Today, the three-bedroom house and the Mirasol Homes neighborhood it once advertised stand as a sad paradox. Built in 2001 with $20 million in federal housing funds intended to vault the working poor into homeownership, the West Side development turned into the kind of blighted neighborhood it was supposed to replace.

Row after row of look-alike beige brick houses sit vacant and boarded up. Broken fences separate weed-choked yards, and broken glass and graffiti litter the lots.

"I don't have any neighbors," Gutierrez said. "Everyone moved away."

For Gutierrez and 65 other families who stayed, last week's $20 million lawsuit settlement with the companies that built the development will allow owners to repair their houses or start over elsewhere.

For the San Antonio Housing Authority, which was badly damaged by its mishandling of the project, the agreement also offers a measure of redemption.

The Mirasol development, and the difficulties that stemmed from widespread structural flaws in the 247 single-family homes, became a defining failure for the agency. Few other events or projects have shaped the housing authority more.

The settlement ends a scandal that drew out for 10 years, vexed four chief executive officers of the housing authority and three San Antonio mayors, and ultimately forced broad reforms at the agency that still are playing out.

After problems with the homes spurred a resident uprising that spilled into City Hall in 2008, then-Mayor Phil Hardberger swept out all five of his appointees and installed a new reform-minded board.

Since then, the housing authority has imposed tighter controls on how it does business with contractors and installed a new president who was given a mandate for broad change and won praise from city leaders.

"It illustrates how there can be a failure of oversight in government," Hardberger said. "But Mirasol also illustrates that when you get the right people in charge, you can get a totally different result, and that's what is happening."

The effort to rebuild the agency's legitimacy began with correcting the problems that allowed Mirasol to fail.

"Mirasol's been a bad name in this town for a long time," said board Chairman Ramiro Cavazos, who was appointed by Hardberger. "We've tried to really shake it up. That's the only way people are going to have renewed confidence."

Troubles with the project began before the housing authority broke ground.

Plans were 'crap'

Four years after the U.S. Housing and Urban Development Department funded Mirasol Homes, an inspector general audit in 1999 chastised the San Antonio Housing Authority for failing to start construction.

"HUD did not intend for the Authority to take four years getting started," the audit stated.

Stung by the criticism, SAHA rushed to award the contract. The call for proposals required companies to cover their own costs up front, a provision that limited the response to companies with deep pockets and resulted in just two qualified bidders. National homebuilding giant KB Home and local developer Magi Realty won the contract.

When the team submitted its plans, the housing authority's architect scrawled on them: "Crap!" "Weak!" "Trash!" "Hate it!" "Start over!"

But SAHA didn't heed the advice, and the five subdivisions that make up Mirasol were completed in 2001.

Less than a year later, complaints from residents began. They described loose cabinets, leaky windows and doors, listing porch beams and buckling walls. Those frustrations grew into troubles with cracked foundations, drainage problems and mold.

Persistent problems prompted the creation of the Mirasol Homes Task Force in May 2007.

The panel provided a buffer between residents and the agency, and it won credit for creating some order amid haphazard repairs. But the task force failed to complete its mission of resolving problems with the homes, and by the time it disbanded 15 months later, residents had lost faith in the group.

By that time, residents who had stopped attending task force meetings were in an uproar at City Hall.

"At virtually every council meeting, we had 20 to 30 people in there, complaining vociferously," Hardberger said.

The homeowners convinced Hardberger that the agency needed a shake-up. He announced the new board in January 2008.

At the first meeting, Cavazos recalled that the overhauled board faced immediate pressure to guard the status quo.

Cavazos said then-President Henry Alvarez and outgoing commissioners pressed the new board to renew Alvarez's contract.

They also pushed the new board on how it should handle Mirasol.

About six months earlier, SAHA had filed a lawsuit against the companies that built the development, KB Home and Magi Realty, and there already was a settlement offer on the table. Alvarez and others urged the incoming board to take it, Cavazos said.

The offer from KB Home and Magi Realty: $1.4 million.

"We dug our heels in and we said no, we're not going to settle," Cavazos said.

Before the end of 2008, the new board decided to flex its muscle and charted a more aggressive legal strategy against the companies. Cavazos said the board also did something else that Mirasol residents hadn't previously seen.

"Some of us on a Saturday went to see these homes," he said.

High-stakes dilemma

For low-income homeowners like Sonia Gutierrez, the rapid decay of their homes posed a high-stakes dilemma.

One of nine brothers and sisters who had inherited nothing from her parents, Gutierrez, 38, was determined to have something she could pass on to her two sons.

She and her husband put down $4,500 to buy the house in 2006. To make the monthly payments of more than $900 and avoid child care expenses, he worked days and she worked nights.

About a year after they bought the house, cracks in the walls appeared and doors started to stick in their frames. In the bedrooms, sliding doors came off their bottom tracks and dangled from the top. Then Gutierrez noticed the fish tank. Sitting on the living room floor, the tank's water level was about 3 inches higher on one end than the other.

"I was upset. I was mad," Gutierrez said. "I didn't know what to do. I didn't know who to call."

Their savings were tied up in the house, but selling it wasn't possible either. With all of the negativity linked to the homes, a sale wouldn't net more than what they still owed.

While the neighborhood emptied, Gutierrez and her family stayed, bewildered by the deterioration of the house.

"A house is supposed to shift, but not this much," she said.

Although Gutierrez didn't know it, she and other homeowners were about to find answers as a result of the new legal strategy being hatched at SAHA.

Lessons learned

The reforms that set the Mirasol settlement in motion began with the departure of Henry Alvarez.

At odds with the new board and under public fire for a failed response to Mirasol residents, Alvarez resigned in June 2008 for a similar job at the San Francisco Housing Authority.

In the following months, SAHA raised its buyback offers on the homes, from a minimum $5,000, to a range between $30,000 and $50,000. The board also instructed the interim CEO, retired Gen. Alfred Valenzuela, to launch major audits of the agency's budget, Section 8 voucher program, information technology department and Mirasol Homes.

One of the biggest changes came in April 2009 with the arrival of new CEO Lourdes Castro Ramirez, who had turned around the Section 8 program at the Los Angeles Housing Authority and impressed commissioners with her background in urban planning and focus on services to residents.

Since then, Ramirez has tightened procurement and ethics rules, beefed up training for staff who oversee the selection process on contracts and pushed for changes in how the agency interacts with residents.

Board members also now oversee contract selection more closely, watch for healthy competition on bids and check to see that companies have been properly vetted.

"I feel very strongly that with the changes we've made, we'll be able to avoid another Mirasol from happening again," said Cavazos, the SAHA chairman.

A month after Ramirez arrived, local attorney Frank Herrera, who had been sought out by the housing authority to represent Mirasol homeowners, began filing lawsuits against KB Home and Magi Realty.

Meanwhile, SAHA was preparing to invest more in its legal fight against the companies. In late 2009, the housing authority deconstructed two homes down to the studs and found a raft of structural flaws that exposed the houses to water damage. Spot checks for the same defects in 18 other homes showed that the flaws were widespread.

That discovery, and a judge's order last year to merge the lawsuits from SAHA and homeowners, fueled the legal battle.

The new alliance between the agency and homeowners marked a stark change in how the housing authority handled Mirasol residents.

"The relationship we have right now with the homeowners is very different from the relationship that SAHA had with them three to four years ago," Ramirez said. "I think that shift in how we view homeowners or residents is probably the most significant, big-picture change at the agency."

What's next

What happens next for residents and the neighborhood remains unknown.

Homeowners are set to receive between $60,000 and $90,000, enough to allow them to rebuild their houses or pay off their mortgages and buy elsewhere.

Attorney Jorge Herrera, who worked on the plaintiffs' legal team, said homeowners won't see the money for at least six months. The Herrera law firm plans to make financial advisers and bank representatives available to homeowners as they navigate their choices.

Gutierrez and other homeowners said they need time to weigh their reinvestment options. She knows her family wants to stay in the area, but hasn't made any decisions.

By design, SAHA officials have yet to draw up plans or talk about ideas for the revamped subdivisions. Ramirez said she wants to hear from homeowners, city leaders, school officials and others who have a stake in the neighborhood.

Sonia Gutierrez has some advice. She wants the neighborhood to be safe again.

"Just the kind of place where families live," she said.

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