AVALON – Several homeowners took issue Aug. 22 with Avalon Borough Council’s decision to hire a special counsel to appeal sanctions against the construction official. Some wondered why the borough didn’t protect its taxpayers when they didn’t receive state-sanctioned home warranties before being issued certificates of occupancy (CO).
Two homeowners who were customers of Artisan Fine Homes LLC, of Avalon, sought to clarify what one called “misinformation” surrounding the reasons sanctions were issued and the need to hire outside counsel. Another Artisan Fine Homes customer expressed frustration because she has not been able to get anyone to repair a leaking roof, calling the builder “unresponsive.”
It is because 12 homes built by Artisan were not enrolled in the state-approved new home warranty plan that Construction Officer John Tracy was fined $600 and ordered to retake and successfully complete the Construction Official course given by the state Department of Community Affairs (DCA) June 11.
At the Aug. 8 Avalon Borough Council meeting, the hiring of a special counsel to defend Tracy was authorized.
Two other homeowners, who were customers of Avalon Development Group, spoke at the work session questioning the need to hire special counsel when they are still without state-approved warranties, and their builder has had its license revoked by the state and no longer is eligible to participate in the program.
Avalon Development Group LLC, of Bethesda, Md., sold 15 homes between 2011-2017 according to the borough. Four homeowners still do not have the state-sanctioned warranty.
Its license was suspended Jan. 9 after it failed a state directive to obtain the proper warranties for 15 homes in Avalon and one in Ocean City.
According to the notice of violation, they also failed to provide the state with a list of homes built in New Jersey within the last 10 years and their warranty information.
Avalon Development Group was originally fined $249,532.29, which was reduced to $124,766.14 according to the penalty order.
Artisan Fine Homes has been owned by Ed Smith since 1999, specializing in “architecturally designed, custom modular homes,” according to the company’s website.
His brother, Chris, formed Avalon Development Group as a “full-service real estate firm focusing on single-family residential development” according to its website. “Customer satisfaction is our primary goal.”
Tracy “mistakenly accepted” 10-year factory warranties on new modular homes sold and constructed in the borough between 2009-2012, according to an Aug. 3 memo submitted by Business Administrator Scott Wahl to council. Those warranties “evidently” did not meet the state’s requirements for new home warranties.
The state-sanctioned warranties cover major structural defects and are paid for by the builder. The cost is based on a formula that includes the total contract price. In the event of a problem, homeowners have access to the warranty procedures under the state plan or state-approved private warranty plans.
Councilman Charles Covington again recused himself during the home warranty discussion, as he did at the Aug. 8 meeting.
What’s “Public Comments?”
Artisan Fine Homes customer Craig Jordan, of 50th Street, began his comments asking if council was aware of a letter he received from Borough Solicitor Stephen Barse, of Gruccio, Pepper, DeSanto and Ruth, P.A., of Vineland, dated Oct. 21, 2016.
The letter concerned statements Jordan allegedly made about Tracy and issues with his home warranty. Jordan gave the council members a package of information including the letter he referenced and other information in response.
None of the Council members responded to Jordan’s question. However, it prompted a discussion about the purpose of public comments at the meeting, and whether Jordan was “personally attacking” Tracy.
“Public comments are public comments,” Councilwoman Nancy Hudanich said. “Are you going to read a personal email? Is this a personal issue?”
After perusing the documents Jordan provided, she called them “extraneous” and “very toxic to employees in the borough. I don’t understand what you are trying to accomplish.”
She also pointed out the topic was not on the agenda.
Solicitor Steven Fabietti, of the same firm, who was attending the meeting instead of Barse, advised council members not to comment or respond to any comments on the issue because of pending litigation.
Failed HVAC Prompts Actions
Jordan, who was not at the Aug. 8 meeting, said he wanted to give his comments on the actions of the construction official and clarify what happened in terms of his home. He did not plan to read a personal email, nor were his comments “a personal attack.”
In 2012 when his heating, ventilation and air conditioning failed, attempts to have the builder repair it also failed because he was told he had a one-year warranty. “The installer would not come out to repair because he said he hadn’t been paid,” Jordan said.
Efforts to obtain a copy of his warranty from Tracy and the state were also fruitless as nothing was on file.
His CO was given in August 2011.
A manufacturer’s warranty enrollment form supplied by Tracy indicated it didn’t meet New Jersey requirements. Jordan said he informed Tracy about this. Jordan said Tracy told him that the warranty was the one used at that time. “He told me he spoke with Ed Smith and he’d get me the state warranty in a couple of days,” Jordan said.
Within a week or two, Jordan said he received a 2-10 Home Buyers Warranty, which “confused” him, so he contacted the DCA.
“I was told that it was an appliance service plan, not an authorized warranty,” Jordan said. “The DCA said it ordered Ed Smith to get me the proper warranty; he delayed, and she ended up suspending him because of me. I ended up paying for my own repairs.”
Artisan Fine Homes’ certificate of registration was suspended March 26, 2014, as a result of not obtaining the state-sanctioned warranties on Jordan’s and another Avalon home.
According to a Jan. 27, 2014 letter to Ed Smith from the DCA, he was fined originally almost $35,000 in late fees, which was reduced to just under $3,500. He was reinstated May 24, 2014, after reaching a settlement agreement resolving the issue according to the DCA.
Jordan sued Artisan in 2016, he said.
After this happened to him, Jordan filed open public records’ requests with the borough about every home built by Artisan to see if they had the correct warranty.
Upon learning none of them had the proper warranty; he contacted the owners to let them know. “Had I not done so, nobody would have known about the issue,” Jordan pointed out. “I feel council and the construction office should have done that.
“This all could have been cleared when I notified the town in 2013,” he said. “This is 2018, and it’s still not resolved. This mess was caused by the actions of Mr. Tracy and Mr. (James Waldron, assistant business administrator) Waldron. It could have been quickly corrected following state law. This was no mistake.”
Jordan also took issue with comments made Aug. 8 by Waldron, that implied the sanctions against Tracy were the results of two complaints. “There are no complaints,” Jordan said. “The sanctions are the result of a visit by the Regulatory Affairs Department in 2017. There was a peer review that resulted in the sanctions, not my complaint.”
The peer review was May 17. The notice of violation against Tracy is dated June 11.
Jordan also said Waldron was incorrect when he said the borough didn’t know the factory warranties were not the same as the state-approved warranties.
Jordan said Artisan Fine Homes built homes in Stone Harbor and followed the law there regarding the proper home warranties, indicating the builder knew what type of warranty was required by law.
Jordan also said the first modular home built in Avalon for a customer was by Niemann Construction, of North Cape May, in 2006. They obtained the proper warranty as the borough required then.
That CO was signed by Tracy’s predecessor, Salvatore DeSimone.
“Ed Niemann informed me that Sal was insistent the proper home warranty be issued,” he added. “This was not a true statement that you were following prior builds.”
Records Request Uncovers Four More
In June 2017, Jordan filed another open public records request with the borough seeking copies of all COs and warranty registrations for homes built by Avalon Development Group from 2009-2017.
It was during the compilation of this information that the borough realized four homes did not have the proper warranties.
Waldron notified the DCA “immediately,” June 27, 2017, of the issue.
Waldron called it “ironic” that based on the June 2017 letter; the DCA revoked the license of Avalon Development Group when “it could have been referred to the Attorney General.
“The Attorney General could have brought an appropriate action, and these four homeowners would have gotten their warranties,” Waldron said. “By revoking his license, he’s not an eligible builder and can’t get the state warranty.”
Waldron also said the mayor asked him Aug. 20 for a side-by-side comparison of what was covered and what was not under the state program.
When he called the warranty company, he said, “We have 17 homes, and we think we have four without warranties. The DCA thinks two homes don’t have warranties. The resident warranty corporation thinks they are insuring two homes, so I ask you rhetorically, who’s at fault? Tracy?
“The DCA doesn’t know what they are doing. The Attorney General should have been involved and wasn’t involved. The warranty company doesn’t know what they are insuring even though the state has approved what they issued.”
Clouding the Issue
Artisan Fine Homes customer Phil Cooper, of 13th Street, pointed out the construction official was found to have issued 12 COs without the proper warranty and he “didn’t understand why they hired special counsel.
“He was sanctioned because of 12 homes,” Cooper noted. “After that, everything is moot. All the rest is garbage Mr. Waldron brought up to convince you to hire special counsel. It had nothing to do with the homeowners not getting warranties.
“What he tried to do was pile in everything together, blending the stuff about two companies,” he added. “It’s just not true. All the rest of the stuff has nothing to do with the sanctions.”
Cooper said he was volunteering on a project for the mayor when the borough learned about the warranty issue, including the fact that his home did not have an approved one.
He said no one informed him about the issue at the time. “There is no reason the borough didn’t handle it then,” he said. His modular home was built in 2009.
He also pointed out that no one on the council “can question my integrity because I’ve worked on all but one campaign.”
When Cooper eventually found out in May 2016 that he didn’t have the proper warranty, he emailed Tracy and Waldron.
He said initially Tracy gave him an appliance service contract, which supposedly was the state-approved warranty.
He said the contract was dropped off at his home, instead of being mailed “return receipt requested” or “signed if hand-delivered” as required by the state to be valid.
Cooper read an email that Waldron reportedly sent Tracy indicating that “Mr. Cooper has determined the document does not constitute the proper approved warranty. It is an appliance service plan. Please have the builder get the correct and necessary warranty and deliver it to me so you and I can review it before giving it to Mr. Cooper and further damage is done.”
“I’m the third person who had this done,” Cooper said, “and I think it was done on purpose.
“When Avalon doesn’t like what’s been done, they push back, they push back, they push back,” Cooper stressed.
“Sooner or later they end up in a corner, and this time it resulted in sanctions,” he said. “They didn’t provide the right warranties; there’s no argument. He (Waldron) couldn’t come up with a reason so he threw all this other garbage in there. He (Tracy) did wrong. Waldron convinced you with all the rest of the stuff that had absolutely nothing to do with the sanctions.
“I’d like to know why the borough hired special counsel with misinformation,” he asked.
Waldron responded to Cooper, saying Cooper received a proper warranty in less than 90 days of his first email.
“He’s been made whole,” Waldron pointed out. “He has the warranty, paid for by the builder. We considered the matter closed. We’re told no warranty claims have been filed.
“I take exception, Phil,” Waldron said. “You’ve been treated fairly and gotten the complete, thorough prompt response and your comments are just regrettable.”
Homeowner Frustrated
Mary Ann DeLellis, of 42nd Street, said she was a customer of Artisan who had been having problems with a leaking roof but couldn’t get the builder to respond, and other builders wouldn’t repair it because they didn’t build it.
“Where do I go from here?” she asked. “I called DCA and was told I’m not allowed to use other builders; I needed to go through my builder. He doesn’t return phone calls. It’s very frustrating as a homeowner. I’m paying to repair items.”
Fabietti again advised council not to comment because of the pending litigation, noting the borough does not administer the program. The state DCA does.
State Provides Direction
Waldron also pointed out what he called a “dichotomy” because while Tracy is appointed for a term by the mayor with council’s advice and consent, he takes direction from the DCA regarding enforcement of the construction code. After five years, he can be tenured which Tracy does have.
“No one here can tell him to give or withhold a building permit or CO,” Waldron said. “What he does has nothing to do with this borough or elected officials giving him directions.
“Mr. Tracy was instructed not to disclose to homeowners affected about not having the correct warranty by his supervising, licensing authority,” he added. “Like it or not, that’s a fact.”
In a Feb 13, 2017 letter to Waldron from Sherita Whetstone, DCA compliance officer, she confirmed that after learning about the warranty compliance issue, it was decided that neither the DCA nor the borough “would be required to conduct an investigation into the matter or notify Artisan Fine Homes’ customers that they may be entitled to a 10-year limited new home warranty. It was decided that we would deal with home owners on a case-by-case basis as they arose. I did, in fact, convey this information to Mr. Tracy and later to Mr. Waldron.”
Waldron also explained that according to a 1998 borough ordinance, the municipality is required to provide Tracy with legal representation and to pay any sanctions ultimately imposed on him.
“The borough has a legal and moral obligation,” he added.
Use Money for Warranties Instead
Avalon Development Group customer Richard Gormley, of 32nd Street, said he wasn’t aware that he didn’t have the proper warranty until this past Memorial Day, when Craig Jordan informed him.
His CO was issued in October 2011, and he still does not have the proper warranty.
“The borough found out in 2012, why haven’t you contacted me and all the other homeowners in the program?” Gormley asked.
Fabietti repeated that “these were issues under litigation” and his advice to council was not to comment, but Gormley disagreed.
“The litigation is a different company,” Gormley noted, “and what difference does it make? I don’t have a warranty that the Avalon Construction Office was to approve as part of the regulations. Why didn’t the borough protect me as the homeowner?”
Gormley said he spoke with the DCA office which confirmed that they had recommended the borough not inform homeowners. “You weren’t held to that,” he pointed out. “So why didn’t Avalon borough, where I live and whose regulations I have to live up to, let me know that I might have an issue with my house?”
He noted that Artisan Fine Homes and Avalon Development Group have been building modular homes in Avalon since 2006, and the first modular home was certified and warranted properly, so the borough knew what was required.
“And then they weren’t,” Gormley said, disagreeing with Waldron’s statement at the Aug. 8 meeting that the problem was corrected and all the affected homeowners have been issued the appropriate warranty.
“There’s at least four that haven’t. That lawsuit is with another company and doesn’t have anything to do with my warranty.
“Wrong is wrong,” he said. “You found out about a mistake that was an honest mistake. Why didn’t you just call everyone and tell them what was going on? I do that in business all the time: Someone makes a mistake, you admit it, and you call them up, and it’s not a big deal.
“Then I read in the paper that you want to hire outside counsel to fight the sanctions with taxpayer money,” he continued. “There’s nothing to fight. The mistakes were made. You didn’t have the warranty; they weren’t done properly. Why don’t you spend the money instead to buy the warranties for the people who don’t have them?”
He thanked Jordan for his efforts on the issue, noting “There’s not enough people like him around.”
Gormley contacted the Herald before the meeting and said he had suffered water damage in his home and shingles have come off his roof.
Expect More Sanctions?
Another Avalon Development Group customer, Michael Prinz, of Seventh Street, said he was one of those without a state-approved warranty, also disagreeing with Waldron’s comments that all warranty issues were resolved.
Prinz spoke at the Aug. 8 council meeting about his concerns that the borough didn’t notify him, either, saying the borough has some of the responsibility in the lack of communications.
Waldron had offered to meet with Prinz following that meeting to discuss options.
“That was a very fruitless meeting,” Prinz told council. “The borough wanted to put all the blame on the state. The borough referred to a letter from Feb. 13, 2017, from Sherita Whetstone (compliance officer, Division of Codes and Standards, New Home Warranty Programs); this is their entire defense on the sanctions. This letter doesn’t mention Avalon Development Group and the four homes who do not have the correct warranty.
“They also questioned our decision to go with this builder,” Prinz added, “which I thought was very unprofessional.”
Prinz said he spoke with Whetstone after the meeting who verbally agreed the letter had nothing to do with Avalon Development and the four homes without warranties. He said he then spoke with the Office of Regulatory Affairs who issued the original sanctions and they were “very interested in learning there were still four homes without warranties and no one was doing anything about it. I expect there will be more sanctions.
“So I ask the council, cease the appeal and take the money saved on legal fees and give it to the homeowners and taxpayers who deserve it,” he urged.
“Why didn’t they fight the state when they were told not to tell the homeowners?” Lisa Prinz said when she contacted the Herald Aug. 16. “They’re willing to fight for their employee but not for the homeowners, the taxpayers.”
She said she and her husband, Michael, have paid over $10,000 in repairs to replace two air conditioning units, a sliding glass door, leaks, loose siding and other problems. They were issued their CO in January 2012.
Where Is the Civility?
Several times during the session Hudanich questioned the “delivery methodology” of speakers. At one point, she stepped out of the meeting requesting to speak with the solicitor.
At that point, the meeting paused because there no longer was a quorum.
Additionally, after each speaker, audience members clapped.
Hudanich asked, “Is that civil? I feel this is defamation of an employee. What we’re doing is bantering back and forth and attacking an employee’s work.
“If the state said they thought the construction official was inept, I’d listen to residents, and I’d say I would take it under advisement and look into it,” she continued.
“By delineating emails, end dates, and actions, then having clapping when people do things incorrectly, I find it offensive as a councilwoman,” Hudanich said.
“That’s my problem. It’s not that I’m being rude or stifling public comment. I am trying to get to the over-arching message of a public input section because what I’m hearing is a delineation of everything that the employee did wrong in the perceived eyes of the homeowner.
“I get that point,” she said. “But to reiterate details, I find it offensive and a little bit inappropriate when an employee is being attacked and the audience claps.
“I ask myself as an educator, where is the civility in this country,” Hudanich asked. “That’s my comment.”
To contact Karen Knight, email kknight@cmcherald.com.
