Caltrans to Redo Repairs on Route 2 Homes

For Bill and Charlene Stamps, the chance to buy the house they had long rented was a dream come true. They had expected their landlord, the California Department of Transportation, to demolish the four-bedroom house on North Mariposa Avenue to make way for a linkup of the Glendale and Hollywood freeways through Silver Lake and Echo Park.

Instead, after much controversy, the state abandoned the project in 1975 and later decided to sell to renters, at reasonable prices, many of the properties Caltrans had acquired. Particularly sweet sounding was the state’s promise to pay for renovation of more than 100 single-family homes, including the Stampses’, that had been left to deteriorate while the freeway project was alive.

So the Stampses bought their house in July, 1984, for $34,000. The price was well below market value but within the means of the disabled former plumber and his wife, who is a nurse. The state awarded a $40,000 contract to a construction firm to refurbish the Stampses’ property.

And that is where the dream began to sour, the Stampses say. Caltrans acknowledges that, after years of red tape and another $20,000 in renovation costs, the Stampses’ house still suffers from a sinking foundation, cracking walls, spongy floors and other problems.

“They want to make us feel like we got a hell of a bargain,” Bill Stamps, 48, said. “But, with all the stress we’ve gone through, I’m not sure it is.”

Two years after the sales of the homes in what is called the Route 2 housing corridor, the Stampses and about 30 other families are still complaining about renovations done by state-chosen contractors. The outcry prompted Assemblyman Mike Roos (D-Los Angeles), who represents the area, to request an investigation by the state Auditor General. The resulting report, issued last year, is highly critical of some contractors, Caltrans and the state Department of Housing and Community Development (HCD), which helped administer the program. The report found that contracted work at 16 of 19 homes visited by the audit team last spring was skipped or not done properly.

“I’m not suggesting that anybody took kickbacks. But there was definitely a lack of supervision and inspection,” said Jesse Soto, a state architect’s representative who worked on the investigation. “I know remodeling is difficult, but there is such a thing as giving you your money’s worth.”

As a result, Caltrans is preparing to redo some of the renovation. Repairs to the Stampses’ house, considered to be plagued by the most problems, is expected to cost another $12,000. Renovations on all the homes may cost taxpayers more than $100,000, officials estimate. It is too late, they say, to ask the original contractors to return.

Meanwhile, at least one homeowner has sued the state and others are threatening to do so if the new renovations are not satisfactory.

Some officials say the problems are annoying but minor when the overall achievements of the Route 2 housing program are considered.

“It was very successful in avoiding displacement and in making low-income people homeowners,” said Nancy Lewis, the former program manager for HCD who is now a private housing consultant. “And I think it has really had a very positive effect on the entire area, even beyond the individual homes.”

But Curtis Tucker Jr., an aide to Roos, counters: “The positives of this project were great. People were able to buy nice homes for $30,000. That’s unheard of in today’s market. I’m just saying that it could have been done a heck of a lot better. There didn’t have to be any negatives at all.”

Bill Stamps and other homeowners agree.

“It would have been better if they just sold it to us at a lower price and let us do the work ourselves; make it a real fixer-upper,” Stamps said.

Won’t Walk Out

“I know I got a value and I am not a fool to walk out on $600-a-month house payments,” said Martin Morales, 28, a factory manager who paid $42,548 for his two-bedroom house on McCollum Street. “But, when we see the ceiling about to fall on our heads, we feel kind of ripped off, even for what we paid for it.”

After spending about $27,000 to fix Morales’ house two years ago, Caltrans is now promising to replace rotting wood steps to the backyard with concrete and steel stairs. Caltrans plans to bolster the house’s sagging foundation, which is causing cracks throughout the home.

“I’m not counting on it, but it would be great,” Morales said.

From 1964 to 1975, Caltrans spent about $7 million purchasing more than 250 properties to extend the Glendale Freeway from where it now dumps onto Glendale Boulevard two miles over the hills to the Hollywood Freeway. While awaiting construction, Caltrans rented out the residences, some of which were dilapidated.

In 1975, the controversial freeway extension was killed, and Caltrans prepared to auction off the houses and apartment buildings. But the renters, mainly low-income Latinos who feared displacement, organized. Four years later, the Legislature passed a law written by state Sen. David A. Roberti (D-Los Angeles) that gave tenants a chance, at below-market prices, to buy the homes as individuals or form cooperatives to buy apartments.

Tough Restrictions

Purchase agreements included tough restrictions ensuring that the houses were owner occupied and well maintained, and that no windfall profits were made in any resale. But Caltrans had to provide repairs--eventually totaling $2.5 million--so that the dilapidated, single-family houses could be financed with federally insured mortgages. Repair contracts went to the lowest qualified bidders.

“We were using state funds and we couldn’t necessarily look for the highest quality at any price,” said Lewis, former HCD project manager. “But we think we got reasonable quality work for reasonable expense. . . . The goal was not to provide perfect homes in new condition. The goal was to put the houses in good enough condition that they could be financed and that they would be decent, safe homes.”

Last spring, the auditing team visited 10 houses selected at random and nine others where owners had complained. According to the audit report, issued in September, the state paid $470,733 to repair those 19 houses, sometimes spending more to refurbish the house than residents paid to own it. Of those repairs, $35,192 in work on 16 houses was either not done at all or not completed, the report said.

The problems ranged from sinks improperly installed and windows not weatherproofed to bad foundations left unrepaired and exteriors not sandblasted before repainting.

In one case, the auditor’s inspectors found that foundation posts and girders were improperly installed and “randomly” located under the North Mariposa Avenue home of Shirley Singleton, causing the house to settle. As a result, her fireplace mantle is coming away from the wall and a bathroom wall is splitting, said Singleton, a courier who paid $34,000 for the large, two-story house. The state then paid $26,500 for renovations.

“It’s a mess,” Singleton said.

Caltrans recently sent a contractor to repair an uneven interior staircase, but even that job was botched and must be redone, Caltrans said.

Possibly only two new foundation piers were installed under the Sayre Lane home of Gerald McNeely, even though the contract called for 16, according to reports filed in Sacramento. The foundation has sunk so much recently, said McNeely, a 38-year-old insurance adjuster, that the floor has dropped away from the toilet, leaving it to wobble on its plumbing.

Caltrans said it will soon tell McNeely how much it will pay to fix the foundation and make other repairs, such as replacing dilapidated wooden stairs, that should have been specified in the original contract. This time, Caltrans will let McNeely and other homeowners select the contractors.

The audit report appears to place more of the blame on Caltrans and HCD than on the contractors, since all houses passed state and city inspection before the contractors were paid. Some contractors simply may have followed vaguely worded contracts or verbal orders from state officials, auditors say. The report is sharply critical of record-keeping in the program. Many records have disappeared, and the report found errors in the setting of sales prices for some of the houses.

“We did not find what we judge to be criminal action. But the purpose of our audit was not to look for those things,” said Kurt Sjoberg, chief deputy for the auditor general. “We were, in effect, performing the inspection the state should have performed before it paid and did what it did.”

The auditor general has no enforcement power but requires a response from the audited agency. Caltrans said it has tightened record-keeping on property acquisition for freeway work. Caltrans expects repairs to housing along Route 2, including some that was not called for in original contracts, to be under way by summer.

“They seem to be taking care of this pretty well,” audit manager Steven L. Schutte said.

Nevertheless, Caltrans officials say the audit may have overstated the case. Some items said to have been missing from the rehabilitation work were actually installed and other matters are open to interpretation, according to Conrad Barber, Caltrans deputy district director for right of way.

“If an item was missing, we were wrong to allow the contractor to be paid, “ Barber said. “If it was poor quality of work and didn’t last, that is open to a judgment call and two different people may have different answers. But people are right to expect the property to be in the condition promised in the contract.”

After the audit report was released, Roos sent letters to all single-family Route 2 homeowners, inviting them to forward complaints to Caltrans. That brought the number of complainants to about 30, Barber said.

“I’d have thought that number was normal,” Barber said. “Even if you buy a brand new house, it will have something wrong. Well, these are not new homes.”

But Tucker, Roos’ aide, believes that, if problems were found with 84% of the audited houses, the same percentage holds for all the remaining houses.

Why, then, haven’t more homeowners complained?

“They are afraid to complain. Or they don’t want to be bothered or they think they got a good deal and should keep quiet,” Tucker said.

Dora and Henry Castillo are not afraid to complain. Their fight with Caltrans has become a personal crusade, one they have taken to the courts, the press and even the governor’s office. They love their four-bedroom house on North Mariposa Avenue, which they bought for about $37,000, but dislike what the contractor, Wilshire Diversified, did to it under a $41,000 Caltrans contract.

In a November, 1984, suit filed in Los Angeles Superior Court against the state and the contractor, the Castillos allege that workmen cracked furnace vents, causing carbon monoxide fumes and natural gas to spread through the house. The suit claims that Henry Castillo, a 53-year-old truck driver, was badly injured in 1983 when he fell while pruning a tree from a second-story window. He fell to the ground, the suit alleges, because the window’s guard rail was deficient and cracked. In interviews, the Castillos complained about other items, such as a bulge in their living room wall, crumbling paint and a lopsided garage floor.

“A lot of people have more or less told other people that I’m crazy, that I want something for nothing,” said Dora Castillo, 48, who is a teacher’s aide. “I just want what’s in the contract.”

Caltrans, HCD and Wilshire Diversified--now called Glenfed Development, a Burbank-based subsidiary of Glendale Federal Savings & Loan--all deny the allegations in the Castillos’ lawsuit. Wilshire Diversified, which received more of the Route 2 contracts than any other company, worked on four of the 16 houses that were found by the audit to have problems, state records show.

Company officials did not respond to The Times’ requests for comment.

Westwood Builders of Los Angeles had three of the 16 contracts cited. In an interview, Arnie Dorf, the owner of Westwood Builders, said he knew nothing of the complaints.

“If I’d known about them, I certainly would have rectified them,” Dorf said. He said it is baffling that an audit would be held two or three years after the work was completed, especially since the houses passed city building inspection. “I followed the specifications of the contract,” he said.

Emotional Disputes

Each of the remaining renovations was handled by different firms.

People on both sides concede that home renovations can easily lead to emotional disputes over murky issues of taste. “It’s like judging a divorce,” one official said.

Adding to emotions over the Route 2 corridor is a rule that allows Caltrans to inspect the houses once a year for 30 years. If the houses are poorly maintained, Caltrans can take the houses back. Some owners fear they will be blamed for decay caused by shoddy renovation. That has not happened, Caltrans officials say.

Meanwhile, Schutte, of the auditor general’s office, said he believes that Caltrans learned from the Route 2 experience.

“I’ll just bet that, if they do it again, they will keep better files, better inform the homeowners and make sure the contractors follow the contracts,” he said.