KB Home to Pay $20 Million Dollar Settlement
San Antonio Texas. Defective KB Homes are soon to be demolished as part of a $20, million dollar settlement with the Housing Authority. From the San Antonio News, ” The housing authority had accused national home building giant KB Home and local developer Magi Realty of scrapping orders for custom-built homes in favor of plans for tract-built houses that were poorly constructed with cheap materials…Mirasol Homes development have agreed to pay homeowners and the San Antonio Housing authority $20 million to settle claims of shoddy construction.”
The Tampa Tribune wrote in Embattled KB Home faces complaints in Texas, ” Residents in San Antonio, Texas, spent a decade fighting KB over construction complaints before winning their battles. Documents obtained by News Channel 8 show KB bought back homes in two neighborhoods in the mid-2000s and agreed to a $20 million settlement in 2011 with the San Antonio Housing Authority to settle claims of shoddy construction.”
The San Antonio Express News reported and it was re-printed in Texas Housing page 6, “$20 million in government funds spent to build the homes, private builders took as much as $9 million in profit….40-86% of profit went to Mirasol Joint Venture Team, comprised of a local developer an KB Homes…..forensic experts found houses built……failed to meet minimal federal quality standards.”
And even more from the Texas Housing publication that hasn’t been talked about much, ” (page 6), “The audit also suggests there was an agreement negotiated between SAHA and builder KB Homes that dated back to 1997, two years before the Mirasol contract was signed. The U.S. Department of Housing and Urban Development relies on the competitive bidding process to limit developer pro?t under the HOPE VI program, yet the audit report states that SAHA adopted procedures that “limited competition” for the Mirasol contract.”
Here is a summary of the audit (Congressman Gonzalez Mirasol) by the Inspector General. It appears the SAHA was not blameless either. The site was not environmentally sound (houses were built on a landfill) and proper bidding for the job did not occur.
The San Antonio Housing Authority wrote, ” Because of the rush and KB Home’s insistence on keeping their profits high, inferior materials were used and many of the subcontractors hired by KB Home were poorly trained or inexperienced. A KB Home employee later stated that the SAHA and KB lived in two different worlds, the world that KB knew about the homes, and what SAHA thought was being delivered. Congressman Charlie Gonzales responding to concerns from this constituents in the neighborhood, began to investigate the Mirasol project in 2003.”
Updated 2011, the SAHA wrote, ” “We were up against corporate giants, but ultimately, the homeowners refused to let their dreams of home ownership die.”