Guaranty Bank out of Austin recently paid a demolition company around $100,000 to flatten 16 model homes in Victorville, California.
Guaranty obtained the housing development when it foreclosed on the builders, Mathews Homes, back in December 2008.
Candidly, the bank felt it was more cost-effective to tear down the homes than market the properties in a depressed housing market. A Guaranty official based in California told the Victorville newspaper, the Daily Press, that it would cost more than $1 million to finish developing the property so it could be occupied.
Compounding the problem, the bank was being fined daily by the city of Victorville for problems related to squatters, vagrants and vandals.
Publicly, the bank said the move was necessary to provide a “safe environment” for neighbors of the vacant housing development.
In an interview with the Wall Street Journal, Guaranty spokesman John Wessman said that only four of the 16 structures slated for demolition were “substantially complete,” while the others were less than half finished and “exposed to the elements.”
The president of the demolition company hired for the job told the Wall Street Journal that he “was a little surprised they couldn’t come up with an alternative.” He also said he would grind up much of the wood into mulch for landscaping, while some of the lumber would be sent to Mexico for construction there.
He’s already booked for his next job: plowing another 20 homes in Temecula next week.
Key Question: Is this the best idea the bank could come up with?
As Bryan Clagett with Raoust+Partners noted, “Materials from these homes could have been saved and even donated to Habitat For Humanity.”
Bottom Line: It may have been cheaper — on paper — to demolish the homes, but what was the cost to the bank’s brand? At the very least, the difference between the PR they are dealing with now vs. the PR they could have gotten is sizable.