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Frisco Charter Amendments to Regulate Homebuilders
Wednesday, 16 March 2005

Inside Collin County Business
Frisco’s future could hinge on vote

Residents in Frisco will soon decide the future of the homebuilding industry in their hometown. Two charter amendments are on the May ballot and their passage will either be the salvation for homeowners or an abomination to Frisco and the homebuilding industry. There is no question that it is important as both sides are gearing up for a fight to convince voters that their position is correct.

Frisco’s future could hinge on vote
3/16/05
By Andy Hardin and Lisa Ferrell

Residents in Frisco will soon decide the future of the homebuilding industry in their hometown. Two charter amendments are on the May ballot and their passage will either be the salvation for homeowners or an abomination to Frisco and the homebuilding industry. There is no question that it is important as both sides are gearing up for a fight to convince voters that their position is correct.

The amendments

One amendment would require homebuilders to submit a $ 250,000 surety bond for each new home they build in Frisco or a $ 2 million bond to cover all new homes built in the city. Both bonds would be required to be in force for five years from the date of the homeowner receiving an occupancy permit. The purpose would be to pay for any defect of workmanship and/or material relating to work done prior to the issue of the certificate of occupancy.
The second amendment would require the homebuyer to acknowledge in writing that if the contract they signed to purchase their new home had a mandatory alternative dispute resolution provisions such as binding arbitration, that they know that, “This contract takes away or impedes the rights of the buyer as a citizen of the United States…”
Taking sides
On one side is Dr. David Becka, his wife, Carol, and daughter, Carolyn, and Take Back Your Rights a political action committee they formed. The other side has homebuilders, Realtors, city officials, the Chamber of Commerce and CUFFF (Citizens United for Frisco’s Future) a PAC formed to fight the amendments.
The side fighting the amendments says that they are so costly to homebuilders that an industry that has driven Frisco’s economy will be stopped in its tracts. If that happens, the implications to Frisco residents, who would have to pick up the tax burden, could be gigantic.

Origins of the amendments

For Becka and his family, they believe, this issue is important for Frisco citizens to educate themselves and protect themselves when they purchase a home. They felt when they had purchased a home in 1998 that they had done their research and were prepared to make a decision as to what area, what homebuilder and what rights they had. But as time progressed and problems — mainly mold — manifested in the home, the Beckas felt as though there was no recourse for what they were going through. After consideration of what actions they should take — contacting the homebuilder, examining their warranty, and finally a law suit that is still in the hands of the courts — the Beckas wanted to make sure no one else went through what they say they’ve been through.
Becka said he started with the city, asking the council to come up with an ordinance that would put more accountability on the backs of the homebuilders. But, Becka said, the city told him to come up the wording he’d like to see. But the Beckas decided if they were going to spend the time and money writing an ordinance, they wanted to make their time worthwhile by creating a charter amendment. An ordinance can be voted on by the city council and changed at anytime. A charter amendment is voted on by the citizens and cannot be changed for two years.
The charter amendments consist of two things the Beckas feel adamantly about — homebuilders providing a surety bond and informed consent for new homes.
“The first thing I wanted to do is I wanted the homebuilder to provide a disclosure,” Becka said. “I want them to tell you about the construction. I want them to tell you about the warranties and exclusions. When you get a warranty, you don’t even realize when you read the warranty you have very little protection when you buy a home today.
“I also want them to tell specifically about the privatized system of binding arbitration,” Becka said. “As a privatized system it takes you out of the courts and that’s where you lose your rights to the court system.”
The other issue at the heart of the amendments, is the requirement for homebuilders to provide either a $250,000 surety bond per home or a $2 million surety bond for multiple homes to pay for any covered construction defects with the home.
There is much controversy over the ability to acquire a surety bond that the amendments state.
“We’ve talked to just as many bonding companies probably that the city has,” Becka said. “Bonds will be available but they have to be written first. That is the job of the city, not my job. It’s called promulgating the bond. Once the bond language is available all they have to do is turn it over to the bond companies, bonds will be available.
“The amendments, that is not the language for the bond,” he continued. “The amendments are just the documents to get it on the ballot. The language of the amendments gives the city broad discretion on how they write these bonds. The only thing the city has to do is they have to follow the basic intent of the charter. And the basic intent is that there is some type of insurance for the homeowner.”
The Beckas feel that between the surety bonds and the requirement of more in depth disclosure from the homebuilder, that citizens would have more power when making such a large investment, buying a new home. Through networking with other concerned consumer advocates they found an attorney in Austin, Fred Lewis, to donate $15,000 worth of legal service to the political action committee the Beckas formed, Take Back Your Rights. Lewis helped craft the language of the amendments.
Signatures were later collected for the petition to get amendments on a ballot and turned into the city and an election has been called for May 7.
“We went around for six months and collected signatures,” Becka said. “The response was amazing. We only initially needed 1,700 signatures to get it on the ballot. As it turns out, when we turned in our signatures we had over 4,600.”

Opposition

Homebuilders in Frisco and throughout the area feel much differently. They dispute the fact that buyers are not already given many acknowledgments about their rights. They feel the language Becka chose to include in the Homebuilder Full Disclosure Amendment is intended to be inflammatory. “This contract takes away or impedes the rights of the buyer as a citizen of the United States (7th Amendment) and Texas to the right to a trial by jury to sue the homebuilder and fully protect the buyer’s rights.”
Bob Darling of Darling Homes said, “You are asking the people to take a chance on the economic future of Frisco. With the reduction or elimination of new residential growth, existing homeowners and businesses will bear the entire burden of funding city services and schools through higher tax rates.”
The cost to homebuilders and the City of Frisco is also in dispute. Central to the question is the cost of the surety bond required by the amendment. Becka points to a February 10 letter from an insurance agent in Wichita Falls to Richard Abernathy, City Attorney for Frisco. The agent states that, “A normal code compliance bond would have a rate of one percent…). If that number is correct, the $250,000 bond required for five years would add $12,500 to the cost of every house built in Frisco.
But the letter used by Becka as proof of the cost is prefaced by a statement by the agent that “After reviewing Article 15 (the proposed charter amendment), it became evident to me that none of my sixteen surety companies would entertain furnishing this bond.” He then goes on to list six problems with the bond.
The cost to the City of Frisco is also a concern even if homebuilding were to continue. The city would be required to keep track of bonds for each home built in the city for five years and the head city engineer would be required to settle some disputes between the homeowner, homebuilder and the bond company. Whether the City of Frisco would be immune from suits by the homeowner if they didn’t like the city’s decision is unknown. “Another unanswered question is the true economic impact to the city for administering these initiatives if passed,” Darling said.
The Collin County Association of Realtors has been researching the amendments and studying the possible impact they would have to the City of Frisco.
“Our concern is that the amendments, as they are being proposed, may have severe unintended consequences for the taxpayers, although they were designed with the best intentions,” President of CCAR Gerald Vokolek said.
“With the information that we currently have on the possible economic impact that these two amendments could have, we are not comfortable that this is a good decision for the citizens of Frisco,” said Marvin Jolly, Director of CCAR and Chair of the Frisco Charter Amendments Task Force. “Many of the individuals that originally signed the two petitions that were circulated by Take Back Your Rights have now come forward to declare that they were misled and did not realize what was involved in changing the city’s charter.”
CCAR has a task force that has attended meetings with all affected parties including Take Back Your Rights, homebuilders, city council and other involved parties. CCAR will launch a public information campaign in the near future based on the facts they have gathered.
It is the unknown that causes the most heartache. Becka states that if the amendment passes that a bond company will step up to write the bonds, but everyone else is uncomfortable taking such a big chance with an industry that is so important to Frisco.
“Naturally I have my feelings about the mayor and the council and I would support a council that supports what’s best for the city. My feeling is that the present administration leans more toward developers and leans more towards builders than they do for the citizens,” Becka said,
Bob Darling asked, “The real question is why the residents and business owners of Frisco would want to risk this city’s financial and economic health in order to be used as a “guinea pig” by those who purport to be protecting them while in truth have personal and underlying political motives?”
Becka’s political action committee accepted $15,000 from attorney Fred Lewis of Austin. Lewis who has worked with the ACLU in the past and a director of Campaigns For People helped Becka formulate the language used in the petition that called for the election.
Also at issue is the Texas Residential Construction Commission enacted by the Legislature two years ago. Proponents of the amendments say this commission is ineffective and not the answer for homeowner complaints. Opponents argue that there are already enough rules and laws on the books to protect homeowners and the TRCC is becoming an effective option for homeowners.
The election is May 7.

 
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