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Jun. 1--KB Home's troubled Northampton development has become the target of a federal investigation amid allegations that the developer-homebuilder may have falsified information to obtain U.S. Department of Housing and Urban Development approval.
While the Housing Department has not commented directly on the investigation, the Veterans Administration and other sources have acknowledged that HUD is spearheading a probe based on allegations involving its approval of the subdivision, and of KB Home's 10-year protection warranty.
Adding to KB Home's woes is the opinion of a Texas Natural Resource Conservation Commission official who says some houses may have been built over groundwater.
KB Home officials would not comment on any federal investigation. In a written release, Aaron Seaman, KB Home's director of government and public affairs, denied the home sites were built over water.
"To summarize, KB Home can state with absolute certainty that Northampton was not constructed on a landfill or dumpsite, and has no naturally-occurring groundwater or perennial springs, Seaman wrote.
Northampton residents have complained of unusually soggy soils, foundation failures and foundation-related structural problems.
Residents also have noted water flowing from cracks in streets and street sections that prematurely failed and had to be reconstructed.
KB Home has hinted that the drainage problem is a result of Bexar Metropolitan Water District pipe leaks. The district found some leaks but maintains they've long since been fixed.
Homeowners have been pointing toward several suspected causes for their troubles, including poor subsurface drainage, a black clay known to be poor for foundations, and the possibility the subdivision was built on a landfill.
Engineers ruled out the possibility of a landfill, although a San Antonio Water System report publicized last year noted that the Houston black clay below the houses "cracks to a dangerous extent when dry."
Earlier this year, TNRCC added credence to the idea that subsurface drainage could be an ongoing hazard to houses and streets.
Dale Burnett, TNRCC's Waste Permits Division director, went to Northampton to investigate the allegations of a landfill. He found no evidence of a landfill, but went on to say "it appears that most of the problems at this subdivision may be related to poor surface and subsurface drainage."
That would not surprise Becky Funk, a resident on Cherry Glade for the past 18 months. Long cracks run down the street pavement next to her residence.
"Any time it rains, for about four or five days afterward, water seeps out of the cracks. They've patched it twice since I've been here," she said.
Funk rents a 3-year-old, $80,000 house that has cracks between the wall and ceiling wide enough for her to stick her hand through.
"What's so sad is our lease is up in January. The people that own this house, they're not going to be able to sell it, and it's going to be hard to rent in its current condition," Funk said.
Last year, KB Home bought back several homes from residents.
Terms of the buy-back included an agreement that sellers wouldn't use the media to disparage the building quality or KB Home's practices.
Burnett's staff was instructed to research which agencies might have jurisdiction over what he described as "isolated wetlands," said Dick Lewis, a TNRCC spokesman. They concluded that San Antonio and Bexar County were responsible for reviewing and regulating residential subdivision plans.
Burnett also stated in an April 23 letter that HUD may have jurisdiction, noting that "it appeared to me that there was reason to believe that several homes could have been built over or near springs and ponds."
The HUD investigation may center on the subdivision approval process. The developer must provide HUD with a form in which the company states whether there are certain foreseeable hazards, including inadequate surface drainage, springs, sinkholes and unstable soils.
At the request of Sen. Phil Gramm's office, Undersecretary of Veterans Affairs for Benefits Joseph Thompson also noted in April that "HUD is currently spearheading the investigation as many of the allegations involve HUD's approval of the subdivision and of the 10-year protection plan."
Thompson noted, however, the Houston VA office's review of its KB Home file "does not reveal a history of frequent problems."
Indeed, KB Home is a national company and has many other developments in Bexar County, none of which have been as plagued as Northampton. And most of the 750 houses in Northampton are sound, or so George Bender believes.
"There's a tremendous number of people here that are happy with their homes," said Bender, a Chestnut Manor resident who sits on the homeowners association board.
Many residents are angry about the media attention, he said.
Referring to the news last year about the nonexistent landfill, he said, "When you tell lies that hurt people, that's not right. We had one guy in the military. He was getting ready to transfer. He couldn't sell his house, he couldn't rent it. He went bankrupt."
A San Antonio-based national consumer advocacy group initiated the KB Home investigation. HomeOwners for Better Building took its fight to Washington on behalf of 132 dissatisfied present and former subdivision homeowners, said HOBB President Janet Ahmad.
The allegations are being raised amid a frustrating legislative season for HOBB, which authored a bill, now dead, known as the Home Lemon Law.
"Our basic interest is the same principal as the car," Ahmad said. "You've got a car lemon law. The manufacturer has three opportunities to fix the vehicle. If they don't, they have to buy it back. As a result, we have better cars and better car warranties."
HOBB's experience is that the overall industry needs regulating, from those building affordable entry-level homes to upscale houses priced at $500,000 or more.
"HUD regulates, but everything is done on the honor system, Ahmad said. "This is where our federal government has let us down. A home warranty is worthless. And you can't go to court.
If there is a dispute, you get forced into binding arbitration and the legal expense can end up costing more than it would have cost to fix the problem."
State Sen. Leticia Van de Putte, D-San Antonio, sponsored the Lemon Law bill, which died in the Senate Business and Commerce Committee.
"This bill did not get a hearing," said Van de Putte's legislative aide, David Holmes, noting that committee chair Sen. David Sibley, R-Waco, did not support it.
"What really killed this bill is that the interests against it were too great to overcome in the time allowed," Holmes said.
"The building industry is a huge industry."
Van de Putte intends to ask the committee to conduct public hearings on the issue between now and the next regular session, he said.
In the meantime, the consumer lobby must seek out some allies, he said.
"The insurance companies should be in favor of this type of thing. Realtors would naturally benefit; they've got a responsibility to disclose structural problems with a property."
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(c) 2001, San Antonio Express-News. Distributed by Knight Ridder/Tribune Business News.
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