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Friday, January 4, 2019 by Jack Craver

Arbitrator rules against city contractor in home repair case

An independent arbitrator has ruled in favor of a homeowner who accused a contractor hired by the city of not doing the necessary work to repair her home and ultimately leaving her house in worse shape than it was originally.

Suzanne Janel is one of a number of homeowners who has publicly expressed dissatisfaction with the work done on her home through the Home Rehabilitation Loan Program, a federally funded program administered by the city’s Neighborhood Housing and Community Development Department. The program provides funding for low- or moderate-income homeowners to make home repairs costing between $15,000 and $75,000. The city pays the contractor and provides a loan to the homeowner that is forgiven if the person lives in the house for another 15 years.

A report by the Office of the City Auditor last month identified a number of problems with the program, including a significant number of homeowners who were unhappy with the work performed.

Janel signed a $38,000 loan with the city, of which roughly $30,000 went to pay the contractor, Piatra Inc., owned by Mirela Glass. The rehab contract called for replacing windows and siding and installing a new water heater.

Janel told the Austin Monitor in April that the contractor had not come close to doing the work specified by the contract. She provided affidavits from two separate contractors who said the work was shoddy. A city inspector also agreed that the home was not code-compliant.

The loan agreement with the city forbids recipients from suing in district court; instead, they must settle any grievance through binding arbitration. In her case before the arbitrator, Janel received pro bono representation from Bill Aleshire, a former Travis County judge who regularly provides legal support to local activist causes.

On Dec. 27, arbitrator Michael J. Schless ruled in Janel’s favor, finding that the improvements to the home “were not completed in accordance with the requirements” of the contract. Among other things, Schless ordered the contractor to remove and replace all of the home’s siding and windows. Neither task had been completed as specified by the contract, he found.

Schless added that all of the work must be completed by Feb. 28, after which Glass, who has not yet been paid the full amount of the contract, should be paid the remainder of the money owed.

Aleshire suggested that the program’s problems extend beyond one problem contractor. For one, the computer-generated cost estimates for the contracts may not account for the full scope of work. The contracts should be more specific, he said, so that contractors cannot evade work that is clearly necessary but may not have been specified in the contract.

The city needs to provide better oversight of the projects, said Aleshire, to ensure that the work is compliant with the contract and the code.

Aleshire also argued that the contracts should allow homeowners to sue for breach of contract, rather than depend on arbitration. Arbitrators are less likely to be friendly to consumers than a jury, he said, which is why trial lawyers don’t like to take arbitration cases.

“My client believes that city staff defended and protected this contractor instead of defending and protecting the homeowner,” he said.

Aleshire is representing another homeowner in the program who is unhappy with the work done by Piatra. In that case, his client, Janis Walker, was able to reach a mediated settlement several months ago in which the contractor agreed to return to the site to do additional work. However, said Aleshire, Glass has still not done the work and the attorney is prepared to take that case to arbitration if she doesn’t begin work soon.

Glass did not respond to emails requesting comment.

Rosie Truelove, director of Neighborhood Housing and Community Development, issued a statement calling the ruling a “favorable result for the parties involved.”

However, Truelove also suggested that arbitration wasn’t necessary: “The terms of the arbitration agreement concur with the corrective measures that were offered to (Janel) during informal mediation last summer.”

Truelove said that the repairs would take a “handful of days” to complete and that Janel would be eligible for up to $3,000 to cover the cost of a hotel stay or storage for personal belongings.

Aleshire expressed bafflement at Truelove’s characterization, calling it “absolutely crazy.” The only reason that the case went to arbitration, he said, was because Glass refused to do much of the work that the arbitrator has now ordered her to perform, notably the replacement of the siding and the windows.

Truelove’s response, Aleshire said, “shows either that she’s being lied to or (staff) still have their heads stuck in the sand like ostriches.”

In a subsequent email, Truelove said, “NHCD staff and the contractor agreed that there was corrective work to be done. By that point, the homeowner would not allow the contractor back on site and we ultimately ended up in binding arbitration to resolve the dispute.”

Aleshire insists that that is “dead wrong.” While Janel did refuse the contractor access to the site earlier on, that was well before the parties tried to work things out through mediation, at which point the contractor refused to do the necessary work, he said.

Aleshire said it was disappointing to see NHCD, “in spite of the ruling from the judge,” continue to “defend city staff and the contractor, instead of standing up for the property owner.”

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Key Players & Topics In This Article

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.

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