurrence was mailed to him on March 7, 2018 and again on April 6, 2018.

“He was also reminded that he was informed that his one year contractor warranty on the work expires on August 21, 2018, and that he had not notified NHCD about any issues. Given that information, he notified our staff member about the three issues he had with the work on his house. NHCD immediately contacted the contractor about the issues to be fixed and a timeline for resolution.”

It remains to be seen what will happen with Pavia, Walker and Janel. The woman who had complaints about the work done to fix her bathtub and add rails so that she would not fall, Karen Jean Cable, said she was not totally satisfied with how the job turned out. However, she credited an aide for Council Member Ora Houston, Chris Hutchins, for helping draw attention to problems with the construction.

Photo by Janis Walker.

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