The city says a construction company breached its contract by building a home for one of its employees larger than what is allowed in one of Raleigh’s affordable housing developments.
RD Construction submitted an approved floor plan for the East College Park neighborhood but, in the middle of the process, went off script and built a bigger home, according to the city.
“It doesn’t look good,” said Larry Jarvis, the city’s housing and neighborhoods director. “It doesn’t smell good.”
“Again, it is not indicative of their past performance,” he continued. “We expressed our disappointment in this builder to (the owner of the company). We were disappointed this happened and we consulted with our attorney, and our attorney did in fact advise this was a breach of contract.”
The company will no longer be allowed to build in East College Park, but it will be allowed to finish other city contracts including in the nearby Martin-Haywood development, another affordable housing development.
RD Construction did not return multiple phone calls and emails from The News & Observer sent on Thursday and Friday.
Octavia Rainey, a long-time neighborhood advocate, asked the city about the home after she noticed it was larger than the other houses in the development. Some of the answers were included in a recent report to the Raleigh City Council.
“This particular house was bigger and longer,” she said. “I said ‘Something is wrong with this house.’ It didn’t look right. It just didn’t look right.”
The city should have known the house wasn’t built correctly and there needs to be more repercussions, she said.
East College Park
The city is about half-way through building nearly 100 homes and 50 townhomes in East College Park, which borders Raleigh Boulevard, New Bern Avenue, Oakwood Avenue and Hill Street.
The city spent years buying property and gave some residents money to relocate. That allowed developers to build homes and townhomes there that will sell for less than market rate to add needed affordable housing near the city’s center.
A majority of the homes can only be bought by people who make below an income limit. That limit is $41,950 for one person or $74,150 for a family of four. These income-restricted homes can’t be sold for more than $250,000, while the remaining homes that are not income restricted can’t be sold for more than $260,000.
RD Construction was one of the handful of developers allowed to build homes in the East College Park development. Builders must build a layout approved by the city, with floor plans generally from 1,100 square feet to 1,600 square feet.
RD Construction submitted a floor plan called The Franklin for the home at 316 N. Fisher St., but then added extra square footage to the home and made it longer, Jarvis said.
“So they built the Franklin but the Franklin was originally a one-story (house) with another half a story on top,” he said. “And what they wound up doing was building a full two-stories. And I think it was a little bit longer than what had been submitted to us and was approved.”
However, the house was permitted and met the city’s development standards, according to Jarvis.
The house built for RD Construction’s employee was not restricted by income, he said, adding the city knew it was being sold to the developer’s employee.
“There was nothing to prohibit that,” he said.
‘It is an outlier’
According to a presentation that has since been removed from the city’s East College Park website, The Franklin is normally sold for $210,000. The house on Fisher Street was sold for $260,000 — the maximum allowed.
As for why the house was bigger than allowed, Jarvis said the construction company owner wasn’t “fully aware of everything that was taking place.”
“There has been a long (city) history with RD Construction,” Jarvis said. “They have been a reliable builder over the years. I would describe this as a very unusual occurrence, given the years they have been a builder for the city of Raleigh. It is an outlier and it is not typical or indicative of their past performance.”
One of the concerns Rainey and other activists have is how the larger home will affect its neighbors’ property values and taxes.
City Council member Corey Branch, who represents this part of Raleigh, plans to reach out to Wake County to see what kind of affect the neighbors might feel.
He supports the staff’s decision to end the contract after the larger home was built.
“Outside of this (house), I think this program has been really successful,” Branch said. “No program is perfect, but we are working through things. Overall things are moving nicely.”