[highlights added] An agency created to resolve disputes between homeowners and builders is "fundamentally flawed" and should be abolished, the Sunset Advisory Commission staff said Tuesday.

"It's really doing more harm to homeowners than good," said Joey Longley, executive director of the sunset commission. "It's not something that we felt could be fixed without some massive overhaul. We think Texas is really better served without it."

The Texas Residential Construction Commission must be reauthorized by the Legislature next year as part of the state's sunset review process.

This is the agency's first review since it was created in 2003 with support of home builders who wanted a system to resolve disputes before homeowners could go to court.

But the staff report said that only 12 percent of cases where the state has sent in inspectors to review alleged defects have resulted in a "satisfactory offer or repair or compensation over the life of the program."

"The remaining 88 percent of reported cases are pursued by one party or the other using the legal system - the very outcome the process was enacted to prevent," the report said.

The Texas House member whose bill created the agency disagreed that it should be scrapped.

"I think the Sunset staff just laid a rotten egg for the consumers of Texas," said Rep. Allan Ritter, D-Nederland.

Audit faulted records
Ritter, who is in the building materials business, also passed a bill last year to include more public members on the agency's governing board, which has been dominated by builder interests. The agency was given more resources, which should result in improvements if given time to work, Ritter said.

Since its inception, consumers have griped about costs and delays in trying to resolve complaints.

A state audit last year faulted the construction commission for sloppy record-keeping that made it difficult to determine how well complaints were being handled.

The staff review found problems with the way the commission was set up, saying it "was never meant to be a true regulatory agency with a clear mission of protecting the public."

It registers builders, but does not require them to be licensed as 28 other states do, "and so does not work to prevent problems from occurring," the report said.

The inspection process, which uses independent, local inspectors, takes an average of four months but some cases have been outstanding for 20 months, according to the report. If defects are identified, the agency cannot force builders to make repairs or offer compensation.

Still, homeowners must complete the process prior to filing a lawsuit.

"No other regulatory agency has a program with such a potentially devastating effect on consumers' ability to seek their own remedies," the report says.

Duane Waddill, executive director of the construction commission, said he "ardently disagreed" that the agency isn't working.

He said the agency has helped homeowners get construction flaws fixed without having to go to court. He said he hired an ombudsman in January to work with builders and buyers to resolve problems.

"Ultimately, I see our goal as resolution," Waddill said.

But consumer groups said the state needs to get tough on bad builders.

"Consumers need real protections against unscrupulous builders who build shoddy homes, and the TRCC has never provided homeowners with that kind of protection. Indeed, homeowners - not builders - are the ones regulated by the TRCC," said Alex Winslow, director of Texas Watch, in a statement.

Public hearing set
Janet Ahmad of San Antonio, president of Homeowners for Better Building, said Texas needs a streamlined process that includes the potential for tough penalties so builders have the incentive "to build it right the first time."

The report will be considered at a public hearing next month by lawmakers and public members of the sunset commission. The review panel's vice chairman, Sen. Glenn Hegar, R-Katy, said he wants to hear the testimony before making a decision whether to support the staff recommendation.

Home builders, a powerful source of campaign donations to legislative candidates, are likely to fight to retain the agency. One of its main backers was Houston builder Bob Perry, who has given about $2.3 million to Texas candidates and causes in the past year.

Ron Connally, an Amarillo home builder and first vice president of the Texas Association of Builders, called the staff report "short-sighted."

"Pulling the plug on the consumers' most readily accessible and cost-effective path to resolution is anything but constructive," he said in a statement.

Abolishing the agency would cost the state $300,000 a year in revenue from builders' fees that exceed its expenses.

janet.elliott@chron.com
8/19/2008

Source: http://www.chron.com/disp/story.mpl/headline/metro/5953468.html

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