After spending two years and more than $2.2 million in taxpayer money, a Modesto nonprofit agency has fired its building contractor for shoddy renovations of 30 one-bedroom apartments.
Modesto gave the Stanislaus Community Assistance Project millions in federal stimulus money to buy and repair the 550-square-foot units at 221 E. Coolidge Ave. Without seeking competitive bids, SCAP's former leaders hired Bellisimo Builders of Stockton to do the work.
Less than half of the small apartments have been finished and the renamed nonprofit's new managers have uncovered serious renovation flaws. They included a bathtub draining into the dirt, heaters that posed a fire danger and improperly hung cabinets that couldn't bear the weight of dishes.
Bellisimo's business manager, David Hartgraves, said his company is not to blame for problems at Coolidge. "Our opinion has been that the city has mismanaged this project from the beginning and we are a victim of the circumstance and effects," he said.
SCAP was under fire last year for how it spent more than $8 million in taxpayer money from the federal Neighborhood Stabilization Program. Modesto had given SCAP the funds to buy and renovate foreclosed homes and apartments, which were supposed to be used by low-income people and those with special needs.
Last summer, The Bee revealed that SCAP's former leaders, Denise and William "Joe" Gibbs, had managed the nonprofit and, in Joe Gibbs' case, earned bonuses worth hundreds of thousands of dollars.
Federal regulators and law enforcement got involved after it was discovered that the Gibbses were using many of the taxpayer-subsidized homes for their family members, their staff and their staff's family members. The Gibbses were fired in December, after an FBI raid of their Riverbank home and SCAP offices. No criminal charges have been filed.
In March, the Modesto nonprofit hired Tom Shanks to be its new executive director, and it has renamed itself Community Impact Central Valley.
Now it is scrambling to find another builder who can get the Coolidge apartments up to standards and ready for low-income tenants before a looming federal deadline.
Shanks said he and his staff are doing their best to correct the agency's problems and regain the public's trust.
Taking on the project
The Gibbses had given Bellisimo Builders the $889,000 Coolidge renovation project after having persuaded the city to buy the rundown apartment complex for SCAP. In June 2010, the city paid $1,560,111 for the property, which some local real estate experts contend may have been as much as $500,000 more than it was worth.
Shanks said he was shocked to discover that SCAP had given Bellisimo such a large renovation contract without first seeking competitive bids. Both the city and the U.S. Department of Housing and Urban Development allowed SCAP to skip the bid process.
"I found that very surprising, because that's bad practice for any public agency," Shanks said.
Bellisimo's contract had an enormous scope, including electrical, plumbing and painting work, new appliances, flooring, cabinets and countertops. It also required the apartments be brought up to current building codes and made accessible to people with disabilities.
But Shanks said SCAP's contract with Bellisimo was "short on specific materials and quality standards." After taking over, Shanks said, Community Impact Central Valley warned the builder that it was going to be more vigilant.
"We told them everything was going to be on the up and up and that we would be monitoring carefully," he said.
Among the construction problems found, Shanks said, were:
Cabinets installed with a 2-inch gap between them and the wall, which made them unsafe to bear the weight of dishes.
Heating units installed using old valves and pipe rather than new pipe.
A critical piece that prevents debris from falling into the heater and catching fire was not installed, which caused warranty and safety issues.
Wallboard installation did not meet minimum standards.
One bathtub drained into the ground rather than into pipes.
City expresses 'concerns'
Modesto officials also found problems with Bellisimo. A June 25 letter to Shanks from Marco Sepulveda, the city's Neighborhood Stabilization Program analyst, lists two pages of "concerns."
Those include reports of complaints by Coolidge subcontractors who had not been paid, even though Bellisimo had received the money for their work. Sepulveda said Bellisimo also hired some unlicensed subcontractors, which is not allowed.
Bellisimo missed its completion deadline and "the city was billed for work that was either incomplete or poorly performed," Sepulveda wrote.
"The amount of issues and concerns with this project continue to multiply, severely impeding progress," Sepulveda wrote. "The overall work performed on this project is subpar and does not come close to meeting the rehabilitation standards we expect on our NSP projects."
Because of those problems, the city warned the nonprofit that it no longer would pay for work done by Bellisimo.
Community Impact Central Valley's governing board voted June 29 to terminate Bellisimo's contract.
The board's resolution instructs Shanks to "pursue every course of action, including legal action, to hold Bellisimo Builders accountable for work already complete but which was done in a subpar manner and which now needs to be repaired at Bellisimo's expense."
There seems to be a discrepancy about how much Bellisimo already has been paid for work at Coolidge. Shanks said the company has received $739,587, but the city says it has paid $722,036.
Either way, Bellisimo is seeking more.
In early July, Hartgraves wrote a letter to Shanks defending Bellisimo's actions and noting that "the most significant delay was when the city of Modesto put a freeze on the project last summer because of concerns" about SCAP. That freeze caused "endless delays and cost overruns" that cost Bellisimo money.
Hartgraves defended the quality of his company's work: "We have been inspected by the city of Modesto over 20 times; we have been inspected by third parties and have passed all the inspections. Never have we been told of any deficiencies."
Bellisimo is "not in any way going to tolerate false allegations or any financial hardship" from losing the contract, Hartgraves warned. He told Shanks that numerous issues must be resolved, including "past-due invoices, nonreturnable materials that have been purchased for Coolidge (appliances in particular), un-invoiced labor and unrealized profit."
Shanks met with Bellisimo's representatives early last week to discuss the dispute, but issues remain unresolved.
For now, Shanks is focused on finding a new general contractor to complete the apartments, of which about 18 are not finished.
"We're confident we can get the bidding process done and pick a new contractor within three weeks," he said.
Modesto Deputy City Manager Dee Williams-Ridley said $213,803 remains in the NSP budget to renovate the Coolidge units. She said the city is confident the project will be completed by the February 2013 deadline to spend the federal funds.
"The city will continue to provide oversight and inspection of this project moving forward, ensuring that the highest standard of workmanship is rendered and that the CICV management over this project meets requirements," Williams-Ridley said. "As a result of our routine inspections, oversight and recent enhancements to the NSP program, the process is working and we'll continue to ensure that all national objectives for this project are met."
Contractors interested in bidding on the Coolidge project should call William Daniel at (209) 872-9016 for more information.
Bee staff writer J.N. Sbranti can be reached at email@example.com or (209) 578-2196.