San Antonio is a relatively poor city, inspite of it’s size. Partly due to few large corporations hq here, partly due to 51% hispanic population and something like 30% illiteracy rate, and bad politics/local government corruption.
There was recently (about a year ago) a neighborhood built for low income residents, and ever since there have been accusations flying about corruption in the bidding/building process, and very poor quality construction. Article in this weekends paper explains a lot: Only two bidders in the process, and one dropped out shortly before the bids were due. Rather than re-start the bidding, the city went ahead and awarded the contract. Federal money is involved, and the federal contracts allow for a profit of only 10%. According to the paper, the profits ranged from 40 to 86%, depending on the numbers used.
They built 247 houses in the 1,200 to 1,500 sf range. The builder was KB Homes, used to be Kaufman & Broad from California, and a major buildeer here of entry level homes with no resale value. According to the paper, the average cost of the 1,200 sf homes was about $26,000 or $22/sf. For the entire project, the total cost of the homes was $7.9 million and the contract price was $17.1 million, for a profit of $9.2 million. I don’t see how that gets to a profit of 86%, but it was a healthy profit no matter how it’s figured.
During an early interview, the develooper said his cost to build was about $39/sf. After the flap started and people began questioning the quality vs cost, he said he mis-stated, and his cost was actually about $48/sf. It will be interesting to see how it all turns out, but knowing San Antoniuo politics nothing will happen other than to award the developer another new contract.
Whenever you are asked if you can do a job, tell’em “Certainly, I can!” Then get busy and find out how to do it. T. Roosevelt
Replies
your builder there is a bit famous, or should I say infamous.
http://kbhomesuck.com/
that's not just some joke web-site, I've seen a bit about them and JLC had a blurb on them not to long ago.
apparently they're not so nice people.
There was a big article in the Houston paper 2-3 weeks ago about their warranty policy. Not news here...they had been on the news several times due to homeowner assn complaints. I know framers who have refused to work for them becuz KB is so production orientated and cheap that they dictate how the houses are to be built, and some framers think they cut too many corners.
Here in San Antonio, they started as Rayco Homes, founded by Ray Ellison after the big war. He built mucho communities of affordable housing for all the military here (we had 5 bases at one time), and they were inexpensive but decent...very entry level but stuff you could live in for a long time. 4-5 years ago they were bought by Kaufman & Broad, who changed the name to KB Homes, and things went to sh1t in a hurry. If I had to step down from my current place, I would consider a double wide before a KB.
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
Edited 4/19/2004 12:06 am ET by Ed Hilton
ed, I don't know to much about them, but any builder that has a dedicated website about how bad they are, well that says something.
what I read in JLC had something about their contracts, there was wording in the contract to state that no home owner could publicly complain about KB homes or any other builder etc...
looks like they lost that one lol
One of the magazine shows had a special on them just lately, showed the web site and talked about the lawsuit that CAG referred to, the one that KB lost.
Frencheys right in that you don't have many of these builders in the upper midwest, certainly aren't any in Iowa. However there are some similar in the suburbs on Chicago. Don't know if you can relate it to the illiteracy rate or not.
There here in the Austin area, I think when I was out visiting CO. they may have been there too.
Regardless where they are their still building the same sh!tty house.
Doug
My 2 cents worth,
I notice that in towns where there is a low illiteracy rate there tends to be a greater percentage of fraud. Here In Minnesota where we have pretty high literacy rates, and a really decent school system fraud is much less common..
Perhaps it's just a northern climate thing or maybe it's a midwest thing but outright open fraud is not all that common..
(That's not to imply that our politicians are any less corrupt than elsewere, simply that they need to be more clever about it here)
It was very common for KB to get sub contractor to bid low as possible, then get them to cut more. Halfway thur the project the subs would walk, leaving behind a lot of free labor and materials. May California framers have been burned by them.
Francois...got your idea, but I think you said it backwards...where there is a low illiteracy rate there tends to be a greater percentage of fraud. I think you meant "high illiteracy rate".
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
Yes I did and thank you for pointing that out to me..