Broken promises

After three years in the Navy, Ruth Velazquez-Scott says she saw enough of the world. When she got out, she wanted to find a place where she and her husband, George, could settle down and raise a family.

They moved into a small one-bedroom apartment but quickly outgrew it. The Scotts wanted a permanent home -- a place where they could grow old together. They wanted the American dream. For a while, they thought they had found it.

It happened by accident. One afternoon after church, they decided to drive by their old home: the former Naval Training Center Annex, a parcel of property whose location close to Orlando International Airport was several miles removed from the east Orlando training center its residents served. The Scotts each had lived at the annex while they were in the Navy, and they wondered what had become of the former Capeheart Housing complex.

It had been five years since the federal government ordered the training center closed as part of military spending cutbacks. No one had lived in these homes for nearly three years, and the Scotts expected to find the 657 structures in utter disrepair.

What they found astounded them. They saw construction; they saw progress. "Welcome to the Villages of Southport," a sign read. The promise exceeded Scott's expectations. "In a visionary move," the sales brochure read, "the City of Orlando entered into a development partnership with CED Construction and the Orlando Neighborhood Improvement Corporation to bring this community and its homes back to the all-American neighborhood it once was."

Southport continued the city's effort to increase home ownership, she was told. The homes were going to be renovated and resold at below-market value. "I was so excited that the city was doing something [with the annex]," says Scott, who was hooked by the sales presentation. "There were so many things I loved."

CED was offering home buyers a one-year warranty: If you had a problem, they'd fix it. After all, the houses were renovations, and CED expected that some homeowners would find glitches. But they promised to work with homeowners to settle problems quickly. And at least the houses had all-new wiring and plumbing, she was told.

For $73,000, she was offered a two-bedroom home in a community that promised cheap lawn care and maintenance, two swimming pools, a strong homeowners association, a community center and a police substation, among other attributes.

The Scotts wasted no time. They filled out the paperwork the next day. The couple's third wedding anniversary was upcoming, and they couldn't think of a better way to celebrate than being in their own home.

But Southport's charm quickly faded, Scott says.

"We knew they weren't doing things right," Scott says. The construction work was shoddy, and the residents' problems mounted on a daily basis. Paint peeled from the walls and baseboards; the "new plumbing" leaked and spewed out rusty water; the "new wiring" was improperly grounded, causing outlets to spark and burn out; one homeowner pulled a trash bag full of soot and dust out of their air vent -- days after CED supposedly cleaned it.

Scott also was angered by CED's seeming indifference to her problems. Her two-week "punchlist" of problems took more than six months to fix -- and then only after she harassed CED officials.

CED lied to her, she says. The all-new wiring she was promised turned out to mean new wiring on the outside of the house, not the inside. The police and emergency medical service substation that she was told to expect now will never exist.

In February, the Scotts and 85 other Southport residents took a petition before Orlando Mayor Glenda Hood, begging the city to pressure CED to fulfill its promises. In the five months since, they've seen little improvement. They wonder why the city -- which once stood so firmly behind the project -- has yet to help them.

By the summer of 1995, the Naval Training Center was out of business, and most of Capeheart's residents had pulled out, leaving Orlando with a deserted monument to an era of military spending. The city already was in negotiations with the Navy to buy the base property, and discussions began about what to do with it.

The 1,100 acres at the base's core later would be awarded to developers who pledged to re-create a "traditional" neighborhood of parks, front porches and curving brick streets. From the start, however, the city wanted to transform the distant annex -- specifically Capeheart Housing -- into a "market value" subdivision, says city spokesman Jim DeSimone. In September 1996 the city began soliciting proposals to redevelop Capeheart. An independent selection committee was established to judge the proposals. The selection was to be made based both on the developer's plan and on the price they were willing to pay the city for the property.

After more than three years of negotiations, the deal struck between the city and the federal government in November 1997 turned over the annex for $1.8 million. Having already selected a developer, the city in turn sold the property for $3.2 million to the Villages of Southport Ltd., a joint venture of CED Construction and the Orlando Neighborhood Improvement Corporation.

It took less than a year for Southport to open the first of its five phases, with Mayor Hood and Congressman Bill McCollum on hand for the ribbon-cutting ceremony. Construction continued on the rest of the project, its rapid pace exceeded only by Southport's sales; with just 75 homes left to sell, the project claims hundreds of potential buyers on a waiting list.

Yet with the ensuing problems and the city's apparent lack of interest in forcing Southport to address them, residents are revisiting the agreement responsible for turning the property over for development.

CED Construction Inc. is a Maitland-based multibillion-dollar corporation that builds affordable housing. Using tax credits and tax-exempt bond proceeds, they've developed more than a dozen lower-income apartment complexes throughout the nation.

Its partner in Southport, the Orlando Neighborhood Improvement Corporation (ONIC), was started by the city in 1984 as a nonprofit organization dedicated to developing low-income housing projects locally using federal, state and local grants. ONIC operated as an extension of the city until 1991, when the corporation become independent. Still, their relationship to city government has remained at less than an arm's length; until 1997, two Orlando officials -- city planner Richard Bernhardt, now retired, and city finance director G. Michael Miller -- sat on ONIC's board of directors.

ONIC was active from the start in redevelopment plans for the Naval annex, and initially teamed with the Coalition for the Homeless to propose a resident hotel on the site. When that project fell by the wayside, ONIC turned its attention to developing affordable housing. It joined forces with Professional Management Inc. But when the latter's South Florida backers began waffling, ONIC backed out.

Then CED came along, touting its financial resources and experience with low-income housing. ONIC quickly jumped on board.

CED/ONIC's bid offered $3 million to the city, and pledged $26,420 in renovation expenses per unit, with a resale value of about $60,000. CED would handle construction while ONIC worked to help buyers secure mortgages and receive down-payment assistance. That was good enough for the city's selection committee, which in October 1996 awarded the development contract to the Southport partners.

They were not, however, the only bidder -- or even the highest one. McCoy Annex Community Redevelopment Venture Inc., of Kissimmee, offered to pay the city nearly $6 million for development rights, and pledged comparable repairs and resale prices. A third bidder, Creative Choice Homes Inc., of Palm Beach Gardens, offered $5.5 million with a pledge of more repairs and lower resale prices.

The city says it went with Southport because of its planned homeowners association, which for $29 a month offered residents lawn care and maintenance. The city said its goal was to keep the annex from becoming a slum.

Disgruntled Southport residents point to another link. ONIC president Robert Ansley says city officials Bernhardt and Miller left ONIC in February 1997 to avoid the appearance of conflict. But both men were on the board in October 1996 when CED/ONIC won the bid.

Although Bernhardt denies any involvement in the Southport deal, the fact that he left over it fuels residents' unease, and contributes to their sense of abandonment by a local government that they feel promised them more than what they got.

"This is not nearly the windfall profit people think it is," says Tony Martin, sales director for the Villages of Southport. Despite original projections, the developer has put in more than $40,000 in renovations per unit. Most of Southport's homeowners are happy, he adds. "This is the American dream."

As for the unhappy ones: "The first houses -- we learned a lot," he says, referring to problems that arose in the first 60 homes, which is where most of the disgruntled homeowners live. Now he believes that Southport's problems are a thing of the past.

Those first problems grew out of misunderstandings, Martin says. In the initial "excitement" of the project, he concedes, some "inaccurate statements" may have been made. Most notable is one made by CED vice president Louis Shassian, who on TV described the houses as having "new wiring" and "all-new plumbing." Martin says there was never an attempt to deceive; he makes sure home buyers know exactly what they're getting before they buy.

"The project is doing what the city hoped it would," he says.

Even so, the $60,000 resale plan was scrapped. Homes instead started at nearly $70,000 -- a 17 percent increase over the price promised in the proposal. Though advertised as below-market housing, those prices are comparable to similar housing in southern Orange County -- and are, at best, 5 to 10 percent off market value.

That fact alone makes Les Wilson mad. Wilson and his wife, Anne, started the petition to Mayor Hood and led a picket outside Southport's sales office.

Wilson's efforts to improve the situation in Southport have been met with threats and intimidation, he says, adding that CED president Alan Ginsburg once even threatened to turn Southport into a rental community if the protests didn't stop. (Martin says that interpretation reflects a misunderstanding; Ginsburg did not respond to Orlando Weekly's phone calls requesting an interview.)

"We fight and we don't go away," Wilson says. "The thing that's scariest about all of this -- many of these people have no clue what their rights are, and they're getting buried."

To an extent, a private building inspector agrees.

"To burn the builder, you have to burn the city," says inspector Steven Lacey. City inspectors, he suggests, are "just not doing the job." He has inspected two homes in Southport, and says that both homes conformed to building codes -- barely. But he doubts the construction work would pass "efficiency codes," and further says he has concerns about substandard plumbing and electricity.

He blames Southport's problems with its residents on the marketing, which he says is "clear to a point, but not all the way." The promotional video hides some of Southport's flaws behind technical jargon. "Unless you're construction-oriented," he says, "you would not know."

Lacey and fellow inspector Hank Goldberg agree that CED's problem lies in sheer numbers. "The biggest problem you have with these buildings is that they're competitively priced," Goldberg says. "The materials used were not of the best quality." Because of the nature of the project, CED typically awarded bids to the lowest-priced subcontractor, he surmises. "More and more contractors are hiring substandard or unskilled workers to assemble and construct housing with materials that may be less than adequate for the job." And cheaper subcontractors often mean less supervision, he says.

Vince Shanult, CED's warranty specialist, disagrees. "We probably have twice as many, if not three times as many, supervisors as your normal project," he says.

"There's a small handful that's hell-bent on trying to get us to take a 40-year-old home and make it a new home, and that just won't happen," he says. He adds that since he is not involved in sales, he has no direct knowledge of what the buyers were told. "The community is a beautiful community, and I believe they're getting their money's worth," he says.

Wilson says he's not hell-bent on getting anything he wasn't promised. And he was told repeatedly that his home was completely renovated and remodeled. That was why he bought it. And since the city envisioned and backed the project from day one, he says, it's time for the city to step in and help.

But the city isn't obliged to do anything. It has detached itself from CED, says Harry Kaplan, the city's chief negotiator in the Southport deal. "We can't answer for the developer or the homeowner," he says. "The only thing the city said is that it is supposed to meet code."

"These kinds of problems happen in any development," he adds. "The developer certainly is not a knight in shining armor, but he appears to be satisfying this point -- trying to get things done."

Indeed, while the area is under renovation -- as it will be until CED finishes construction -- the city's is poking around to ensure that Southport homes adhere to "life safety" codes, says Frank Billingsley, director of the city's permit department. To that end, Billingsley says he and his staff have regularly inspected Southport's houses. And rather than ignore any problems, "this department has turned its head directly on the project," he says.

That's a hard statement for residents to accept. So they don't. Their unease is magnified by the fact that many residents relied on ONIC to obtain their mortgage and down-payment assistance, and as such have nowhere else to go. But they'll be going to the polls.

"There's a message to Mayor Hood: Election time is coming up," says Wilson. "Twelve hundred votes in Southport will be voting against her."


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