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Foundation shaky for Andres

Seven months ago, subcontractors for Andres Home Corp. threw a party at a Spring Hill restaurant in a show of support for the home builder and to quell what they called rumors about Andres' financial health. It was billed as a homeowners party, but most of the people who showed up for free drinks and food were other Andres Home subcontractors and employees.

Today, many of the partygoers have filed mechanics' liens against the builder, claiming they have not been paid in months. Others have quit working for the company after not getting paid.

One of the two subcontractors who said he helped foot the bill for the party has been prohibited from obtaining building permits in Hernando County because he allegedly failed to pay suppliers.

And 12-year-old Andres Home _ for years Hernando County's dominant builder _ is in trouble.

Mechanics' liens against the builder, piling up steadily since April, are approaching $100,000.

For most of last week, Andres Home's models in Seven Hills, The Gardens and Pristine Place were closed because salespeople had left the company after not getting paid on time and for other reasons.

Many of the more than 60 houses the company has under construction in those subdivisions and elsewhere were abandoned weeks ago by subcontractors who were not getting paid. One subcontractor went so far as to picket Andres Home's offices Friday after not getting paid in four months.

"They keep telling me I'm going to get put on a list to get paid, but I haven't been," said Jim Mattalina, who picketed Andres on Friday afternoon.

Mattalina said he is owed more than $500 by Andres Home for porcelain repair work his company did in June.

"If they aren't going to pay you, why do they hire you?" Mattalina asked.

Earlier last week, it looked as if Andres Home had found money to pay Mattalina and other subcontractors.

On Tuesday, Gerald "Jerry" Andres announced to subcontractors and creditors that he and the president of Monarch Homes of Hernando County Inc. were discussing financial options that could inject capital into Andres Home.

But just days after the talks began, Monarch Homes president Gene Dunn called them off, saying Andres Home had nothing he wanted.

Andres said Friday that he is looking for other financing for the company and that he has no plans to declare bankruptcy.

"I'm still fighting this thing," he said. "There's still a couple of things in the works."

Andres has said he hopes to get financing and clear up the liens before a scheduled Nov. 13 appearance before the county's Construction Licensing Board for failing to pay subcontractors properly. The board could revoke or suspend his privileges to pull building permits in the county.

"I think that Jerry just got overextended," said Rastus "Red" Pelfrey, president of Mid-Florida Windows, an Andres subcontractor that has filed more than $20,000 worth of liens against the builder. "He just got too many things going at one time."

Rumors hurt

Jerry Andres is a big, mustachioed man of 38 years.

He started Andres Home in 1978 and since then has devoted most of his life to the business.

"My whole life is coming to work in the mornings and going home at night," he said recently.

Andres admittedly is a nervous person, and when things are tough in his business, he shows it. Last week, after the meeting with subcontractors and creditors, the only thing going faster than the pack of cigarettes in his breast pocket were the words coming out of his mouth. He said he hadn't slept properly for some time.

The devotion by Andres to his business has helped make Andres Home the biggest and one of the most profitable home-building companies in the county.

Last year, Andres Home built nearly 200 houses _ more than any other Hernando County-based builder. This year, Andres already has built about 150 houses.

The houses net Andres Home an average profit of 17 percent, Andres said _ substantially better than the average 10 percent to 12 percent profit most builders make. Last year, the company's sales topped $16-million.

But Andres knows how to spend money as well as he knows how to make it.

Before his divorce in August from his wife of eight years, Andres owned a 1986 Ferrari, a 1989 Mercedes-Benz, an antique 1934 Chevrolet, a 1989 BMW and a 1985 Chevrolet Camaro, court records show. He and his wife, Elaine, also jointly owned a house in the exclusive Lake in the Woods subdivision in Spring Hill and two condominiums in Daytona Beach.

Wealth and success naturally invoke envy, and Andres said it is his success as a builder that has resulted in his business' biggest problem _ rumors.

Andres acknowledged that he, like other builders, has been caught in a soft economy that saw new-home starts in Hernando County fall by nearly 25 percent during the third quarter of this year compared with 1989, but he said his problems have been compounded by talk on the street.

"Gossip and rumors are the worst thing in the world," he said. "I've been fighting it for years. I can run my business just fine, but when s--- like this happens, what do you do?"

In March, Andres got so fed up with rumors of his company's demise that he hired the Tampa public relations firm of Smith and Darlington Inc. to help track down the sources of the gossip. Andres threatened to file slander suits against whomever Smith and Darlington found, but none was filed.

Later that month, the subcontractors threw the party for Andres Homes at AJ's in Spring Hill, a popular restaurant for builders working at the nearby Gardens and Seven Hills subdivisions.

Rumors about Andres Home have done far more than stain its reputation, Andres said.

He said he has been told by several of his subcontractors that the only reason they filed liens against him was because they heard he was going to file for bankruptcy any day.

Under the mechanics' lien law, a subcontractor can file liens against a builder only after the builder fails to meet payments as outlined in contracts.

But when rumors about a builder's financial health circulate, the result can be like a run on a bank.

Andres said some subcontractors, worried that his company abruptly might file for bankruptcy and leave them in the cold, filed liens one or two days after they did work for him and did not give him the time outlined in their contracts to pay the bills.

But though subcontractors were asking for money early, banks were not releasing money until they were supposed to under designated draw times as outlined in separate contracts. Therefore, Andres said, he was stuck with coming up with the subcontractors' money ahead of time or letting the liens stand.

Complaints and cuts

Grant Tolbert, the county's building official, started taking note of Andres Home's financial health in mid-August, after Wil Bar Concrete Co. filed liens on 15 Andres Home jobs. Wil Bar claimed it was owed more than $18,500.

The Wil Bar liens were settled a week after they were filed, but by late August more liens and complaints were being lodged against Andres:

On Aug. 20, officials with Buddies Painting called the county's Development Department to say they were owed more than $3,100 by Andres Home.

On Aug. 21, M&M Garage Doors Inc. filed 27 liens against Andres Home, claiming it was owed nearly $8,000. Those liens were satisfied later that month.

On Aug. 23, officials with Cliff's Septic Tank Service called the county's Development Department to say they were owed nearly $9,000.

A pretrial hearing is scheduled for Monday in a small-claims suit filed against Andres Home by Nite Owl Security Co. Officials claim they are owed more than $2,300.

"I agree that once these rumors start flying, it's difficult to get these liens released," said Tolbert, who took over the county's Development Department in July. "But at the same time, we've had some (subcontractors) come in and say they were not paid for 30 days, when they were supposed to be on weekly draws."

Complaints against Andres Home have gotten so bad that Development Department employees have been told to direct calls and questions pertaining to the company to Tolbert. Tolbert said on average he gets about 15 calls a day regarding the builder.

The liens and complaints were not the only thing adding fuel to the fire at Andres Home, however. About the same time the liens were filed, Andres slashed overhead at his company.

Andres Home's middle-management staff has been laid off, and its sales staff has been reduced from 20 people to six.

By the time the cuts were complete, Andres had slashed more than 35 percent of his company's overhead, and its work force stood at about half of what it had been earlier in the year.

With each job cut and each lien filed, Andres said, the talk of his company's demise continued.

Indeed, clerks at the Tampa Division of the U.S. Bankruptcy Court said they have been getting 20 or more calls a day from people asking if Andres Home has filed for bankruptcy protection.

"Once this stuff gets started, it just goes on and on," Andres said. "How do you stop it?"

Andres did stop it _ temporarily _ last week.

After the meeting Tuesday and the disclosure of a possible merger with Monarch Homes, several subcontractors said they would return to Andres Home jobs the next day.

But three days after the meeting in Andres Home's offices, Dunn called Andres to tell him that he no longer was interested.

"There is no arrangement, and there is no longer any under consideration," Dunn said Friday.

"We were looking to see what was in the store, so to speak," Dunn said. "But there's just nothing in the store for us."

"This is all wrong'

In August, Bob and Angela Jacques of Long Island, N.Y., contracted with Andres Home to build an $80,000 home in The Gardens subdivision.

The Jacqueses' son and daughter-in-law had a house built by Andres Home two years earlier and had recommended the builder.

Work on the Jacqueses' house began in September, and the retired couple was supposed to close on the house in November. They sold their home in New York and started renting an apartment there until their Spring Hill house was complete.

Last week, the Jacqueses received notices from two Andres Home subcontractors saying that they had not been paid by the builder for work done on the house.

After checking with their bank, the Jacqueses found that Andres Home already had taken at least two "draws" on their escrow account totaling more than $25,000 that was supposed to be used to pay subcontractors, said Mary Jo Artura, the Jacqueses' daughter-in-law.

The Jacqueses also received a letter from Andres Home last week, Artura said. The letter said that because of a "backlog," their house would not be completed until January.

"Now they're renting a house, they've bought two (plane) tickets to come down here in November, but there is no reason for them to do so," Artura said of her in-laws.

"This is all wrong," she said. "It just is not right."

When a builder the size of Andres Home is in trouble, more than just customers can get hurt.

Dozens of subcontractors could be forced out of work in an already tough new-home market, and other builders could suffer if things at Andres Home do not improve.

"It would certainly give the whole industry a black eye," said Philip Dobson, vice president of the Hernando Builders Association.

"It would probably make everybody scrutinize (the building industry) more closely," he said. "Not only the banks, but the buyers, too."