We will build a fully enclosed building shell with all county approved inspections. The shell will have its roof, outside siding, windows, doors, interior framing, rough wiring and rough plumbing. You will provide painting, sheetrock, flooring, cabinets, counter tops, light fixtures, plumbing fixtures, and obtain the final inspections for electrical and plumbing and Helco. For any of our floor-plans, deduct 20% off the price. Want a custom interior? This is an excellent way to get exactly what you want.
As another option, we can help you save money if you want to be an owner builder. We'll reduce our price by the type of work you can handle on your own - so you'll be paid what our sub-contractors normally would be paid. We will still be the contractor responsible for the project, and you'll get all the benefits and savings, but will avoid the pitfalls of taking responsibility for the whole construction project.
Please, Don't Let this Happen to You...
Posted on: Tuesday, December 11, 2007
Hawaii builder's woes put halt to 132 homes
By Kevin Dayton
Advertiser Big Island Bureau
The financial woes of a Big Island developer who may be on the verge of bankruptcy has halted work on dozens of homes being built for the state Department of Hawaiian Home Lands on three islands.
Fred T. Yamashiro, president of Fredco Inc., said he mistakenly underbid the projects several years ago, and has told Hawaiian Homes officials his company won't be able to complete work on 132 lots at various stages of development on the Big Island, Kaua'i and Lana'i.
News of Fredco's financial problems alarmed and angered homesteaders, including some who have borrowed hundreds of thousands of dollars and delivered money to Fredco to have their homes built. Those borrowers are still required to make payments on the mortgages, but can't move into their homes because they aren't finished.
"Everyone is disappointed, because they're working two or three jobs to pay both a mortgage and rent, and still have no home," said Joe Lee Hong, whose four-bedroom house stands unfinished in a Hawaiian Homes subdivision in Kaumana on the Big Island. "These are good people, hard working people."
After many months of construction delays, Lee Hong said, the work crew at his house finally walked off the job last week, telling him they were leaving because they weren't being paid. Lee Hong estimated his house is still one to two months away from completion.
"We've been put through an emotional roller coaster the whole time, and now we sit with debt, and no home," he said.
Hawaiian Homes Commission Chairman Micah Kane said responsibility for completing construction now falls to bonding company Hardware Hawai'i, but Kane said Hawaiian Homes will be "engaged" in solving the problem because it was Hawaiian Homes that selected Fredco to develop the projects.
Laura Henderson, a sergeant with the state Department of Public Safety, stood outside her unfinished Kaumana home pointing out the bare plywood on her roof that is beginning to crack and sag in the Hilo rain. Water from the leaking roof had ponded on the wood floor of the home.
"This our dream, we waited, and now look at it," said Henderson. Henderson is building the home with her longtime partner Julia Ke, who is Hawaiian.
Fredco was the developer for a dozen Hawaiian Homes units on Lana'i, and another 29 on Kaua'i. On the Big Island, the company was developer for 37 homes in Kaumana, another 17 in Pana'ewa, and 37 in Lalamilo in West Hawai'i.
The homesteaders acknowledge the homes were very inexpensive by Hawai'i standards, with Lee Hong paying about $200,000 for a four-bedroom house with a fireplace, and Henderson and her partner paying $160,000 for a three-bedroom.
Yamashiro said Friday he ran into problems because he bid the project two or three years ago at $125 per square foot, and increases in construction materials and labor costs have pushed his costs to $165 per square foot today.
"Simple math, I'm over budget $40 a square foot," he said. "That's it in a nutshell. It's like I tell my wife, in our business, if we get a good project, we make a lot of money, but you can lose a lot of money.
"I underbid, and I take full responsibility," he said.
Hawaiian Homes is the largest developer of affordable homes in the state today, with about 2,000 units in the planning stages or various phases of development, Kane said. The department uses income from its commercial and other leases to finance housing development on other HHL lands. It then leases housing plots to Native Hawaiians for 99-year terms and they build homes on the land.
The agency has also been receiving $30 million a year in payments from state government under a settlement to compensate HHL for historic uses of Hawaiian Home Lands by the state and territorial governments. Those payments have allowed HHL to dramatically accelerate its home building program.
Kane said the department selected Fredco because Yamashiro's Menehune Development Co. had a good track record with the department dating back to 1998, building more than 250 homes in Kona and on O'ahu.
Yamashiro is well known on the Big Island and served for years on the Big Island Water Board after he was appointed by former Mayor Stephen Yamashiro, who is no relation. Fred Yamashiro is currently a member of the county Liquor Commission appointed by Big Island Mayor Harry Kim.
Kane said all of the projects have already been delayed to varying degrees, with Kaumana already delayed by a year. The projects are again stalled while the problem with Fredco is sorted out, but Kane said he expects to see movement soon.
"The bonding company is engaging. They are in discussion with the beneficiaries. The responsibility now falls on the bonding company to complete the projects, and we're going to assure that that happens," Kane said.
Technically the homesteaders have contracts with Fredco, and the bonding company is now required to fulfill those contracts, but Kane said the Department of Hawaiian Homelands will be involved.
"We're going to fulfill our obligations," Kane said. "We put our stamp of approval that this contractor was going to fulfill his obligations, and so I think we have a moral obligation to our families, and we're not going to sidestep that in any way shape or form."
He said one of the challenges has been to determine how the department can help speed progress on the homebuilding without releasing any of the players from their financial obligations to the homesteaders.
LEGAL ACTION FEARED
Henderson and Lee Hong both said they have been trying to reach Hardware Hawaii to find out when work can resume, but said they have received no response apart from a letter asking for records. The letter from Hardware Hawaii advised the lessees that "Fredco has yet to provide access to records" for the project.
Representatives of Hardware Hawai'i on the Big Island referred questions to a company official on O'ahu who did not return calls Friday.
Alan Murakami, litigation director for the Native Hawaiian Legal Corp., said inquiries have been trickling in from homesteaders caught up in the Fredco collapse, and said the staff is concerned there may be an "onslaught" of demand for legal services by lessees.
In one case, a homesteader at Kekaha was originally given a completion date of 2005 for a house, which was later moved to 2006. The developer took a draw of $37,000 to finance work on the house, but has only completed the foundation. The lessee, meanwhile, gave up a rental unit because he thought he would have his own home by now.
Murakami questioned the HHL strategy that required homesteaders to use a contractor such as Fredco that was selected by HHL, while at the same time HHL set up legal arrangements where the contracts to build the homes are all between the homesteaders and Fredco.
That placed the greatest risks on the lessees when it is the Department of Hawaiian Home Lands that has a public trust obligation to the homesteaders, Murakami said.
"There is something very questionable about that," Murakami said, adding that the department needs to be "accountable" for the arrangement.
Kane said that arrangement has worked in the past, "but in this case it obviously didn't." In hindsight, it would have been best if the developer of these projects had been legally bound to the department instead of the lessees, he said.
"I want to make sure that people don't feel that we're trying to skate on our responsibility," he said. "We're going to see it through."
Kane said the project delays prompted Hawaiian Homes to take a closer look at Fredco about four months ago, and on Nov. 26 the company notified Hawaiian Homes that workers would be pulled off the projects. Kane said he interpreted that to mean Fredco did not have the money to pay for those crews.
FEE HIKE DENIED
Kane said Fredco recently asked for permission to charge more for the homes, but Hawaiian Homes refused that request.
On Nov. 30 the company notified the bonding company that it would not be able to complete the projects. "We have met with Fredco. He was trying to make it work, and I think it just kind of snowballed on him," Kane said.
Hawaiian Homes has had meetings of homesteaders to explain what is happening, and Lee Hong said many were angry.
Henderson said she is stuck paying both her mortgage for her home in Glenwood, which she plans to sell to move to Hilo, and for the unfinished house in Kaumana. "This is wrong," she said. "This has been a nightmare."
Lee Hong asked early in the process if he could select his own contractor, and Hawaiian Homes told him he had to use Fredco. That means Hawaiian Homes now has a responsibility to make sure the projects are promptly finished even if the legal contracts are technically between Fredco and the homesteaders, he said.
"Given the opportunity, I would have had a home built a year ago, I would have been living in it a year ago," Lee Hong said. "The people are not asking for anything but to get what they paid for."
Reach Kevin Dayton at firstname.lastname@example.org.
• • •
Wednesday, May 28, 2008 10:24 AM HST
Bankrupt builder let them rot; agency vows new homes before Christmas
by Jason Armstrong
Tribune-Herald Staff Writer
"We would go up there and cry -- just stand in there and cry," Henderson said of the dwelling in which she and Native Hawaiian beneficiary Julia Ke had planned to celebrate last Christmas.
All that's left now are concrete footings
and the hope that a replacement home will be ready this coming Christmas.
"At this point, you got to have faith in God," Henderson said. "It can't be any worse; it can only get better."
The couple's Kaumana home was one of 12 along Uhaloa Road that the state Department of Hawaiian Home Lands had razed before they were ever inhabited.
The demolition was prompted by widespread mold, which was discovered after the unfinished dwellings sat vacant following the builder's bankruptcy last December.
"We decided the best thing to do was just tear it (down) and start over again, and that's what we did," said Lloyd Yonenaka, DHHL spokesman.
All the affected homesteaders will get replacement houses within five months or so, he said.
"Our commitment to our beneficiaries, from the very beginning, was to complete those homes as soon as possible," Yonenaka said. "We're going to build these homes as quickly as possible, and we're going to stick to the original price."
Any cost increases will be absorbed by the DHHL or the bonding company, Yonenaka said.
Coastal Construction has been hired to do the new housing project and should start the work any day, he said.
"Obviously, it's a very personal thing when a house is so close to being done. I know many of them were sad about it," Yonenaka said of the affected lessees. "From our perspective, the department is doing everything it can to live up to its obligations to provide homes for these people."
Judith and Eugene Mariano sold their Washington home and moved back to Hawaii in 2005 after being told their new Hilo house would be finished by the end of 2006.
"It was almost completed," Judy Mariano said of the dwelling that became rubble. "When we saw the house going down, it was kind of heartbreaking."
The DHHL has reimbursed the couple for the cost of storing their home furnishings, but not for the capital gains tax they paid due to the inability to buy a replacement home quickly, she said.
"It's been a really hard ride for us because we've been living out of suitcases (since) moving from Washington state," she said.
The homes were abandoned when builder Fredco Inc. filed for bankruptcy last December. Owner Fred Yamashiro, hired by the DHHL to build dozens of lessees' homes on Hawaii Island, Kauai and Lanai, also filed for personal bankruptcy.
Hardware Hawaii Inc. was the company bonded to finish the project if Yamashiro -- no relation to former Mayor Stephen Yamashiro -- couldn't.
But the company was slow in taking over the construction, Yonenaka said.
"We were very frustrated in the beginning because we couldn't move fast enough," he said.
That resulted in the three- and four-bedroom, two-bathroom homes sitting unprotected from the punishing weather.
Henderson said her house had a roof, but no shingles or other waterproofing material. The result, she said, was that it filled with 3 inches of water for months, which attracted small critters that swam throughout the 1,248-square-foot structure.
"It just sat there full of water," she said.
Testing revealed mold, prompting the DHHL to offer lessees a new home on the same lot, the chance to accept their dwelling as-is, or to have it removed and be responsible for rebuilding.
Henderson said she and Ke took the first option. That means she won't get as much money for her Fern Forest home because property values have dropped from a year ago when she had planned to sell.
The situation has not left Henderson bitter, however.
"It's been a very stressful and long ordeal, but I think in the end we're going to get a better house," she said.
The new home will feature a propane fireplace, rather than a wood-burning one, and be built in the preferred location, she said.
"We've been through hell and back, but I think they're doing it right now," Henderson said. "At this point, just build the house right, and we'll be OK."
For the Hendersons and the Marianos, that means better workmanship and materials.
"There was a lot more issues other than the fungus going on with our home," Henderson said.
She said the original builder covered over broken siding, installed "defective" windows with improperly placed weep holes and used the wrong size nails.
Eugene Mariano had similar complaints.
Screws protruded from the siding, while steps were too narrow and sagged under his weight, he said.
"Really shoddy work," he said.
Asked how he feels about having his home rebuilt, Eugene Mariano said, "I think it's a blessing. I feel pretty good about this new contractor."
He won't let Coastal Construction get away with poor quality work.
"I'll be there to watch anyway," he said. "I have a lot of confidence in Hawaiian Homes, and I'm sure they're going to make things pono (right)."
Judith Mariano also praised the department's decision to take over the project.
"We're fine with where it's going, because at least we see the light at the end of the tunnel," she said. "Now it's looking better, and Hawaiian Homes has been backing us up all the time. They've been wonderful.
Homes built for DHHL lessees in Hilo's Panaewa neighborhood were tested and found to be mold-free, Yonenaka said.
The mold turned up only on the post-and-pier construction used in Kaumana, he added, noting the Panaewa dwellings were built on concrete slabs.
E-mail Jason Armstrong at email@example.com.
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Here's another story from Joe B...
"I wanted to save money on building our new home, and thought my wife and I and some friends could do a lot of the work since we've had experience in remodeling homes. I got the permits and arranged for the site preparation and work started. The dozer operator told us that there was a big lava tube that he couldn't see until the vegetation got uncovered, and his dozer needed repairs before he could finish. Because our lot was only 10,000 sq feet, he couldn't push any more rocks around without creating a drainage problem, so he needed to fill the area with rocks. That cost us 20 truck loads at $400 per truck, or an additional $8,000."
"If I had gone with Kavana in the first place, they would have taken the hit on surprises like this, not me." [return]
Kavana Homes has built over 500 new homes in Hawaii since 1975 and we invite you to check out this website to learn more about us and living on our island. Aloha!
Call Elaine at 808-989-0894 or mailto:firstname.lastname@example.org