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Thursday, December 6, 2018 by Jo Clifton

Homeowners share stories of home repair anguish

Austin city auditors found the Neighborhood Housing and Community Development Department home rehabilitation loan program left a significant number of homeowners unhappy with the work contractors did and frequently missed its own goals over a three-year period, fiscal years 2015-2017. Andrew Keegan was the audit manager and Henry Katumwa was the auditor-in-charge of the audit.

Three of those homeowners described their continuing troubles to the Council Audit and Finance Committee Wednesday. Janis Walker, Suzanne Janel and Irene Atkinson all participated in the federally funded Homeowner Rehabilitation Loan Program, and each of them say that their homes are in worse shape as a result. The Austin Monitor described problems Walker and Janel were facing in stories that appeared last spring.

Both are still living in homes that have not been adequately repaired. Walker told the committee that she had been in contact with up to 14 other “victims” of the program and is on what she called day 456 of her saga. After doing an inadequate job the first time, she said, the contractor was supposed to put a new roof on her home.

“Two days before Thanksgiving there was a pretense of work beginning again … I was told I could move out of my home,” for the contractor to put on a new roof. Walker would not move out, however, and insisted on staying in her house to see what workers were doing. The contractor left and has not returned since, Walker said. “NHCD not being able to effect a health or safety situation has affected all of us. And here we sit.”

Atkinson told Mayor Pro Tem Kathie Tovo and Council members Leslie Pool and Alison Alter that she and her husband applied for the program in late 2016 and construction began in January 2018.

“Before the work started on our home, the contractor, On Call Services, complained to us and to the city coordinator that he was being ‘robbed’ by the city and not being paid an adequate price for the work being performed. Shortly after work began, the contractor informed us and the city coordinator that there were not enough funds – even though the contractor had signed the initial contract,” Atkinson said.

Under that contract, Atkinson and her husband borrowed $75,000, although they are not required to repay the loan unless they sell their home within a certain number of years. But it is a debt and it creates a lien as long as a loan is in effect.

One major problem with their house was the plumbing, Atkinson told the committee; when they ran the dishwasher, water would come up through the floor and flood the kitchen.

Initially, she said, the contractor had agreed to fix the plumbing for $1,400, and that was the amount written into the contract. However, the contractor told the Atkinsons and the city employee assigned to monitor the contract that the price for the service should actually be $8,000. The city worker then drafted a change order, she said. But the contractor did not fix the plumbing problem and the homeowners who used to have two working toilets now have only one. She said that the city employee tried to help, but he obviously had a long-standing relationship with the contractor, a relationship that seemed to sour. That city employee has now retired.

Atkinson told the committee that she learned from Letitia Brown, the city employee now handling their case, that the contractor did not get the proper permits and the city admits that the work was not done correctly. The Atkinsons now qualify for a different NHCD program called Go Repair, which could provide a contractor to fix their plumbing problems.

NHCD managed eight programs to assist low-income residents in repairing their homes. The city allocated $15 million for the home repair program, which operates through grants and forgivable loans, but the audit notes that NHCD left $6 million unspent at the end of FY 2017.

According to the audit, NHCD’s home repair program “had significant issues related to construction activities. These issues with the Homeowner Rehabilitation Loan Program resulted in increased fraud and safety risks, in addition to low participant satisfaction.”

Attorney Bill Aleshire represents Walker and Janel on a pro bono basis as they struggle to get their homes repaired. He explained that the contracts currently in use do not make it clear exactly what repairs are included. “They end up with a contract that is vague,” and the only enforcement is to binding arbitration. The contract prohibits the homeowner from filing suit in court. Aleshire said such contracts “undermine our jury system,” pointing out that everything said during binding arbitration must remain secret except for the decision of the judge. That means the public is deprived of its right to know what happened.

The contract is between the contractor and the homeowner; the city is not a party to the contract. Pool recognized that as a problem and wanted to know whether it could be changed. Tovo and Alter also expressed concern about the ordeals each of the homeowners have endured. All three said they wanted to get more information about the program in the future.

Problems with the program started while Betsy Spencer was the director of the department and Steve Ritchie was the construction manager. Spencer was allowed to retire and Ritchie resigned under pressure shortly after that. Since Ritchie left, all of those who worked with him in the construction division have also left the department. So, the department can start with a new slate of construction managers.

Rosie Truelove took over as department director in August 2016. In her response to the audit, Truelove agreed with each of the audit department’s recommendations, the first of which was to restructure the home repair program contracting practices.

Truelove wrote in her response, “In spring 2019, AHFC (Austin Housing Finance Corporation) will launch a new solicitation for a Job Order Contract.” That will replace the current repair contract which has been in place since 2011.

She also promised to update policies related to the frequency of progress inspections and to ensure that staff collect and review “sufficient documentation to demonstrate compliance with all applicable home repair program eligibility requirements.” While this was not a focus of the audit, auditors did note a lack of documentation in several areas.

Patsy Lynch [Public domain], via Wikimedia Commons

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Key Players & Topics In This Article

Austin City Council Audit and Finance Committee: a sub-group of the Austin City Council. It's members are charged with oversight of city fiscal operations and anything that falls under the purview of the Office of the City Auditor.

City of Austin Neighborhood Housing and Community Development Department: This city department provides housing and community development services for Austinites. To that end, they administer programs, provide grant services, and work with non-profit and agencies to provide housing for eligible residents. The department also provides small business development services.

Office of the City Auditor: This city department is created by the city's charter in order to establish and ensure "accountability transparency, and a culture of continuous improvement in city operations."

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