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Meanwhile, Back at the Ranch . . . lobbyists try to bushwhack buyers of faulty homes

Myra Goldstein's house is falling down, falling down, falling down. The windows leak. Electrical outlets don't work. Outside, stucco is cracking. Inside, drywall is flaking. Upstairs, the balcony is rotting and sagging. Downstairs, a crack in the foundation runs the length of the house, moving the house and, among other things, making the cabinets sag. When Goldstein takes a large metal pot out of a kitchen cabinet, the shelf above it gives way, and a pile of Pyrex crashes to the floor.

"I'm telling you, this is the house from hell," she says above the din.
Sounds like a job for This Old House, which is odd, since Goldstein bought the 3,200-square-foot house new, in 1990, for a hefty $240,000. The views from her lot, which is in a subdivision called Vistana, off Pima Road near Dynamite Road in north Scottsdale, are stunning. The home itself is beautiful--high ceilings, fireplace, kitchen island--and tastefully decorated.

But from the day she moved in, there have been problems, Goldstein says. At her insistence, the builder, UDC, has repeatedly tried to fix them. Sort of. UDC patches the cracks and replaces the windows, but the problems never go away.

Drive around Vistana, and you'll quickly notice that other houses are falling apart, too. Huge cracks are patched on the house across the street from Goldstein's. After years of complaining, Goldstein and about 130 of her neighbors finally filed a class-action lawsuit against the homebuilder, demanding real repairs, rather than the slapdash fix-ups they've been getting. UDC has since been purchased by Shea Homes. The lawsuit is in its early stages. No settlement has been reached.

Eric Sachrison, the lawyer for the Vistana residents, says it could cost as much as $300,000 to properly repair each home.

Goldstein doesn't want to move. In any case, she'd have trouble selling a crumbling house.

"It's a shame," she says. "I wake up every morning and say, 'Please, God, nothing should happen today.'"

Unfortunately, Vistana is hardly unique.
Lawyers like Eric Sachrison who sue homebuilders for a living--especially lawyers living in Maricopa County, where scores of new homes are completed every day--will send their kids to tony colleges on the fees they collect. As more homes are built, complaints mount. When the complaints aren't resolved, homeowners sue.

Last year, fed up with the lawsuits, Arizona homebuilders tried to get a law passed that would have granted them broad immunity from prosecution over allegedly shoddy construction.

This bill would have saved the homebuilders many millions of dollars. It would have set a precedent for other states to follow. This was a big, big deal, and the homebuilders treated it as such. The homebuilders have their own lobbying group, the Home Builders Association of Central Arizona, and their own state lobbyist, Spencer Kamps, but this was a job for Bob Fannin.

It was a classic case of the Super Lobbyist at work. The homebuilders drafted their own legislation and convinced three high-powered Republican senators--Marc Spitzer, Tom Patterson and Rusty Bowers--to introduce it; they worked behind the scenes, trying, by one count, six different ways to cram the bill through the system.

They did everything right, but they still lost. And when they did, the homebuilders retaliated against Phoenix Republican Representative Barry Wong, one of the legislators who refused to play along. The homebuilders' political action committee did an anti-Wong mailing to voters in his district a few days before September's primary. Wong won anyway, but the mailing served as a signal to all legislators who consider crossing big business.

The so-called "Home Builders' Immunity Act," Senate Bill 1401, would have limited the warranty on most work to a year from purchase. It would have prevented homeowner associations from suing on behalf of individual homeowners. Under the bill, homeowners wouldn't have been able to collect punitive damages or damages for inconvenience or, possibly, lawyers fees--even in successful cases.

In defending their bill, the homebuilders repeatedly spoke of the situation in California, where a housing boom has spawned thousands of "frivolous" lawsuits against homebuilders. The cost of defending themselves has forced homebuilders to boost home prices, they say.

The homebuilders asked for the moon, when it might have been more prudent to request a few meteors, their opponents say. The bill was so draconian it was easy to get homeowners like Myra Goldstein riled up about it. Most likely, it would have taken away her chance of getting her home fixed correctly.

"It was horrible," recalls Senator Chris Cummiskey, a Phoenix Democrat. "Basically, it took away any recourse that an individual homeowner would have in going after the contractor for faulty craftsmanship on their home."

Accompanying Fannin when the bill was unveiled before the Senate Finance Committee were other lawyer/lobbyists: Jeff Westfall, an attorney for Continental Homes, and Jeff Sandquist, Brad Holm and Kevin O'Malley, who along with Fannin represent Del Webb and the Home Builders Association. O'Malley, an attorney with Gallagher and Kennedy, was identified as the bill's author.

 

There was no opposition at the hearing. Fannin, et al., had done their job well, keeping the bill so quiet that prospective opponents hadn't heard about it. Amazingly, it sailed through committee, then passed the full Senate, 22-8, before anyone noticed. Then a story popped up in a daily newspaper, and Eric Sachrison called Judith Connell, a veteran lobbyist but not a hired gun of Fannin's caliber. She signed on as a lobbyist for "Homeowners for Quality Housing," and, along with lobbyists for homeowner associations, fought the bill in the House.

Connell was not optimistic, recalling, "I thought at the time, because it had already passed the Senate, it was a Mack truck heading on for its destination. It looked like it was going to sail through."

She knew she had to kill the bill in the House, or risk it becoming law. Some of Governor Jane Dee Hull's best friends are homebuilders (Phil Dion, CEO of Del Webb, chaired Hull's campaign finance committee). "We did not want a bill getting to her," Connell says of Hull.

In her time at the Capitol, Connell has represented a number of groups, including Arizona Right to Life and the Healthy Arizona Coalition. Recently, she represented the Arizona Biltmore Estates and Villages Association in its effort to preserve the Adobe Golf Course from development. She now represents Rio Salado Crossing, the massive football stadium project.

Instead of using money and influence to get what her client wants, Connell uses a rather novel approach--the self-described "political grassroots specialist" goes public. She launched a letter-writing-phone-calling-fax-sending-e-mailing campaign, urging homeowners to contact their elected representatives and make noise about SB1401.

It worked. At the House, SB1401 first landed in the lap of Phoenix Representative Barry Wong, chairman of the House Committee on Economic Development, International Trade and Tourism. After speaking with the opposition, Wong refused to hear the bill.

"It's a David and Goliath thing. The individual homeowner is already at a disadvantage as one person versus the huge company," Wong says now.

Wong says he warned Representative Bill McGibbon, chairman of the House Ways and Means Committee, who also refused to hear the bill.

Fannin and Co. were undeterred.
By Connell's count, different versions of the bill popped up a half-dozen times before the end of the session. In the waning days, she recalls, House Speaker Jeff Groscost announced that if Fannin could come up with the 31 votes necessary for passage in the House, he'd bypass the routine committee process and let the bill come to the floor, attached as a rider to a bill passed out of a conference committee.

But Fannin never got the votes.

Barry Wong almost paid the price for defying a Super Lobbyist and his client. On September 3, just five days before the primary, he received a certified letter from the Home Builders Association of Central Arizona, including a postcard they mailed to Republicans in his district--the site, by the way, of one of the most heated primary battles in the state. Incumbents Wong and Sue Gerard faced perennial challenger Jerry Harris.

The postcard reiterated the Arizona Republic's endorsement of Harris and Gerard, and quoted the paper: "Barry Wong . . . has been something of a disappointment . . . he has often been indecisive and exhibits a lack of consistent principles. . . ."

The mailing cost the homebuilders association $5,832. It was legal, but Wong was peeved.

Wong has taken his time returning a call from Spencer Kamps, the homebuilders' full-time lobbyist. He says he's waiting for a call from Connie Wilhelm-Garcia, executive director of the Home Builders Association of Central Arizona.

Of Wilhelm-Garcia, Wong says, "She's made no direct overtures to try to talk to me. Instead, she sends someone who's second or third in line. That tells me they're not very interested in making amends."

Wilhelm-Garcia says Wong's inaction on SB1401 was not her group's sole motivation for the mailing. She sees it as pro-Gerard and Harris, not anti-Wong.

In any event, Wilhelm-Garcia says, the homebuilders will not reintroduce their immunity act this year. Instead, she says, the group's bill--authored by the homebuilders' lobbyists--would merely require homeowner associations to include homeowners in the decision-making process before filing lawsuits on their behalf and to take other steps to keep homeowners informed.

"It won't have anything to do with what we did last year at all," Wilhelm-Garcia promises.

Senate Bill 1401 was a rare case in which a Super Lobbyist was outgunned by citizens' groups. Barry Wong gets credit for making a consumer-friendly issue, but it wasn't so hard: He had lobbyists like Judith Connell outlining the arguments and lining up the opponents.

 

Wong insists, however, that he would have taken the side of the little guy, either way.

"Whether it's a small businessperson or the individual on the street, they don't have the clout or the lobbying power," he says. "I'm their lobbyist. That's why they elect me."

The Players
And their contributions to statewide and legislative candidates

For the homebuilders . . .

Super Lobbyist Bob Fannin, Quarles and Brady. He gave $15,435 in direct and in-kind contributions. His clients on SB4101 and their contributions: Del Webb PAC: $43,540; Del Webb employees: $42,399; Home Builders Association of Central Arizona PAC: $26,059; Home Builders Association of Central Arizona employees: $3,015.

Kevin O'Malley, Gallagher and Kennedy. He gave $790. Gallagher and Kennedy's PAC gave $7,175.

Other home builders, their PACs and employees: Estes Homes: $1,150; Robson Communities: $27,020; Southern Arizona Home Builders: $750. Shea: $995; Continental: $1,985; UDC: $2,610.

For the homeowners . . .

Judith Connell, Homeowners for Quality Housing. Connell gave $418. (Homeowners for Quality Housing does not have a PAC.) Her clients and their contributions: Arizona Right to Life: $1,335.

Tom Dorn, Community Association Institute. He gave $1,150. Other employees of Dorn's consulting firm, Jamieson/Guttierez, gave $6,835.

Janice Goldstein, Arizona Trial Lawyers Association. She gave $3,140. The trial lawyers PAC gave $3,550.


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