The Exurb Rebellion
| April 29, 2005 | Dateline
The Exurb Rebellion
BY FORREST WILDER
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fastest growing areas in Texas are no longer the suburbs, but instead remote,
once-sleepy towns far from the city center. The media has taken to calling these
boomtowns of suburban white flight, “the exurbs.” The city of Frisco,
the last stop on the North Dallas Tollway, is one such place. Frisco has gone
from a remote farming outpost of 6,000 residents in 1990 to a burgeoning city
of well over 75,000 today. By 2015, the city is expected to boast a population
of 140,000.
Everywhere in Frisco there is evidence of a development gold rush. Many farm
fields feature signs that read “for sale” and “proposed for zoning
change.” Instead of cotton and wheat, a now-familiar crop of corporate
chains like Starbucks and Wal-Mart rise seemingly overnight from the rich, black
soil. Farm roads once traversed by tractors are becoming thoroughfares for real
estate developments that promise the American dream of a spacious, affordable
home with a large garage and St. Augustine grass. In 2004 alone, the City of
Frisco issued 3,200 permits for new home construction.
But
signs springing up on the yards of homes scattered around the city indicate
a brewing revolt against business as usual in Frisco. The signs read: “People
vs. Goliath. Vote “Yes” on Proposition 1 and 2!” The people in
this case are a group of newly minted activist-citizens who are fed up with
what they say is an unaccountable building industry that all too often sells
faulty homes. The Goliath they face is an alignment of area builders and City
of Frisco officials who are pouring resources into trying to stop the consumer
revolt. The battle is being joined over Propositions 1 and 2, amendments to
the City Charter that supporters believe will strengthen homeowner rights, but
which developers and city officials decry as a death knell for the city. Voters
will get the chance to decide for themselves on May 7th.
The leaders in this grassroots revolt are an unlikely group of activists. A
self-described Republican, military family, the Beckas—Carol and Dr. David
and their adult daughter, Carolyn—moved to Frisco in 1997 after Dr. Becka
retired from a 28-year career as an Army orthodontist. Looking forward to owning
their first new home after a lifetime of constant moving, the Beckas contracted
with Huntington Homes, a major Texas builder, for their dream home in the Starwood
development, a gated “luxury home community,” as the subdivision’s
website touts it. Starwood is an idyllic enclave for the affluent, launched
by Blue Star Land, a development company run by Jerry Jones, owner of the Dallas
Cowboys.
Immediately after moving in, the Beckas say they began to have serious problems
with their $318,000 home. Pipes burst behind walls and in the foundation, causing
persistent flooding; an uncapped gas line leaked gas into the house; toilet
water poured from the ceiling into the kitchen. The water damage spawned fast-growing
toxic black mold. For more than five years, the Beckas put up with these problems
and what they say were Huntington’s band-aid fixes. (Three calls for comment
from Huntington were not returned.) Eventually, the mold and the flooding became
such health hazards that the family moved into a hotel and later an apartment
where they now reside. In August 2003, they sued Huntington, a legal battle
that continues to this day.
During
their multi-year headache, the Beckas began talking with other homeowners in
Frisco with similar problems. It seemed to them that there was a home-buying
horror story around every corner. Some had moved into their new homes only to
discover serious structural flaws, but couldn’t do anything to get their
builder to fix the problems. Others had in good faith signed a contract with
their builder, only to discover later, when they wanted to sue for defects in
their homes that they had inadvertently given up their right to the courts because
of a binding mandatory arbitration clause in the contract. A few of the aggrieved
had tried to use the dispute resolution process of the newly created state regulatory
agency, the Texas Residential Construction Commission only to find that their
money, time, and effort had been squandered because the commission had no enforcement
power.
The Beckas concluded that their situation was far from unique and something
had to be done. “We wanted to help other people out so they don’t
have to go through what we went through with our house,” says Carol Becka.
As they saw it, the fundamental problem was that the relationship between buyers
and builders was poisoned by an imbalance of power. Builders, if they chose
to do so, could get away with cutting corners and lousy workmanship because
there was—and is—little consumers can do about it. And they put little
stock in the Residential Construction Commission, which is overly tilted in
favor of builders, to solve their problems (See “The
Agency that Bob Perry Built,” February 4, 2005). With nowhere else
to go, they took their concerns to the City of Frisco.
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City Council, the Mayor, and the city staff are immensely proud of their management
of Frisco. Fundamentally, they see their role as stewards of the area’s
explosive growth. In order to maintain low taxes and pay for the City’s
expanding infrastructure—a new $30.5 million city hall and a public library
currently under construction, for instance—they believe they must maintain
sky-high population growth. As a result, the construction industry and the City
have a shared interest in keeping development booming. The Council fiercely
guards its authority to carry out this mission. So when the Beckas brought the
Council their demands for stronger homeowner protection, city officials were
less than receptive.
In January 2004, the Beckas approached the Council for help with a few commonsense
ordinances. Specifically, they wanted the city to require builders in Frisco
to secure either a $250,000 bond for an individual home or a $2 million bond
for multiple homes. Then, homeowners could make claims against these bonds if
there was a problem with a new home. They also proposed an “informed consent”
ordinance, requiring builder-buyer contracts to include full disclosure of warranties,
binding mandatory arbitration agreements, and any risks or hazards of the home
that may be otherwise hidden from the buyer. In essence, the amendments would
attempt to mitigate the “Buyer Beware” situation that has plagued
the new home market in Texas.
The Beckas warned their elected officials that if they did not cooperate, they
would take the issue to the voters by collecting enough signatures to put amendments
to the City Charter on the ballot. On the Dallas-affiliate Fox 4 News in February
2004, Mayor Mike Simpson promised to “do something” with the proposed
ordinances as he waved the written copies in the air. Instead, city officials
did nothing. In May, frustrated by their local government’s intransigence,
the Beckas formed a political action committee called Take Back Your Rights.
They recruited a motley bunch of exurban rabble-rousers and began collecting
signatures for the two charter amendments. In Miracle-Gro Frisco, city officials—and
the area’s vocal and powerful construction community—seemed blindsided
by the Beckas’ perseverance. On November 8th, Take Back Your Rights presented
the City Secretary with the fruits of six months of labor on the streets of
Frisco—9,600 signatures, enough to force the City to put the amendments
to a vote.
To prepare for the May 7th election, city officials called two work sessions,
one in January 2005 and another in March, to discuss the proposed amendments.
While these were ostensibly fact-finding meetings, DVDs of the sessions reveal
meetings consumed by acrimony and divisiveness. The Beckas have taken to calling
them “work-over” sessions. Builders, developers, trade association
representatives, and participants in the bond industry showed up en masse to
testify against the amendments. Bob Pavlis, president of the Homebuilders Association
of Dallas and the head of Bob Pavlis Custom Homes was there to complain about
the high cost of regulation. David Siciliano, a local developer and political
campaign contributor to two councilmembers, explained that disclosure of binding
arbitration clauses was unnecessary since consumers have a personal responsibility
to read their contracts. Meanwhile the city council took turns haranguing the
Beckas about their lawsuit against their own homebuilder, accusing the family
of turning a personal problem into a public crusade that did not really have
grassroots support.
At the January work session, Mayor Mike Simpson told the assembled audience,
“We have some bad doctors; we have some bad lawyers; we have some bad citizens.”
The builders and their allies in the audience broke out in applause. Dr. Becka
went to the dais to respond. “You people are elected officials. You represent
the citizens. You don’t represent special interests just because you’re
trying to build a city.”
JoAnn Hamilton, a member of Take Back Your Rights and a 75-year-old Republican
activist, remembers with bitterness appearing in front of the Frisco City Council.
“[The council] was treating me like a little old lady who was out looking
for her lost cat,” she recalled. Her fellow activists, she said were treated
“like a bunch of terrorists who came to town just to ruin the builders.”
pponents
of the ordinances are doing their best to scare the voters. The message is simple:
The Charter Amendments Will Destroy Frisco. The cost of bonding will drive construction
costs up, pushing builders to develop territory that’s even more unregulated.
The City will have to raise taxes and cut services in response to the lagging
revenue. Frisco’s progress will come to a grinding halt and the boomtown
will bust.
To drive home this alarming message, the opposition quickly cobbled together
an Astroturf political action committee named Citizens United for Frisco’s
Future or CUFF, which, as of April 11, was flush with almost $100,000. According
to Andrew Wheat of the Austin-based campaign watchdog group Texans for Public
Justice, at least 95 percent of this total comes from the builder industry.
A who’s who of area builders and developers are listed as CUFF contributors:
Huntington Homes ($500), Sotherby Homes ($5,000), Darling Homes ($5,000), Pavlis
Homes of Texas ($500), and Warren Clark Development ($10,000), among many others.
One City Council member, Joy West, has even chipped in $25. With this money,
CUFF is running professionally produced TV commercials in Frisco that show firefighters
unable to put out fires, children unable to go to school, and elderly folks
barred from the hospital, all because of the charter amendments. CUFF has also
spent $3,500 with Ohio-based Fallon Research and Communications, a Republican
polling firm with ties to the housing industry, and $13,000 with Cornerstone
RSCS for the production of the aforementioned TV ad. Both these companies have
been hired by builder-financed PACs in recent years to help defeat citizen initiatives
around the country.
City officials deny that there is a systemic problem of shoddy home construction
in Frisco. Councilmember Maher Maso told the Observer that he had not received
a single e-mail from a citizen in recent memory complaining about his builder.
But the Observer found one street, Arrowhead St. in the Starwood development,
where at least six homes have been struck with foundation and other structural
defects in the past few years. (Oddly, Mayor Simpson, who lives on Widgeon Way,
several streets over, claims also to have heard very little about bad homes
in his city.)
According to Matt Davis, the attorney for Steve Roberts Custom Homes, which
built the six faulty homes, litigation involving the homeowners and the builder
ended in confidential settlements. Under the terms of the agreement, the homeowners
are barred from discussing their homes’ problems. Collin County Appraisal
District records show that the six homes were bought back from their owners
by builder Steve Roberts. One of the homes was repurchased by Roberts twice.
Carmen Roberts of Steve Roberts Custom Homes claims that the problems involving
these houses are an isolated blemish on the company’s 30 years in business
and that no one is sure what went wrong.
The builders don’t like the “informed consent” amendment—educating
homebuyers on their contract—any more than they like the bond proposition.
“On the surface informed consent sounds reasonable,” says councilmember
Maso. “But as a homeowner, I have a responsibility to find out what I’m
signing.” Maso himself ended up in arbitration when he bought his home
in Frisco. He admits, “There’s a problem [with builders],” but
insists that, “Most of the problems are resolved.”
Hugh Preacher would disagree. He and his family moved into his new Huntington
home in Frisco in September 2000. Prior to moving in he noticed that a door
didn’t fit well. “I can still remember [the builder] telling me he
thought it was due to new construction that needed to settle in.” Within
weeks, however, he noticed that everything was a little… crooked. The curtains
didn’t hang quite straight, the kitchen floor slanted, the doors didn’t
shut. An inspector told Preacher that the foundation had been poured at an angle
that no amount of framing or external correction could fix. Preacher hired a
lawyer. But as it turned out, he had signed a contract without realizing it
had an arbitration clause. Preacher said that despite his reams of documentation
of the house’s flaws and the apparent negligence of the foreman, the arbitrator
was only interested in the definition of “structural defect” contained
in the home’s warranty. The arbitrator ruled in favor of Huntington and
demanded $1,000 from Preacher for the proceedings.
“Arbitration was a waste of my time and my money,” says Preacher.
Preacher is stuck with his house, which has been devalued from $370,000 to $153,000.
(The Texas Association of Builders estimates that 80 percent of the new home
construction in Texas is built by only 20 percent of its builder members and
that the contracts of its member builders almost all contain arbitration clauses.)
The builders’ criticisms of the propositions are not without merit. For
example, it does seem likely that some small builders will not qualify for the
bonds. The amounts—$250,000 and $2 million—are so high that bond companies
will probably only issue them to large-sized companies with considerable assets.
Whether the City can write ordinances to exempt small builders is open to debate.
In addition, the city engineer’s role in determining the builder’s
code compliance could be complicated when four parties—the City, the homeowner,
the bonding company, and the builder—all have a stake in the dispute.
Proponents of the amendments argue the city has enough leeway to resolve these
issues. “The City has a tremendous amount of discretion in implementing
the charter amendments,” says Fred Lewis, one of the authors of the charter
amendments and the president of the Austin-based Campaigns for People.
Lewis explains charter amendments work like amendments to the Constitution in
that they only provide a framework; the specifics must be worked out through
the implementation of ordinances and, usually, the intervention of the courts.
The activists pushing the amendments have already signaled that they hope the
City uses its discretion to meet some of the builders’ concerns as well
as tease out some of the finer points.
What may, for the City, be a nasty local fight has statewide implications for
the builders. “The [Residential Construction Commission] is the big trump
card in all this,” said Paul Cauduro, the director of government relations
for the Homebuilders Association of Greater Dallas and a frequent participant
at Frisco city council meetings. “These are not City of Frisco issues.
They should be decided on by the [commission].”
But residents like Robert Baldwin don’t trust the state agency.
“Why do I want to go to an agency that’s not going to help me? They’ve
been given no power to do anything to the builder,” said Robert Baldwin,
whose dream home on the outskirts of Frisco turned out to have major foundation
problems. “Builders are the biggest lobby in the state and they’re
getting away with bloody murder.”
The Beckas also tried to enlist state officials in a solution. In August, they
visited with their state representative, Ken Paxton (R-McKinney), at his district
office in McKinney. They briefed him on their concerns and asked him for help
at the state level. The meeting was anti-climactic. “He appeared uninterested
and yawned through most of [it],” wrote Carolyn Becka in an e-mail message.
Seven days later, Paxton received $10,000 from the single largest Republican
political donor in Texas, real estate developer Bob Perry. This may have been
a coincidence in timing, but it sure didn’t put the Beckas on equal footing
with the construction industry. In November, Paxton helped arrange a meeting
between Frisco city officials, the Beckas, and the construction commission.
“The purpose of calling the meeting was to bring all the parties together
to have a dialogue,” said Paxton’s District Director, Sheacy Thompson,
who, herself, has donated to the Frisco builders’ PAC. According to all
parties, little came of the meeting.
On February 22nd, Rep. Paxton filed House Bill 1237, a bill that would require
builders that use contracts with arbitration clauses to include a notice that
defines arbitration. However, the language required falls far short of the proposed
Frisco amendments.
“The notice in this bill could easily lull Texas homeowners into thinking
arbitration is no big deal, or that it is actually good for them,” says
Ware Wendell of the Austin-based public advocacy group Texas Watch. “Paxton’s
notice fails to mention how consumers forfeit their constitutional right to
a trial by jury under binding arbitration. This is a glaring omission.”
Paxton’s chief of staff, Paul Powell, insists the bill is in no way related
to the “Informed Consent” amendment in Frisco.
Whatever happens in Frisco on May 7th, it’s probably not the last we’ll
hear from disgruntled Texas homeowners. By trying to shunt all consumer complaints
through a feckless state agency and strip consumers of their rights through
mandatory arbitration, the building industry is inviting more local revolts
whenever it reduces quality on homes to extract more profit.
Forrest Wilder is a freelance writer living in Austin.
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