The Jeffersonian: Politicks, Sports, and Culture

Monday, August 22, 2005

Mirasol Homes

Wrapping up our all San Antonio Monday, the Express-News had a good write-up in Sunday's paper over the ongoing controversy of the Mirasol homes fiasco- a federally subsidized project owned by the San Antonio Housing Authority (SAHA) that attempted to sell brand new homes to the working poor. A noble endeavor, however, as the article shows, something hard to do when you're using the cheapest material available, not adhering to standard building practices, and being run by a organization that is rife with territorial beauracrats, incompetent leadership with a little bit of corruption on the side:

Ten years after Mirasol was designed, ostensibly to give the working poor a shot at homeownership, SAHA hasn't sold a third of the houses, and many people who did buy are clamoring to get out.

Built atop a landfill after a controversial bidding process, Mirasol has had problems almost from the outset. Cost-cutting measures during construction and poor management have undermined the development's noble objectives, prompting community activists and elected officials to question how developers profited and what taxpayers got for their investment.

According to a San Antonio Express-News review of a federal audit and its working papers, SAHA steered the Mirasol contract to one developer, paid it $189,000 to "design" house models that already were being built, then gave away up to $2 million in a negotiation process called "value engineering" that allowed the developer to reduce the quality of construction.

The audit, released in April 2004 by the U.S. Housing and Urban Development Department's Office of the Inspector General, also claimed SAHA spent $1.86 million mismanaging a contaminated landfill at the site, and that it could not document more than $2 million in salaries associated with the project.

Though SAHA says it has accounted for the payroll discrepancies, it continues to negotiate HUD's recommendation that it repay the $1.86 million.

SAHA has made it almost impossible to obtain a complete picture of what happened at Mirasol because it cannot produce construction contracts and other documents that it's required by law to maintain.

The Mirasol project cost $48.3 million and included an administration building, clinic, child-care facility, townhomes and senior apartments.

Of that total, $20.1 million was spent for 247 single-family homes — 160 to be sold under a lease-purchase program and 87 for public housing.

Sixty-six of the lease-purchase houses now are vacant and the purchase program has left many residents disgruntled and concerned about construction cost-cutting and use of lower-grade materials.

Henry Alvarez, SAHA's president and chief executive officer, came on board a year ago, after Mirasol was built. He says SAHA today is looking to the future, not the past.

First off, great job by Alvarez using the McGwire quote. Secondly, this is just the tip of the iceberg:

The auditors' documents show SAHA allowed quality to decline in this process. According to the documents, SAHA "saved" between $5,340 and $8,000 per house, or about $1.3 million to $2 million for the project by lowering quality.

For example, SAHA allowed KB to use roofing shingles with a 20-year warranty instead of 30 years and substitute 7/16-inch oriented strand board (OSB) roof decking for 5/8-inch plywood.

The builder also substituted 2-by-4-inch trusses for 2-by-6-inch joists, eliminated front and side screen doors, didn't use noise-reducing wall insulation in the bathrooms and installed less efficient air conditioners, resulting in higher utility bills for low-income residents.

Although auditors' noted in their working papers that negotiators constantly mentioned the "savings" created by these substitutions, they wrote that every time SAHA walked into a value-engineering discussion, the average cost per house went up and the quality went down.

Auditors cited a SAHA memo in which an agency mid-level manager told his vice president that two senior SAHA executives tried to convince him the value-engineering process was "a cost reduction" for SAHA.

But, he wrote to his supervisor, "the developer is going to pocket the savings, reduce the quality to minimums & SAHA gets nothing for this effort."

When asked why top executives failed to heed warnings from staff about lack of value and loss of quality, SAHA spokeswoman Melanie Villalobos said: "The reality is that the high-ranking executives to whom you refer are no longer at SAHA, and it would be conjecture to speculate as to what these individuals may have been thinking five to 10 years ago."

Melvin Braziel, SAHA CEO from 1997 until he retired in 2004, was at the helm during the value-engineering process.

Last year Braziel denied that the bidding was manipulated in favor of MJVT, but in a June 11, 2003, Express-News commentary, he acknowledged some mistakes, saying: "Yes, poor decisions were made, with regard to design and material choices for the homes, by both contractors and staff."

When asked to comment for this report, Braziel said, "I don't have anything else to add."

KB steadfastly maintains, and the auditors agreed, it adhered to building codes.

The money shot? When your use of cheap materials actually makes the houses more expensive. But not to you of course. Then again, anyone whose ever worked with their hands could tell you that. Those who do have to pay? Those who bought the homes-

Many Mirasol homes are showing a lot of wear and tear after just four years.

Two residents reported this spring that when it rains, their kitchen floor linoleum bubbles up, apparently from water coming through the foundation.

Inspection reports done during construction by the Army Corps of Engineers said the contractor failed to properly cure the foundations. After it was pointed out that the specifications call for the concrete to cure for seven days, the Corps' report said, the contractor "made some attempt to properly cure the slabs."

Even when the houses were new, problems with doors not closing or being almost an inch out of vertical were reported.

Driveways were another problem. A fallen tree limb punched an 8-inch-diameter hole in the concrete of one. That, along with several others in the subdivision, had to be replaced.

The Corps of Engineers' report noted the contractor was warned not to let construction workers stand on the reinforcing wire mesh when the concrete was being poured. Standing on the mesh pushed it against the ground, reducing the strength of the concrete.

Still, SAHA defends the quality of construction. Villalobos, quoting from the published report of federal auditors, said construction methods "meet San Antonio building codes and are consistent with acceptable industry practice in the area."

Yet in May 2003, when most of the houses were about 2 years old, a forensic architect told SAHA lawyers the materials "were some of the least expensive and therefore most likely to fail with normal and relatively brief wear and tear."

The Zaragozas' experience backs up that report. "I don't know what we're going to do when the warranty is up," Carole Zaragoza said. "I or Randy will have to work until we're 70 just to keep the house up."

And the taxpayers:

Complaints about SAHA's management of Mirasol that were included in auditors' papers portrayed an agency rife with petty interdepartmental disputes, a lack of teamwork between key department heads and an unwillingness to share information unless specifically asked.

The agency also was sensitive about the public release of information. A memo from the CEO to a vice president concerning Mirasol-related documents warned: "It's not in SAHA's best interest to release these."

Villalobos said SAHA was unaware of the memo and does not withhold information from taxpayers, but that the agency is undergoing an "organization-wide effort" to improve record keeping.

SAHA's actions show what happened to officials who complained too stridently.

The head of the architectural and engineering services department, Frank Jasso, eventually was cut out of the Mirasol oversight process after complaining sharply about loss of quality and subsequently was fired.

If anyone should have known quality, it was Jasso. He wrote the original specs for Mirasol that SAHA revised.

Those specs, according to architect Kimm, were used in designing homes on Guadalupe Street that stand as a reminder of what Mirasol could have been.

Housing manager Sylvia Mendez, a 26-year SAHA veteran, constantly raised alarms about cracks in the walls, doors that wouldn't close properly, and bathroom fixtures that were stained or loose. She wanted them fixed before residents moved in.

Mendez told auditors she was told to stop complaining at meetings attended by HUD officials, then she was moved off the Mirasol project.

Really, the whole story is just unbelievable.

The sort of anger that this blunder can work up over on the near West side is part of the reason why Delicia Herrera is a councilwoman today. Let's hope she can use her activist experience with Mirasol Homes to affect some sort of change in/on San Antonio for something like this to never happen again.