Bad Drywall Hits NOLA, Habitat Homes to be Gutted

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Brightly painted homes at new Musicians' Village, New Orleans, Louisiana, 6/27/2007.

CBS News has learned that an estimated 120 homes built by Habitat for Humanity in New Orleans for residents displaced by Hurricane Katrina will be gutted and rebuilt in the coming months because the homes contain defective drywall.

Among the homes affected are those in Musicians' Village.  

A cornerstone of post-Katrina rebuilding effort in New Orleans,  the village was conceived by musicians Harry Connick, Jr. and Branford Marsalis.

Habitat estimates that at least 40 out of 72 homes in the Musicians' Village will have to be gutted and rebuilt.

Residents living in the homes will move into rental apartments for at least two months while the homes are repaired. Some homeowners started the process of moving out this week. All electrical wiring, carpet, plumbing components, duct work, hot water heaters, insulation, smoke detectors and drywall, as well as some appliances, will need to be removed and replaced.

The New Orleans Area Habitat for Humanity, which is a non-profit housing organization, will do the work and promises to cover all costs. The organization is conducting testing to determine exactly which homes are defective and so far, 70 specific homes have been identified with test results coming back daily. Habitat spokesperson Aleis Tusa told CBS News the price tag for the remediation will run Habitat $45,000 per home plus housing and storage for each affected resident.

"We continue to stand by our families by fronting the funding for any remediation so that our partner families do not have to be out of pocket while seeking reimbursement from the manufacturers," said Tusa.

The New Orleans Area Habitat for Humanity built a total of 280 homes in New Orleans between August 2005 and October 2009. According to Tusa, the majority of those homes were constructed with one brand of Chinese drywall that Habitat purchased in bulk from a Florida supplier for $925,000. The manufacturer of the drywall, Taishan Gypsum Co., has been identified as one of the Chinese companies that imported bad drywall into the United States during this same time period.

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As CBS News Chief Investigative Correspondent Armen Keteyian reported in March of 2009, the defective drywall can deteriorate a home making it unlivable in a number of ways including causing severe corrosion, destroying electrical wires and appliances. The bad drywall also gives off a foul smell. The health effects are still unknown.

The latest tally by the Consumer Product Safety Commission, which is the federal agency that oversees defective products, is that now approximately 6,300 households nationwide could have defective drywall. That number continues to grow as more homeowners become aware of the problem.

In a statement to CBS News, Harry Connick, Jr said: "it broke my heart when I learned that like so many others along the Gulf Coast, some of our homes in the village were built with defective drywall."

In a separate statement, Branford Marsalis told CBS News: "I became involved with Habitat for Humanity because I believe in their work and their mission."

Both musicians expressed confidence that the New Orleans Area Habitat for Humanity will take care of homeowners.

"They have stepped up to the plate and are moving the affected homeowners into temporary housing while they gut the houses and fix them," said Connick.

However, according to an article published today by the investigative media group ProPublica and the Florida newspaper the Sarasota Herald-Tribune, some homeowners are questioning whether Habitat has reacted quickly enough.

Tusa told CBS News Habitat will continue monitoring and testing the homes it built to help fix the problem.

Read the full statements from Harry Connick Jr, and Branford Marsalis below:

09/07/2010 - Full Statement from Harry Connick Jr. to CBS News:

"It broke my heart when I learned that like so many others along the Gulf Coast, some of our homes in the village were built with defective drywall. In the days immediately after the storm, Habitat was sold some defective product. And the reason why I have been a Habitat supporter for over two decades is that in the face of this horrible news, they have stepped up to the plate and are moving the affected homeowners into temporary housing while they gut the houses and fix them."

09/07/2010 - Full Statement from Branford Marsalis to CBS News:

"Sadly for my fellow New Orleanians, many, many homes were rebuilt after the storm with what now turns out to be defective drywall and some of the homes in the Village are affected. I became involved with Habitat for Humanity because I believe in their work and their mission. And as I am not personally involved with details related to the construction, I can't comment specifically on the issues you have raised. What I CAN tell you is that I am confident that they will work with the homeowners and make sure that any of the affected homes are properly fixed."