Thievery adds to the cost of building a home in Md.

Ouch! With insurance rates already high, builders tend not to report theft losses but to absorb them, and pass them along to homebuyers.

October 26, 2003|By Anne Lauren Henslee | Anne Lauren Henslee,SPECIAL TO THE SUN

Theft at residential construction sites has become an expensive part of doing business, according to Maryland homebuilders.

Builders, police and insurance workers said items such as lumber and appliances often disappear from residential construction sites when building crews go home for the evening. With added costs to replace stolen goods and increased liability insurance rates, the often underreported crime is hurting contractors' profits and consumers, experts say. The National Association of Home Builders estimates that the losses increase the cost of a new home by 1 percent to 2 percent.

"Theft remains a fairly consistent, nagging issue," said Mark Somerville, purchasing manager for the Baltimore division of Ryland Homes. Items taken from job sites, he said, include "everything from ... lumber to heat pumps, water heaters, air conditioners, furnaces, appliances, copper. If it's not tied down, it's fair game."

Each year, more than $17 million in reported losses is attributed to theft and vandalism at construction sites, according to the Inland Marine Underwriters Association, a New York group that represents insurance companies used by builders. Industry sources said the number grossly undervalues the actual loss to builders, because theft at sites is rarely reported to insurers.

The added claims, said builders, would make the rates out of reach for policyholders. Instead, the losses are absorbed and passed on to homebuyers.

"It is a big and increasingly serious issue," said Rick Kunkle, division president of Patriot Homes, which is based in Howard County. "Ultimately, it is figured into our costs."

The National Insurance Crime Bureau and the Associated General Contractors of America estimate that theft and vandalism account for $1 billion a year in losses and other costs to builders. Indirect costs include rentals, downtime, management time and project-overrun penalties.

But few studies have been done and little data collected to determine the full extent of theft on residential construction sites, according to industry representatives.

Builders, insurers and law enforcement officials said they suspect that those who remove the items include professional thieves, workers with access to the construction sites and neighbors in search of materials for home-improvement projects.

Local police forces said construction-site theft is a crime they have dealt with aggressively in recent years.

In Baltimore and Howard counties, police said thefts have decreased during the past year, in part because of better patrols around construction sites. Builders said the numbers are probably down because development controls have led to fewer homes being built.

State prosecutors said they believe the rising cost of building materials might contribute to the appeal ofthe crime to would-be thieves.

"So many of the materials at construction sites are becoming more and more expensive and therefore more likely to betargeted," said Steve Bailey, a deputy state's attorney with Baltimore County.

Bailey said the crime is considered a felony and can carry prison sentences of up to 15 years.

"But it really depends on what the individual's background is," Bailey said. "A juvenile who goes there and damages homes and steals a bunch of stuff is going to betreated differently than the person who has kind of sized up a site, is stealing the stuff and turning it around and making a profit on it, and who has a record of doing this type of thing. The victim suffers the same monetary loss, but obviously one is specifically preying on construction sites and looking to profit from it."

Reports of equipment theft have increased steadily every year since 1996, according to Insurance Services Office Inc., an industry group that gathers statistics and other data for property-casualty insurance.

"Probably the biggest pain regarding it isn't the sheer dollars involved, although they're pretty high," Somerville said. "It's the delays that are involved due to materials disappearing, like going for a final inspection and finding out that your furnace is gone."

Kunkle estimates that Patriot Homes loses about $75,000 annually to theft. Topping Patriot's list of stolen merchandise are air-conditioning compressors, followed by appliances, kitchen cabinets and general lumber, he said. Ryland officials said they have not calculated how much they lose annually to theft.

Smaller builders report that in addition to thefts of lumber and tools, unauthorized use of services such as trash collection are a concern. Some builders say it's common for trash and other large items to be left in bins at construction sites, forcing builders to spend more to empty the containers. It costs about $500 each to empty a bin, builders said.

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