Work Stops on Ghost Town
Meadows Housing Project Shuts Down
By Robert Bryce, Fri., June 21, 1996
While Global and Paradigm fight it out in court, dozens of contractors and materials suppliers have been left unpaid. According to a list of Paradigm's accounts payable, the biggest creditor is 84 Lumber; Paradigm owes the materials supplier nearly $373,000. Richard Brake, the manager of the 84 Lumber store on Hwy. 290 East, confirmed that the debt was close to that amount, but he refused to discuss it any further, saying the matter was being handled by the company's corporate office in Pennsylvania.
Frank Waters, the owner of Austin Ready Electric, an electrical materials supplier and contractor, is owed $53,844. Waters had a crew of ten working full-time at the Meadows project for months. He finally pulled his crews off the job earlier this month when it became clear that he would not be paid any time soon. Waters began filing liens on the property in early May, when Paradigm owed him some $66,000. The liens allowed him to collect more than $12,000 when Global sold two houses at the end of May. Before he pulled all his workers off the project, Waters made certain to protect his investment. "I've got liens on almost everything out there," he said. Despite his financial woes -- "$50,000 is a lot of money to me," Waters said -- he still believes in the project. "I feel like this project should have and still may work if they get the proper people in there that can get in and finish this thing up."
Ed White, a carpenter, is one of many laborers who have been idled by the dispute. White worked at the site from September to mid-May and hopes he will eventually be paid the $2,500 he is owed. But he said, "I worked for four weeks without a paycheck." Last week, he began working at Advanced Micro Devices in order to make ends meet. He, too, said he would go back to work at the site if Paradigm and Global are able to work out their differences.
Waters said it was natural for a project like Meadows to run into problems. "I think they went through a tremendous learning curve. They were taking homes off of slabs and relocating them." Waters and others close to the project said that Paradigm and Global struggled to coordinate building permits and construction approvals. The various approvals slowed the construction, which in turn slowed the home sales. When sales slowed, Global reportedly ran low on cash, which prevented it from paying the contractors.
Inexperience may have played a role. Neither of Global's owners, Keith Wood and Gary Johnson, are experienced in large development projects. Wood was formerly in the insurance business, Johnson in the phone business. Both have had brushes with regulators. On October 5, 1993, the Fort Worth Star-Telegram reported that Wood was fined $125,000 by the state of New Jersey for selling health insurance policies that overstated their benefits to policyholders. New Jersey also forced Wood to surrender his insurance license. A year earlier, the state of Washington took similar action against Wood, and in 1989, the Texas Department of Insurance issued an emergency cease and desist order against the American Healthcare Advisory Association, a group allegedly created by Wood for the purpose of selling group health insurance.
In 1994, Johnson paid a $20,000 fine to the Texas Attorney General for his part in removing telephone equipment from motels. In a March 5, 1994 story, the Austin American-Statesman reported that employees of Johnson's companies, Consolidated Telephone Service and Client Services, were posing as representatives from the Federal Communications Commission, AT&T, or other phone companies in order to gain access to the phone systems of various motels in the Austin area. "Once they got access, the [Consolidated Telephone] employees removed the existing equipment and installed machines from Osiris [a Dallas phone company]," the Statesman reported. "Osiris paid Johnson commissions on calls routed to it from each motel or business where Osiris dialers had been installed, the state said."
Neither Johnson nor Wood could be reached for comment on this story. Wood, who lives in Arlington, has an unlisted phone number. Messages left at Global for Johnson were not returned. Global's attorney, Lee Yeakel, also did not return calls.
Despite Johnson's and Wood's history of run-ins with regulators, their development company became the largest recipient of the homes available for relocation from the former Bergstrom Air Force Base; it eventually was granted rights to nearly half of the 257 units available. At the time the city awarded the Meadows Housing contract, Global Southwest had impressive amounts of land and capital to invest in the project. When construction on the Meadows project started last year, Global was in an enviable position. In addition to receiving the lion's share of the Bergstrom duplexes, the company had several million dollars in financing available from First Interstate bank. (First Interstate is a named defendant in the suit filed by Paradigm against Global on June 3).
Now, work has ground to a halt. More liens will likely be filed on the property in the next few weeks by suppliers and contractors. Global still has 18 homes at Bergstrom that haven't been moved. Bill Cook, the director of the city's Neighborhood Housing and Conservation Office, says the city is now "looking for other parties to move those houses" off of the former air base.
Tom Wakely, president of the non-profit Corporation for Affordable Housing, has criticized the Meadows project in the past for the sardine-like density of its design. He predicted in the February 16 issue of the Chronicle that in 10 years, the project would be a slum. Now that it has stalled, Wakely feels little consolation. "It's almost like we told you so," he said. "I wish it wasn't. It's a sin what they have done out there with that housing when everybody is in such great need of housing."
While various companies and workers have been hurt by the work stoppage, the families who have bought houses and moved into the Meadows project may have the biggest worries. Out of 189 houses at the site, only about two dozen are occupied. And the longer it takes Paradigm and Global to resolve their differences, the greater the chances for the neighborhood to decline due to neglect and vandalism.
Sylvia Rodriguez paid $70,000 for a three-bedroom house on Signal Point in March. She hasn't seen anyone working on the houses at the site for nearly a month. Half a dozen partially finished houses sit across the street from hers. One, recently moved from Bergstrom, still has the steel beams used to relocate the house underneath it. A block away, several homes are partially covered with black plastic. Most are missing large chunks of siding, doors, and windows.
"They haven't finished the grass," said Rodriguez, who shares the house with her son and seven others. "And when it rains, the water takes all the dirt and grass seed down into the street."
Jon Valla, his wife Vikki, and their nine-month-old daughter Kaitlyn, also moved into the Meadows development in March. They paid $74,000 for a three-bedroom house with a white limestone facade that sits on the corner of Trinity Meadows and Alsace. A graduate student in neuroscience at UT, Valla thought he was getting a good deal: no move-in costs and the mortgage payments would be cheaper than rent. Now, he's not so sure. The house across from his front door has a huge mound of dirt in front of it. Three-foot-high weeds grow in the yard. Valla's nearest neighbor lives half a dozen houses up the street. In between sit still more houses in various stages of rehabilitation. Few have doors.
"All in all, I think the sales office was incompetent," Valla said. The biggest problem he noticed was that Global and Paradigm couldn't work together. "With the number of workers they had out here, they shouldn't have had any problems." But, he said, "They couldn't seem to get anything coordinated."
And if he had it to do over again, would Valla buy at Meadows? "No," he said quickly.
Why not? "Look at it," Valla said. "It doesn't look like we are going to get any neighbors any time soon. And we are starting to get worried about property values."
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