Rebuilding A $50 Million Mistake

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Plenty of rumors have been spread by students surrounding the closure of Stevenson and Kresge apartments. There is the theory that students smoking inside the buildings caused the fire alarm to constantly go off, while interior sprinklers caused water build-up. There is the theory that Greek housing would be built in Stevenson’s spot. There is the “deadly black mold” theory. Despite the email from Stevenson College Housing explaining that the apartments were to be remodeled due to water damage, the ongoing lawsuit claiming faulty construction at the infill apartments — Stevenson, Kresge, Cowell and Porter — was kept quiet.

“It didn’t seem like there was an immediate need for anything to be done,” said third-year Samer Elayyan. “But with water damage you can’t see that. As far as physical appearance and functionality in the apartment, it worked out really well. I’m kind of surprised they had to redo them.”

With two sets of sister colleges needing repairs to prevent more serious problems in the future due to the alleged incorrect construction, CHES decided to close Stevenson and Kresge apartments during the 2013-14 school year, and Porter and Cowell apartments in 2014-15.

Blach Construction and Pyatok Architects took the lead on the infill apartment repairs this year and will continue next year. The UC Regents are suing Devcon Construction Inc. for  $50 million to cover the costs of remodeling, as well as lost revenue and attorney fees. Photo by Alex Posis.
Blach Construction and Pyatok Architects took the lead on the infill apartment repairs this year and will continue next year. The UC Regents are suing Devcon Construction Inc. for $50 million to cover the costs of remodeling, as well as lost revenue and attorney fees. Photo by Alex Posis.

In 2011, students reported leaks in the shower floors at the Stevenson apartments, which sparked UCSC housing administration to investigate other aspects of construction at all four infill apartments.

“The assembly [of the shower pans] wasn’t desirable,” said Capital Planning for Colleges, Housing and Educational Services (CHES) director Steve Houser. “We had some failures and went through the process to document some of the construction issues associated with those. During that process, basically like anything in life, you start looking at something, and you find other things that aren’t so desirable after you see the first thing wrong.”

Houser was not happy with his findings, including major issues in the way the stucco was infiltrated with water. There were signs water was getting behind the stucco and not draining the way it was designed to.

“It had nothing to do with plumbing. It had to do with the ability to protect against rain,” Houser said. “When we had the building designed, we took into account that Santa Cruz is obviously a very wet place, and the point was that stucco was integrated with the window system to ensure that wind and rain would not penetrate through it. Essentially it should get winged off of it.”

In June 2012 the UC Board of Regents filed a formal complaint against Devcon Construction Inc. of Milpitas, the general contractor, to recoup $2.7 million primarily to remodel the shower floors. But the minor problems turned into larger ones upon investigation, and the regents are now seeking an estimated $50 million — $40 million for infill apartment remodeling, $8 million for lost revenue and additional expenses and $2 million for attorney and expert fees — said CHES associate vice chancellor Sue Matthews in an email. Trial is currently set for January 2015.

We paid for this thing one time and we’re not paying for it again — that’s our position. We’re not being cavallier at all with those funds. — Steve Houser, Capital Planning for Colleges, Housing and Educational Services director

According to the claim at the United States District Court Northern District of California — San Jose Division, “the Regents allege various construction defects and damages, including claims of leaking shower drains, soft bathroom floors that were caving in, leaks causing damages to unit ceilings below and related defective conditions.” The claims supporting this lawsuit include contract breaches and negligence, compounded by Devcon’s rejection to pay for new construction.

UCB column: Information provided by Robert Flaharty, UCB executive director of Enterprise Operations of Residential and Student Service Programs. UCSC column:  Information provided by UCSC CHES. UCLA column: Information provided by Peter Angelis, UCLA assistant vice chancellor of Housing and Hospitality.
UCB column: Information provided by Robert Flaharty, UCB executive director of Enterprise Operations of Residential and Student Service Programs. UCSC column: Information provided by UCSC CHES. UCLA column: Information provided by Peter Angelis, UCLA assistant vice chancellor of Housing and Hospitality.

While Devcon is the formal defendant in the Santa Cruz Superior Court case, the UC Board of Regents also made demands against the general contractor’s surety, St. Paul Fire and Marine Insurance, and the lead designer, BAR Architect, for construction and design defects. Houser notes the lawsuit is further tangled by the large number of subcontractors Devcon hired to complete the infill apartment construction.

“That’s one of the complications here — going through the process to identify problems and then figuring out who is responsible for what,” Houser said. “It’s not so clean. It’s not one entity that Devcon hires.”

This year Stevenson and two Kresge apartment remodels cost a combined $20 million, and next year Porter and Cowell infill apartment remodels will cost roughly about the same, according to current estimates. Student Housing Services assistant director Kevin Tresham said in an email that “student housing funds are being used to fund this construction project and an ongoing legal claim is underway with the objective of recouping these funds.” Houser said the lawsuit could potentially take years to resolve.

“We paid for this thing one time and we’re not paying for it again — that’s our position,” Houser said. “We’re not being cavalier at all with those funds. We’ve already had plans for those funds to deal with other facilities, and we’re being informed that we have quite a strong legal position to expect to recoup considerable funds for this. It’s a little bit of a hedge because we just don’t know for sure.”

 

Illustration by Bharatendu Swamy.
Illustration by Bharatendu Swamy.

The regents are represented by Ralls & Niece LLP, who along with Matthews and the attorney for BAR Architect, declined to comment on the lawsuit against Devcon.

Matthews said any repair costs and losses not recovered in the litigation will be the burden of the university, which lies in student housing fees. These four apartment buildings were part of the $61 million infill apartment construction from 2002-04, also funded by student housing fees.

Approximately one-fifth of student housing funds are used to pay debt from prior CHES projects, while an additional one-sixth fund capital reserves are necessary to plan and implement future housing projects, according to CHES estimates. Adding to nearly 35 percent of student fees, depending on the type of room and meal plan, students pay $300-$550 per month toward construction fees.

As UCSC on-campus housing fees frequently top “most expensive” housing lists on U.S. News and Huffington Post, paying for the same construction twice is “heartbreaking,” said Bogard Construction project manager Dave Tanza.

“Two of my kids went to UCs and I’ve had to pay those fees,” Tanza said. “I consider it my money too.”

Tanza worked at UCSC as a senior architect for 14 years before switching jobs in 1999. Now Tanza is working on campus again because Bogard was hired as the owner’s representative to assist the university with managing the budget and schedule.

However, Tanza said the infill apartment project is different because it’s being completed while the lawsuit is still pending rather than after money has been recouped following a settlement. There are often lawyers from all parties of the lawsuit taking pictures and visiting the site, which he said has the potential to slow the project down because questions are being asked and schedules have to be made in advance.

Tanza agrees with the university’s decision to repair the buildings as soon as possible, rather than waiting for the lawsuit to end. The primary concern was water damage caused the wood studs to “dry rot,” which refers to wood decay that greatly impacts the structural integrity of the building.

“Wood construction is fairly forgiving, but the issues were pretty bad,” Tanza said. “Had we had a wet winter, there would have been more moisture and potential for damage. But [from] what they knew at the time, it was the right decision and what we’ve discovered has made the decision that much better.”

Bogard Construction project manager Dave Tanza manages the subcontractors hired by Blach Construction. As the owner’s representative, Bogard acts as the liaison between Blach and UCSC in order to stay within the budget and schedule. Photo by Alex Posis.
Bogard Construction project manager Dave Tanza manages the subcontractors hired by Blach Construction. As the owner’s representative, Bogard acts as the liaison between Blach and UCSC in order to stay within the budget and schedule. Photo by Alex Posis.

All construction issues from 2002-04 remain alleged. As with most construction lawsuits, it’s never completely clear who is at fault for what component of a project, Tanza said.

“There are a lot of pieces and components to a project,” Tanza said. “Of course one side will say, ‘you’re completely at fault’ and the other side will say, ‘well, we’re not at fault because maybe it was maintenance, maybe it was a design thing.'”

The decision to close apartments at Stevenson and Kresge this year and Porter and Cowell next year was made because the latter apartments are more shielded by trees and have roof overhangs. These features cause rain to land further off the building instead of landing at the base of the building.

“We’re trying to figure out if [Porter and Cowell construction] warrants the same robust work like Stevenson and Kresge,” Tanza said. “We think it probably does, but we don’t think we will find so much unforeseen damage as we found at Stevenson and Kresge.”

Stevenson affiliates were given priority this year to live in Cowell, and Kresge affiliates in the Redwood Grove apartments, while next year Cowell affiliates will have priority at Stevenson, and Porter-affiliates at Redwood Grove. This shuffling of student housing caused an increase in double-resident rooms being rearranged into triple-resident rooms, in order to house displaced students.

“We did not take the decision lightly, but we also felt like we had to proceed because we didn’t want to ignore problems,” CHES director Steve Houser said. “I don’t think we had any imminent concern about student health, but it was something we wanted to address immediately so we didn’t have that concern later. You never want prolonged water intrusion into buildings.”

Last year, former Stevenson apartment resident Samer Elayyan was left asking why the building was going to be closed, and now Cowell apartment resident Christian Garcia wonders why there is no clear answer to the reason behind the closure of Cowell and Porter apartments next year. His main concern is if the water damage is harming the safety of the students.

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Garcia said the lack of explanation behind closing the Cowell apartments is not only “unsettling,” but frustrating.

“If it’s just for safety reasons then yes, it is necessary,” Garcia said. “It just seems like colleges take advantage of students. The demand is high for housing, you’re not going to go live in Watsonville because it’s a commute, so students are forced into living on campus. They can charge whatever the hell they want. I feel like we have no say. It’s all up to the people in charge of this. We’re kind of screwed.”

Chancellor George Blumenthal said the fact that UCSC is most comparable with UC Berkeley in its most expensive room and board rates is worrisome.

“It’s a big issue, and believe me we tried many things to keep the costs down,” Blumenthal said. “Seismic upgrades — ultimately, at the end of the day — students pay for them. That’s one of the reasons it’s so important when we do construction. We have adequate work and insurance that it’s being done right, so down the line students won’t have to fund this again.”

Building at UCSC is difficult because the limited number of construction companies in Santa Cruz that will build large-scale projects on the isolated campus. Housing prices are also driven up due to complications with building on-campus, including ravines and underground caverns, said executive vice chancellor (EVC) Alison Galloway.

This does happen, but that doesn’t mean this should be the normal way of doing business. Frankly, we should do as much as we possibly can to make sure it doesn’t happen for all the obvious reasons. — Chancellor George Blumenthal

An email from Student Housing Services assistant director Kevin Tresham and other CHES staff said market housing costs in Santa Cruz are not driving factors for on-campus housing costs and there are no “convenience fees added to the cost.” In addition, CHES associate vice chancellor Sue Matthews said the construction to the infill apartments is not increasing UCSC housing rates. However, recently released 2014-15 rates indicate most rooms increased approximately $500 from this year. Matthews said this is an average annual increase in room and board rates.

With dorm and apartment buildings on campus that still have not been remodeled since their original construction, housing fees will carry the bulk of future construction costs. EVC Galloway said housing operates as a separate  function within the university and construction is always funded by student fees.

The Porter apartments look new on the outside, but have the same water damage issues as found at Stevenson, Cowell and Kresge. Porter and Cowell apartments will be closed next year, and affiliates will be offered priority housing in their respective sister college. Photo by Alex Posis.
The Porter apartments look new on the outside, but have the same water damage issues as found at Stevenson, Cowell and Kresge. Porter and Cowell apartments will be closed next year, and affiliates will be offered priority housing in their respective sister college. Photo by Alex Posis.
Water leaks reported in 2011 forced UCSC housing administration to investigate construction at the Stevenson apartments. Water damage led to wood decay or “dry rot,” which threatens the structural integrity of the buildings. Photo by Alex Posis.
Water leaks reported in 2011 forced UCSC housing administration to investigate construction at the Stevenson apartments. Water damage led to wood decay or “dry rot,” which threatens the structural integrity of the buildings. Photo by Alex Posis.

“We are trying to recover as much as we possibly can in the lawsuit because we want to keep those costs as low as possible for students,” EVC Galloway said. “It’s also the way we spread the payments across a wide swath of students as opposed to only charging those who are going into a new apartment. We do it in a way that we try to keep it as low as possible, but the only other source of money that we have would be to take out of the operational budget, which is what provides classes.”

If significant funds are not recouped from the lawsuit, students will pay for a project they and many former students already paid for.

“These buildings were only 10 years old, and they should not be only 10 years old before we put a ton of money back into them,” Houser said.

This is not the first time the university dealt with allegedly faulty construction, Chancellor Blumenthal said. There was also a lawsuit against subcontractors 20 years ago at Crown College to retain money for repairs that had to be redone shortly after the original remodel.

“This does happen, but that doesn’t mean this should be the normal way of doing business. Frankly, we should do as much as we possibly can to make sure it doesn’t happen for all of the obvious reasons,” Chancellor Blumenthal said.

With nearly half of UCSC students living on campus, student housing fees are the only revenue relied upon to build and renovate the colleges’ dorms and apartments. With housing fees and student population on the rise, going back to reconstruct new buildings is not in the budget. Remodeling projects at Oakes and Family Student Housing may be pushed back due to the infill apartment woes. If the Devcon lawsuit does not recoup enough to cover all construction costs, student fees will be relied upon to make up the difference.

“I know the university would like to get things settled as quickly as possible because the university’s job is education and research, it’s not fixing bad buildings,” said Bogard Construction project manager Dave Tanza. “They want to get out of there and go back to what they’re good at.”

What’s Going On At Merrill? 

Photo by Alex Posis.
Photo by Alex Posis.

What? $45 million construction project to renovate four dorm buildings and one apartment building to accommodate more students, improve access for people who are disabled and increase overall functionality to Merrill housing.

Why? As part of the 10-year major maintenance cycle, each summer a residential college is repaired and improved before students return in the fall. But the 45-year old Merrill buildings needed drastic improvements requiring two years of work. All dorm and apartment buildings have remained open throughout construction.

On Schedule? Unforeseen conditions have prolonged Phase I of the project, which focuses on Merrill Residence Halls A and B. Capital Planning for Colleges, Housing and Educational Services (CHES) director Steve Houser said “below-grade site conditions” have delayed the construction of the elevators, which pushed Phase I’s original completion date of April to September. However, he doesn’t expect the extra time necessary for Phase I to affect Phase II — the Plaza building and site improvements — to be completed by early October and Residence Halls C and D by September. Latter renovations will start this summer after students move out.

Ongoing Construction: Third-year Merrill dorm resident Erika Fuentes is pleased with the results of the construction, but frustrated with the constant inconvenience and construction noise. “The construction here, everyone’s just tired of it,” Fuentes said. She also noted the large number of small triples in her dorm building, which are “smaller than she has seen in any other colleges.” Fuentes has lived in Porter dorms and Oakes apartments before, and for her, the decision to remodel the infill apartments before Oakes is a puzzling one.

Another Big Project: “[The infill apartment construction] is very frustrating and it’s also very time consuming, but that being said, we did undergo a big project at Merrill,” Houser said. “Merrill was another facility that needed a lot of love, so that one has been exciting, and while not done, it has really improved that facility a lot. We would much rather improve a facility than spend a lot of money to get them where they should have been in the first place.”

What’s Next? CHES associate vice chancellor Sue Matthews said in an email that Oakes is slated for renovations in summer 2016 and Family Student Housing renovations are set for summer 2017.