British Columbia installs safeguards for homeowners Faced with construction defects in the 1990s nearly identical to Oregon's now, the province enacted sweeping reforms. If any place in North America foreshadows the potential severity of construction defects in Oregon, it is this similarly drizzly city where a housing boom hit a decade earlier.
British Columbia installs safeguards for homeowners Faced with construction defects in the 1990s nearly identical to Oregon's now, the province enacted sweeping reforms Monday, June 20, 2005 JEFF MANNING VANCOUVER, British Columbia -- If any place in North America foreshadows the potential severity of construction defects in Oregon, it is this similarly drizzly city where a housing boom hit a decade earlier. Vancouver, B.C., was laid low during the late 1990s after it became painfully clear that newer residential condos were rotting and falling apart because of moisture problems. Thousands of buyers faced repairs they couldn't afford while their home values plummeted. More than 700 buildings failed, affecting 65,000 property owners. The city's crisis, with repair costs that have surpassed $1 billion, parallels Oregon's in many ways. Yet it stands in sharp contrast when it comes to solutions.
Unlike the efforts in the Oregon Legislature to protect the building industry, the provincial government in Vancouver adopted an ambitious slate of pro-homeowner policies and tough new construction standards that have helped ease victims' financial losses and restore confidence in the industry. Immigration, particularly from Asia, was a big factor behind British Columbia's housing boom, which started about the time of the Expo '86 world's fair. In a decade, the population climbed 29 percent to 3.8 million. Many of those arrivals moved into new condos, which generally are more affordable than single-family homes in the Vancouver area, where land is at a premium. Developers threw up hundreds of new wood-framed buildings three to five stories high. Many were doomed to fail. The leaky condo ordeal Tony Gioventu, executive director of the Condominium Home Owners' Association, a New Westminster, B.C., homeowner advocacy group, described the classic leaky condo victim: The person bought the condo in the mid-'80s for $129,000. The homeowner association discovered significant water damage in 1997. The market value of the condo instantly dropped to $50,000 -- a 60 percent plunge -- and the owner faced an average $30,000 assessment to repair the damages. "People were underwater immediately," Gioventu said. "Even after their fix, they couldn't recover. The stress, the grief and the terror these people experienced when they lost their life savings . . . for a lot of people, their condos were their retirement plan."
Some went bankrupt. Others simply walked away, handing the keys to the bank. The problems grew to a full-blown scandal, commanding Page One news and a top-level political inquiry. On April 17, 1998, a Commission of Inquiry headed by former British Columbia Premier Dave Barrett began to investigate and look for potential remedies. After months of hearings, the panel issued a scathing indictment of nearly everyone involved in the building industry. The findings echo the litany of problems cited by homeowners, developers and builders in Oregon: Construction quality was stunningly low, and contractors used untrained workers. Builders were using new and cheaper materials that didn't hold up in the region's wet climate. Architects designed buildings that lacked roof overhangs and other basic moisture-protection features. "Premature building envelope failure in British Columbia has become a major economic and social disaster," Barrett said in February 2000. Regulating the industry As consumers lost faith, annual housing starts, which had topped 20,000 at the height of British Columbia's boom in 1993 and 1994, dwindled to an annual low of 8,203 by 2000. Ultimately, the provincial government stepped in to regulate the construction industry. As of July 1, 1999, to get a license, builders were required to show proof they were covered by home warranty insurance before obtaining a building permit. At a minimum, builders must have a policy that will cover moisture damage for five years and structural defects for 10 years. The Homeowner Protection Office, newly created in 1999, funded a raft of research projects to determine what was behind the failures, and it required new construction to be inspected by building envelope specialists.
The Homeowner Protection Office also instituted a financial-aid program for victims. As of May 31, 2005, the office has awarded more than $500 million in low or no-interest loans and grants to homeowners. That's in sharp contrast to the political reaction in Oregon, which has turned into a fight over consumer rights to sue. Things aren't perfect in British Columbia.
A liability insurance shortage persists, particularly for architects and engineers. And even with the government aid, homeowners generally have recovered only 25 percent to 80 percent of repair costs, Gioventu said. Yet, Vancouver's skyline is once again dotted with construction cranes. Engineers and builders have adopted new "rainscreen" designs that, in theory, allow buildings to dry out even when they do leak, preventing damage. Housing starts in the province surpassed 19,000 in 2004, the highest number since 1994. David Ricketts, a Vancouver engineer who helped develop rainscreen technology, predicted his city and the rest of the Northwest will face the fallout from failed buildings for at least 10 more years. His firm, RDH Building Engineering, opened offices in Portland and Seattle in the fall of 2003. Ricketts said a few Oregon builders seem aware of the depth of the building envelope problem, but not all. "Some are in denial that it is systemic," he said. "But it is." Jeff Manning: 503-294-7606;
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