The City of Scottsdale has called out erroneous statements made by an embattled local housing co-op’s board of directors that had attempted to silence residents concerned about an ongoing multimillion-dollar plumbing project.
The Progress first reported on July 28 that some residents at the Scottsdale East Homes housing cooperative were concerned about ongoing plumbing and sewer improvements that have strained the community’s finances.
According to financial records produced by residents, the co-op’s board of directors has almost completely depleted the community’s savings accounts over the past year by spending over $700,000 on plumbing and sewer line repairs.
The board recently took out a $4 million loan and earmarked the bulk of it to go towards additional sewer line work.
Letters sent to residents by the board said they were necessary emergency repairs due to catastrophic sewer line collapses.
The residents, though, argue that all repairs could have been budgeted out over the next several years.
Co-op members like Matt Stobs have also complained of what they characterize as subpar work performed by the board’s contractor, Peterson Plumbing.
Members Stobs, Kyle Solomon, Jill Heise and Pete Aiken all said Peterson workers had performed “shoddy” work in their units, failed to fix problems or damaged their units and belongings.
Multiple members also complained to the city that Peterson Plumbing did not have the proper permits to begin a recent sewer line replacement.
The city agreed and an inspector issued a Notice to Comply on July 18, effectively stopping work until the company obtained the proper permit.
The board attempted to silence disgruntled members with a letter sent by the community’s attorney on July 25.
“Recently, (Scottsdale East Homes) and its contractors have been delayed in working on the sewer project, due to numerous complaints by SEH members to the City of Scottsdale, none of which were for actual ordinance violations,” according to the letter from Edward O’Brien, an attorney with the Tempe-based Carpenter Hazelwood law firm.
The letter continued “The corporation assures us that sewer project is compliant with all local ordinances, and the City has not found any ordinance violations.”
An attorney for Scottsdale called those statements inaccurate.
Senior Assistant City Attorney Eric Anderson wrote in a letter addressed to O’Brien that “the City has reviewed and determined that your letter contains a number of misrepresentations that need to be corrected.”
Anderson wrote that the city found at least one ordinance violation related to the sewer project due to the permitting issue.
“Additionally, when first contacted, city inspection officials determined that construction was occurring without the required permit which is a violation of City Code,” Anderson wrote.
Anderson also found that the co-op’s lawyer had lied about the city requesting that members stop contacting the city with complaints.
O’Brien’s July 25 letter stated “The City has asked SEH to issue this letter to request an end to the meritless complaints over the Sewer Project, because the city has not found any Ordinance violations.”
O’Brien goes on to write that the city found that responding to the complaints was “a waste of resources.”
The city made no such request.
“Please be advised that the city neither requested nor implied that Scottsdale East should contact its members and discourage them from contacting the city,” Anderson wrote. “Scottsdale East members are welcome to contact the city if they perceive that a violation of City Codes or ordinances is occurring.”
Anderson asked the board to send a letter to members correcting the errors. That letter had not been sent out as of July 31, according to Stobs.
This would not be the first time that the board or its attorney has sent erroneous information to its members regarding potential permitting issues with the sewer project.
On two occasions, the board blamed concerned members for causing additional costs and permit requirements rather than holding Peterson Plumbing accountable for failing to obtain the proper permit.
In a July 17 letter to members, the board wrote “In spite of or because of the member harassment of the City of Scottsdale and other government officials there is an additional permit required and initial inspections by the City of Scottsdale; all instigating additional costs to our community.”
A July 18 letter made a similar claim.
“Due to the continued complaints of SEH members, there is now a new continuum of inspection required on any project here on the SEH property. That level of inspection, which is not the norm, will now be applied retroactively to all of the work that has been done on our property to date,” according to the letter.
Anderson, the senior assistant city attorney, disputed those claims, because city permit requirements are applied based on the scope of work of a project and not only in situations when residents complain to the city.
“The short answer to the question is ‘no’—the City’s Code and permitting standards do not vary based on whether someone complains or not,” Anderson wrote in an email to the Progress.
Anderson’s response also contradicts a statement made to the Progress by Peterson Plumbing President Ron Peterson.
“Everything’s done totally by the book, totally legally. The City of Scottsdale is involved, everybody’s involved,” Peterson said on July 25.
An attorney for Scottsdale East Homes Inc. sent a response to Anderson and City of Scottsdale on Aug. 2, refuting some of the city’s claims.
In the letter, attorney Edward O’Brien said Anderson’s claim that the city never requested that Scottsdale East discourage members from contacting the city is untrue. He also said the community’s sewer project is now in full compliance with city ordinances and invited city officials to come to a special meeting of members.
“That is inconsistent with three separate incidents of communication with City employees from other City Departments than the City Attorney’s Office, as described below,” according to the letter.
O’Brien went on to describe three specific instances between July 18 and 25 in which he alleged city employees made requests to himself or other Scottsdale East representatives, asking them to direct members to stop contacting the city for matters unrelated to ordinance violations.
Despite member concerns, construction on the latest sewer line project resumed at Scottsdale East on July 25 after Peterson Plumbing obtained the proper permit from the city.
Still, residents are concerned that the quality of work and mounting costs of the project will negatively affect their community and their ability to remain in their homes.
One member, who requested anonymity, said increased fees and assessments related to the ongoing plumbing work could force them out.
The member's dues were approaching $300 per month by July 2019 following two small increases over the previous two years.
Additionally, the board implemented a one-time $2,400 assessment on all members this summer for plumbing and sewer line projects, Stobs said.
That assessment can be paid in 12 monthly installments of $200, which, coupled with dues, put a financial strain on the anonymous member.
The member, who said they work two jobs to cover bills as is, said they made three requests to HOAMCO, the community’s management company, and the board to discuss the payments and ask what would happen if they cannot pay them.
“The only response was that if payment (was) not given by due dates (the) eviction process would start,” the member said.
The member said that a representative for the management company suggested “to get a loan or (lose) my membership.”
Stobs, another member, said the current situation and increased costs are causing him to question how long he wants to stay in the community.
“When this place running smoothly, it’s hard to find anything better, especially in Scottsdale…but now I have to ask ‘Do I really want to pay that much?’” Stobs said.