Home-Construction Industry in Florida Examined in Wake of Hurricane Andrew

FLORIDA'S home-building industry is under intense scrutiny in the wake of Hurricane Andrew.

Homeowners want to know why their houses collapsed. Regulators are taking a keen interest in the building code and how it may have been violated. Even Wall Street has taken notice.

Last week, Lennar Corporation, south Florida's largest home builder, saw its stock tumble at news that an ongoing lawsuit against it had been amended to include hurricane damage. Another class-action suit is reportedly threatened against Arvida Corporation for shoddy construction. More suits are likely.

"These houses are Mickey Mouse," says Jose Gill, a resident of southwest Miami. He points to trusses that were never nailed together, vents that were boarded up, and eaves left unanchored to the wall. He plans to sue.

Even homeowners who don't go to court are likely to reexamine their assumptions about quality housing. "The expensive homes were made out of wood," says Bill Timmeny, owner of an older concrete-block house in Miami that survived relatively well. "These places were cheaper. In the future, people will take a look at these houses."

Hurricane Andrew packed such high winds that some destruction was to be expected. Dade County estimates that 63,000 homes were damaged or destroyed. The state of Florida puts the figure at 85,000, but of those no more than 10,000 were totaled while another 25,000 were so seriously damaged that they may or may not be salvageable.

"I think people are going to find it's not a construction-quality issue at all," says Allan Pekor, chief financial officer for Lennar. "It was a storm of a magnitude that nobody designed for."

That is what investigators are going to find out. Designing for wind speed

According to National Hurricane Center estimates, Andrew hit southern Dade County with sustained winds of 140 miles per hour and gusts of up to 175 m.p.h. South Florida's building codes call for structures to withstand winds of only 120 m.p.h.

But the comparison is misleading. The way that the National Hurricane Center measures wind speed and the way building engineers design for it are two different things, says Mary Kathryn Smith, program manager of codes and standards for the Florida Department of Community Affairs. The practical effect is that winds measured by the hurricane center at 140 m.p.h. might fall within the 120 m.p.h. standard set in Dade and Broward Counties' building codes.

That's what happened with Hurricane Hugo in 1989, says Rick Vognild, codes department manager for the Southern Building Code Congress International. Charleston, S.C., officials found that winds reported at 140 m.p.h. fell to 95 to 100 m.p.h. when measured according to building-design speeds.

Such determinations could have huge significance, not only in the courtroom but in the ways that south Florida rebuilds.

"I am very confident that the wind was 140 m.p.h. and that we have seen devastation that nobody has seen before," says Charles Danger, head of Dade County's building-code-compliance office. Neither he nor Ms. Smith think building codes will change dramatically. Both agree that workmanship or code violations may account for some of the damage.

When a group of engineers, building-code officials, and building-material suppliers toured the devastation of southern Dade County, they found a range of construction practices. One subdivision in Miami's Kendall area escaped virtually unscathed from the destruction around it. Obviously, someone had done something right, Smith says. Shingles become missiles

On the other hand, the group found many examples of poor construction. Shingles, especially the concrete-tile variety, were often improperly laid and became missiles, smashing into neighboring houses and cars. Another source of concern: gable ends that failed on many houses.

If shoddy workmanship did increase the damage, part of the reason may be Florida's construction boom in the 1980s. High-wage union craftsmen gravitated toward big commercial projects, leaving residential housing to be built by low-wage and often immigrant laborers. In many cases, nonunion housing contractors began to specialize. One contractor built the frame, another the roof, and so on, says Monte Byers, a spokesman for the United Brotherhood of Carpenters. "No one was looking at how all these parts fi t together."

South Florida will experience another construction boom as southern Dade County rebuilds. Lennar, with 15 percent of its business located in south Florida, fully expects to participate in the rebuilding. Dade County will also be a magnet for thousands of out-of-state contractors and workers.

In the short term, housing costs will skyrocket, as people who lost their homes look to buy new ones. Virtually all apartments around Miami have been snapped up already. Even repair work will cost dearly because of shortages of labor and materials.

After Hurricane Hugo, Charleston saw home prices fall back after an initial surge, but they now remain some 10 percent above normal, says Max Hill, a local realtor. Though many out-of-towners expected it, "the bargains really didn't appear."

If building codes become more stringent, housing costs will go up even further. On the other hand, the lingering memory of Hurricane Andrew may slightly depress land values. "The effect of a natural disaster on housing values really depends on whether the disaster was expected," says Anthony Yezer, an economics professor at George Washington University who has studied the phenomenon. Since hurricanes are expected in Florida, the impact won't be too large. "There will be some negative effect" particularly

on land values, he says.