Tampa council wants developer of Belmont Heights homes marred by Chinese drywall to pay compensation

TAMPA — Even as a rescue plan to rehab four government-subsidized homes marred by Chinese drywall gets under way, the Tampa City Council wants to go after the company that built the development.

Council members recently told city attorneys to look into what legal action they can take against Michaels Development Co., the master developer of Belmont Heights Estates. The council also plans to ask U.S. Rep. Kathy Castor and U.S. Sens. Marco Rubio and Bill Nelson to ensure that Michaels, an affordable housing developer, be barred from getting new federal contracts because of its refusal to help the families stuck living in toxic homes for about nine years.

Hillsborough County commissioners have approved spending $205,000, mostly from affordable housing funds, to pay for renovation of the homes and temporary accommodations for the four families who were recently moved.

The plan requires the city to roughly match that amount through a federal grant intended for low-income families to make home repairs.

"I hate using more federal dollars that are meant for rehab to be used for something that probably should have been resolved earlier by the folks that built the homes," said council Chairman Mike Suarez, who wants to know why claims for defective construction could not be made on insurance policies required by the developer.

That could be complicated.

As the Belmont Heights master developer, Michaels subcontracted construction of the for-ownership homes to Banner Homes of Florida, a small Tampa company that went bankrupt in 2007.

Michaels has repeatedly refused requests from the Housing Authority to compensate the families, arguing that Banner Homes and the Chinese drywall manufacturer should be liable. The New Jersey company employs 1,800 people and manages 360 rental communities nationwide, including 825 apartments at Belmont Heights Estates. It bills itself as the nation's largest private-sector owner of affordable housing.

"We are not unsympathetic to this situation," said Laura Zaner, Michaels' vice president of marketing. "The fact they went out of business and can't be sued or are not around to fix the problem doesn't necessarily make us responsible."

Michaels is working with the Housing Authority to find vacant apartments for the families to stay in while their homes are repaired, Zaner said. But the families would have to meet federal income qualifications.

The plight of the residents came to light through a Tampa Bay Times report on how 12 families, most living in public housing, unknowingly bought homes made with toxic drywall in 2008 through a Housing Authority homeownership program that included down payment assistance from Tampa.

The fumes from the drywall corroded copper and electrical wiring, damaging air-conditioning units and appliances. Residents complained of nosebleeds, headaches and breathing difficulties.

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Eight of the 12 families walked away from their homes, which went into foreclosure. The remaining families are still making hefty mortgage payments on virtually worthless homes.

Efforts to get compensation from a class-action lawsuit against the state-owned Chinese drywall manufacturer have stalled in federal court because the Chinese government is refusing to cooperate.

It's unclear whether the U.S. Department of Housing and Urban Development would back the city against Michaels. The company has worked with 26 housing authorities across the nation on projects that typically require HUD approval.

But the idea, at least, has the support of Castor.

"The Tampa City Council and the Hillsborough County Commission are right to stand up for our neighbors, and I support their efforts," she said in an email.

Michaels has not been awarded any further Tampa Housing Authority contracts* since the drywall issue came to light, said Leroy Moore, Housing Authority chief operating officer.

Another developer, Lennar Homes, took responsibility when it was discovered that toxic drywall had been installed in homes under construction at the Oaks at Riverview. It worked out a deal to compensate owners and replaced the drywall, Moore said.

Council member Harry Cohen said he is glad the city and county are stepping up, but questioned why it took so long for the residents to get help.

"How can it take eight years to deal with something that has a cumulative health effect on people?" he asked. "I think the lesson is that something should be done when the problem is identified, not waiting for people to figure out whose responsibility it is."

Contact Christopher O'Donnell at codonnell@tampabay.com or (813) 226-3446. Follow @codonnell_Times.

*EDITORS NOTE: This story has been updated to correct an error. The Tampa Housing Authority has not banned Michaels Development Co. from competing for construction projects.