Timely Demise
Legislature decides to let ‘builder protection agency’ die

Emphasis and [bracketed comments] added

Before the Texas Residential Construction Commission (TRCC) was created by the legislature in 2003, new home purchasers and their builders would attempt to resolve any disputes that arose. When a resolution could not be reached, they were free to take the matter to court.

That changed when the TRCC came online. Long derided by consumers and some state officials as the "builder protection agency," it forced consumers into a cumbersome administrative process that critics charged took too much time, cost too much money and almost always resulted in decisions that favored the builder.

That is one reason TRCC is currently at death's door in Austin as lawmakers in the Senate showed little appetite for extending the life of the controversial organization created by the legislature in 2003 at the behest of Bob Perry and other home builders.

According to Harvey Kronberg of The Quorum Report, Sen. Glenn Hegar told reporters on May 22 that he's inclined to allow the TRCC to be phased out under the state's Sunset process because lawmakers were unable to reach a compromise on how to keep the agency functioning.

Hegar, a Katy Republican, is carrying the catch-all Sunset bill that's pending in the Senate to cover those agencies whose Sunset bills die during the waning stages of the session. The TRCC Sunset bill did not get a hearing in the Senate Business and Commerce Committee.

"I was not able to reach a compromise with all parties," said Business and Commerce Chairman Troy Fraser (R-Horseshoe Bay). "We simply ran out of time. My committee is not scheduled to meet again, so whether that agency can be saved is out of my control."

Rep. Joe Deshotel (D - Beaumont), who helped fashion a substitute reform bill in his Business and Industry Committee in the House, confirmed to The Examiner that the action on the Senate side did indeed spell the probable end of TRCC.

"The TRCC was built on a faulty foundation. It has finally been condemned and will be demolished," said Alex Winslow of Texas Watch, a statewide consumer group that has advocated an end to the agency. "Bringing an end to this feckless state agency will enable lawmakers, homebuilders and consumers to start the process of building real reforms that ensure builder accountability, quality building standards and true oversight and regulation of the homebuilding industry."

Last summer, the Sunset Commission staff recommended abolishing the agency, citing its lack of public support and apparent inability to help consumers. This came after a 2005 comptroller's report that also called for an end to the agency. Despite efforts by the homebuilding lobby to save the TRCC, it finally became apparent to lawmakers that the TRCC was fundamentally flawed and should be scrapped.

Staunch opposition from watchdog groups including Texas Watch, Homeowners of Texas and Homeowners for Better Building (HOBB) kept the pressure on the relevant committees and members. HOBB President Janet Ahmad in particular was a walking repository of information on the content of the various bills and amendments offered during the process, providing needed clarity on what exactly was - and wasn't - included in each one, to the apparent discomfort of some proponents who preferred the details remain obscure until they rammed a bill through.

[HOT: Statements like this from Texas Watch and HOBB make us "hot around the collar." They are patently false and misrepresent the role that these "consumer watchdog" groups played in the TRCC's demise. The fact is that Homeowners of Texas had to fight AGAINST these groups in its campaign to abolish the TRCC. These two other groups abandoned that campaign early on, while hearings were still being held concerning abolishing the agency. That's when they started negotiating with the builders on a builder-friendly bill that was intentionally deceptive and convoluted. The bill itself was written by builder attorneys "look" consumer-friendly when in fact it was totally the opposite and would keep the agency for another 6 years. Texas Watch and HOBB lobbied for that bill even before HOT introduced amendments to eliminate some of the most egregious provisions. We can no longer consider these organizations to be effective consumer advocates and allies, and we question both their competency and motives.]

In the end, those efforts proved futile. A significant contributing factor in TRCC's demise was the persistent testimony of homeowners who ran into serious problems after they had purchased new homes, only to find that TRCC consistently took the side of the builders over the buyers.

[HOT: Having good arguments, a solution, and effective witnesses was a key to HOT's success. Unfortunately, some HOBB witnesses may have done more harm than good. They did have compelling stories, but because they hadn't used the TRCC process, they were ineffective in critiquing the agency's effectiveness and actually contributed to builder's arguments in favor of keeping the TRCC. The advice that these homeowners received from HOBB, in suggesting that they NOT use the TRCC process, resulted in them losing all legal rights, since the TRCC was by law a prerequisite to other actions.]

Slander in the House

Two women from Southeast Texas - Marcia Kushner of Jersey Village and Dorina Corrente of Sugarland - became regular visitors to the state capitol in Austin over a period of years to tell their horror stories about the builders they believe hid behind the TRCC to avoid fixing the defects that plagued their not-inexpensive new houses.

Kushner and Corrente were living witnesses to what many characterized as TRCC's pro-builder bias, and they paid a price for their willingness to speak up. In separate interviews with The Examiner, Kushner and Corrente both expressed the belief their claims were belittled in part because they are women on their own without a man to assert their position to the mostly-male builders, inspectors and TRCC personnel.

Corrente in particular was singled out for harsh treatment, first from homebuilder D.R. Horton and most egregiously by Duane Waddill, executive director of TRCC.

When she testified at a hearing in Austin before the House Building and Industry Committee on March 23 of this year about her on-going struggle with the homebuilder, Waddill sought to dismiss her complaints and assailed her credibility by suggesting from the podium that she was mentally unstable and that D.R. Horton had to obtain "a restraining order against Mrs. Corrente to keep her off their property."

Presumably this meant that Corrente must have hallucinated the severe drainage, mold and foundation settling problems that have made her Greatwood home what she described as "a living hell."

Perhaps Waddill saw Corrente as an easy target because the 68-year-old Italian immigrant and American citizen still speaks with an accent after 44 years in this country, and she does feel she has suffered unnecessarily at the hands of the homebuilder and the state agency that is supposed to mediate this kind of dispute.

While many find this form of character assassination a despicable tactic that has no place in what is basically a business dispute, Waddill went too far in his assertions to the House committee - because the charge he leveled against Corrente was a lie. There was no restraining order.

The origin of this untruth provided an unwitting insight into how the TRCC in general - and director Waddill in particular - operates. When his casual slander blew up in his face, Waddill was forced to write a letter of apology to Corrente for his assertion that the builder had obtained a restraining order against her.

But where did the slander originate? Waddill's words offer stark testimony to the hand-in-glove relationship between builders and TRCC.

"D.R. Horton stated to my office that Ms. Corrente was barred from their offices because over time the company had developed concerns over their perception of her state of mind and comments made in public hearings by others on her behalf," wrote Waddill.

'Builder protection agency'

The idea that Waddill sees himself as a conduit for slander from a homebuilder against a consumer speaks volumes about how TRCC operates. It also reaffirms the conclusion reached by then-Comptroller Carole Keeton Strayhorn after her department conducted a performance audit of TRCC.

"In a homeowner survey conducted by my office, I found that 86 percent of homeowners who responded said their builder failed to fix construction defects in their homes," wrote Strayhorn, who added, "If it were up to me personally, I would blast this TRCC builder-protection agency off the bureaucratic books."

Keep in mind that Keeton-Rylander is a Republican and winner of statewide races where she was supported by Bob Perry. Her view of TRCC was widely shared by many in Austin, and three years later when the agency was up for Sunset review, the staff of the Sunset Commission echoed her conclusion and recommended that TRCC be abolished.

Waddill's false allegation might seem like a small matter of no great importance to anyone other than Dorina Corrente. But when lawmakers in the Senate made the decision to let TRCC be abolished, it's an open question whether this story and others tales of consumers who felt abused at the hands of the agency played a role in their deliberations.

The short, unhappy history of the TRCC began with Bob Perry, a homebuilder unhappy with the way disputes with his customers often ended up in expensive litigation. As the largest single donor to Texas political campaigns, Perry was in a position to do something about it.

Dr. Richard Murray is a political scientist who directs the Center for Public Policy at the University of Houston. A long-time observer of the Texas political scene, he has watched the rise of Bob Perry with a certain fascination. Murray cites the TRCC as almost a case study in the application of an overwhelming cash advantage.

"We talk about the triangle of government, like the defense contractors, the relevant committee and the military bureaucracy and the idea that the regulatory agencies are captured over time by the entities that they regulate," said Murray. "But with this deal, they weren't captured - Perry created them. It wasn't like the Securities and Exchange Commission that was created in the 1930s and by 2000 had been pretty thoroughly taken over by Wall Street. This was not capture; this was creation. They were in his pocket from day one."

Once the TRCC was up and running, it may have provided homebuilders the reverse consumer protection Perry wanted - but at what cost to their reputations?

Murray put it simply. "I tell my friends don't buy a new home in Texas; you've got no recourse if the building has got serious problems," he said. "The builder can simply string it out and almost everybody ends up walking away because they run out of time and money."

Back in April, Murray speculated that TRCC is so bad it would seem that it must eventually sink of its own weight.

"Every now and then, somebody that's politically powerful gets gored by this damn deal," said Murray. "They do buy $2 million homes that have real problems, so you do have some counter-examples where you have people that are otherwise conservative Republicans find out (these are) not frivolous lawsuits; this is not permitting anybody to sue under any reasonable circumstances."

End game

The day after it became apparent the TRCC bill would die in committee, the Senate added a provision to an omnibus Sunset bill that would abolish the TRCC next February. Even some of the agency's defenders seemed to realize that the political will didn't exist to keep the TRCC around. Quorum Report quoted Sen. Hegar - who earlier this session supported keeping TRCC around - saying, "It's time to gently wind this agency down." Indications are the House will go along with this scenario.

The move brought praise from Texas Watch's Winslow.

"(This) Senate vote marks the end of a long battle to restore the rights of homeowners," he said. "The TRCC was built to protect builders - not homeowners. We need to start from scratch to create real protections that ensure homes are built to the highest possible standards and hold bad builders accountable."

[HOT: We agree that, "We need to start from scratch" but don't think of that the same way. Remember that HOT introduced real reforms with a bill to abolish the TRCC and replace builder registration with licensing under TDLR (Texas Department of Licensing and Regulation). Rather than support an initiative to keep the builder "foxes" out of the regulatory "hen house." Texas Watch worked with the builders to keep the TRCC for another 6 years. That's not consumer advocacy in our view.]

The Texas Residential Construction Commission will cease to exist on Feb. 1, 2010, barring some unexpected legislative maneuver to breathe new life into this fundamentally-flawed agency. What happens next is unclear, because the law previously controlling home builder disputes - the Residential Construction Liability Act of 1989 (RCLA) - was modified in part by the TRCC enabling legislation. Sources at the capitol say the impact of the TRCC shutdown on future home purchases might depend on how a court interprets the legislature's actions.

What that means to homeowners like Marcia Kushner and Dorina Corrente is less clear. They are stuck in the administrative portion of a TRCC system where the inspectors and arbitrators have overwhelmingly favored builders over consumers. This process has prevented them from filing civil lawsuits and taking their cases before a jury that might not be as inclined as those inspectors and arbitrators to see things the builder's way because jurors are not dependent on future business from those same builders.

After more than five years of her own personal struggle, Corrente is heartened by reports of the imminent demise of TRCC but said she'll believe it when she sees it.

"They say it is going to die," she said. "Until they close the session, I do not believe that they will abolish TRCC. I know that every newspaper had this story, but I'm not sure that we need to celebrate yet."

By James Shannon, Mid & Sounth County Editor, The Examiner, 05/30/2009
Source: http://www.theexaminer.com/main.asp?Search=1&ArticleID=157&SectionID=1&SubSectionID=1&S=1