The Meadows at Trinity Crossing, the city’s most ambitious low-cost housing
project, appears to be gasping its last breath. The city has turned off the
electricity to the contractor’s office because of an overdue bill of $627.20.
The workers, who used to number more than a hundred, have gone home. The sales
office is closed. Dozens of houses that used to be located at Bergstrom Air
Force Base sit abandoned, in various stages of disrepair. Liens and lawsuits
rather than nails and sheetrock are the order of the day at the project, which
was designed to capitalize on more than 200 houses formerly owned by the
Department of Defense. On May 29, Paradigm Structures, Inc., the gen-eral contractor on the project,
filed a $2.1 million mechanics and materialman’s lien against the property,
which is owned by Global Southwest Development Inc., the project developer. The
next day, Global sued Paradigm in Travis County District Court, claiming breach
of contract. Global is seeking $2.6 million for “substandard workmanship” and
lost profits. It wants another $1 million in exemplary damages. On June 3,
Paradigm returned the favor, suing Global to foreclose its lien on the 239-acre
property located a half mile or so north of the Walnut Creek Sewage Treatment
plant on FM 969 in far East Austin. The project, which began amid hosannas from
city officials, has deteriorated into what one attorney familiar with the case
calls “the biggest feather-legged bunch of shit you ever heard of.”
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.”
This article appears in June 21 • 1996 and June 21 • 1996 (Cover).