By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
For almost a year, Jerry Holt has worked in bureaucratic limbo as Governor Fife Symington's commissioner of the Arizona Department of Real Estate, running the agency and awaiting word on whether the state Senate will confirm his appointment.
Now, with a hearing on his confirmation likely next week in the Democrat-controlled Senate, Holt, who ran the Republican governor's election campaign in Mohave County, appears bound for choppy political waters.
State Senator Manuel Pena Jr., chairman of the Commerce and Labor Committee that will pass judgment on the confirmation, says Holt will have to explain some of his actions since his appointment.
In response to complaints, the committee is searching department documents to determine whether Holt has been soft on regulation, says Pena, a Democrat from Phoenix. In addition, two sources familiar with the department's inner workings say that the 54-year-old former Mohave County supervisor and real estate appraiser has proven overly kind to the industry he is charged with regulating.
Specifically, Peøn¤a said committee researchers are wondering:
|Why UDC Homes, the Valley's second-largest homebuilder, has been able to avoid paying thousands of dollars in filing fees for paperwork on many of its subdivision projects.
Why three land investors and a broker from Lake Havasu City, Holt's hometown, were barely disciplined for marketing almost 200 properties between 1985 and 1990 without filing any of the legally mandated reports or paperwork with the department.
Why, under Holt's leadership, the department has more highly paid administrators and fewer field investigators than it did when he took over.
Holt defends the department's performance, and says all of the questioned actions were not only legally justified but in the public's best interest.
I think we're giving better service than at any time in the past," Holt says.
Given Arizona's notoriety for land scams-earned mostly in the 1960s and 1970s when worthless desert plots without water, roads or other basic services were being peddled wholesale to unwitting out-of-state buyersÏthe small real estate department Holt heads bears substantial responsibility for protecting consumers.
It oversees licensing of the state's roughly 45,000 real estate brokers and salespeople, administering exams, screening out questionable applicants and making sure those who are licensed stay abreast of developments in real estate law.
Equally important, the department is supposed to keep tabs on developers and land subdividers, making sure they live up to their obligations and promises. The department had its troubles before Holt's arrival. A state auditor general's performance audit, conducted before Holt's appointment and released last September after he took over, blasted the agency.
The audit concluded that the department was not adequately following up on consumer complaints, was meekly enforcing subdivision laws and was guilty of favoritism for granting real estate licenses to departing employees and agency friends who did not meet the minimum legal requirements.
Fresh on the job, Holt promised to fix things. But the two sources, who asked not to be named for fear of professional backlash, say that the fee arrangement with UDC Homes and disciplinary decisions in the Lake Havasu case demonstrate that cozy relations with the industry have gotten worse under Holt.
At issue in the UDC Homes case are the legally mandated public reports" that constitute the backbone of subdivision regulation. They are detailed disclosures of a developer's financial health and intentions. They list all of the services-water, electricity, telephones and so on-that will be available to a buyer and promise that there will be roads, fire hydrants and other necessities.
The reports must be on file with the department, and copies must be given to buyers so they'll know exactly what they're getting into.
Ordinarily, developers must pay either $500 or $250 to file a public report, and an additional $250 fee to amend the report when important changes must be made.
Since last October, a review of department files shows, UDC Homes has been amending dozens of its public reports without paying the usual $250 fee for each one. Instead, one $250 fee was charged to cover amendments that otherwise would have totaled at least $6,000 and possibly more than $13,000.
Were the waived fees a favor to an influential developer? Holt says no. Although the waiver was unusual, Holt says it was granted as part of an agreement to convince UDC to update its reports on multiple subdivisions.
A UDC homebuyer had complained that the company was not fully disclosing the charges for telephone service, Holt says, and the department agreed that the public reports should be amended to reflect the higher fees.
UDC did not feel the higher telephone charges constituted a material change" (the threshold requiring that a report be amended), says Mark Upton, senior vice president of UDC and head of its Arizona operations. Upton says UDC didn't think it should have to go through the expense and time-consuming process of amending 50 or so reports.
Finally, last October, the department agreed to waive the fees if UDC would update its reports. The decision was made for the sake of expediency, Holt says, and actually helped consumers because the updating of the reports was not delayed by months of legal wrangling over the question.
Department files show that while it was updating the telephone-cost information, UDC also made other changes in the reports-such as revising information on water and sewage disposal, electricity and other servicesÏthat might have, in themselves, required amendments. Both Holt and Upton said they were not aware any other changes had been made during the updates.