More than 20 people who purchased townhouses in the taxpayer-supported Seigle Point community developed by Grubb Properties have sued the developer and general contractor, alleging shoddy workmanship and poor maintenance.
At issue, the owners say, are failing decks with rotting wood, heating and air conditioning units that are breaking down, electrical system problems and too little sound insulation between units. The owners have sued Seigle Point Townhomes, a subsidiary of Grubb Properties, general contractor Carocon Corp., and electrical and mechanical subcontractors.
“We want to see someone step up to the plate and take responsibility,” said Jeremy Rose, who bought a Seigle Point townhouse in 2009. “Our assumption was these things were being maintained properly. Now the burden is put on us as owners when we weren't responsible for this.”
Both Grubb Properties and Carocon have denied wrongdoing and said they plan to defend themselves. The companies have moved to dismiss the lawsuit, which isn’t scheduled for further action in court until next year. They declined to make anyone available for an interview.
“Seigle Point has attempted to resolve disputes that have arisen with the homeowners, however, some of the homeowners felt compelled to file a lawsuit,” Grubb Properties spokeswoman Emily Ethridge said, in a statement. “Seigle Point will defend itself and hopes that all of the disputes can be resolved.”
Grubb Properties, headed by Clay Grubb, is one of the most prominent local developers, with projects underway such as the SkyHouse apartment towers uptown and a planned overhaul of Elizabeth Avenue, with more apartments and retail along the streetcar route. The company’s past projects include Latta Pavilion condo development in Dilworth, which also includes retail and restaurants.
Charlotte-based Carocon spokeswoman Amanda Hudson said the contractor was “very surprised” by the lawsuit.
“Carocon denies the allegations of the lawsuit ... Carocon has always stood behind our work and warranties, and pride ourselves on our quality of work and service,” said Hudson, in a statement. “We built the project to all plans, specifications and code requirements and passed all quality control inspections, including building and code inspections.”
Seigle Point was built on the site of the former Piedmont Courts near uptown, one of Charlotte’s most notorious housing projects, with a history of violent crime and drug dealing. The biggest part of the redevelopment was done by the Charlotte Housing Authority, which built 200 new rental apartments on the site.
Those are separate from the townhouses, and are not part of the townhouse owners’ lawsuit or complaints.
The 2008 redevelopment was funded in large part with a $20 million federal grant from the Hope VI program, designed to replace the worst and most dilapidated public housing.
The city of Charlotte also contributed $12.9 million to the redevelopment. Of that money, $5 million was from the city’s Housing Trust Fund, and the city spent $6.1 million on infrastructure. The city also spent $600,000 to buy land for the project.
Pam Wideman, Charlotte’s deputy director of the Neighborhood and Business Services department, said the city is no longer involved in the project. After the units were built and residents moved in, Grubb Properties fulfilled its obligation for the grant money it received, she said.
“I feel their pain – I’m a homeowner,” Wideman said.
The original plan called for building 50 townhouses as part of the project, with 20 set aside to be subsidized for low- to moderate-income purchasers. Thirty-six townhouses were built, a total Grubb said includes the 20 affordable units.
The Housing Authority said 19 units remain to be built. All of those units are supposed to be market-rate housing.
Twisted beams, falling handrails
The most serious problem at Seigle Point, the owners say, is with two-story wooden balconies and stairs that lead up to the units’ back doors. The wood is soft, and beams are twisting, cracked and splitting. Gaps up to an inch wide have opened between support posts and crosspieces, and floorboards are popping up, free of the nails. Handrails are falling off, and rusty nails and odd screws protrude at angles.
One owner received a home inspection report that recommended limiting the number of people on her deck to two because of its condition.
“The construction of the balconies with the stairs is poor,” a separate 2014 engineer’s report on another deck commissioned by the owner from engineering firm Penta reads. A lack of maintenance, sealants and staining has allowed the wood to discolor and crack, the engineer wrote. He recommended replacing most of the townhouses’ balconies.
“It is my opinion that the poor quality of the constructed product are too extensive to be repaired,” he wrote.
The owners say Grubb Properties ignored or dismissed their concerns for years, including during the years before an HOA was incorporated and Grubb was managing the property. They hired a lawyer using their own money, because, they say, the Grubb-controlled homeowners association wouldn’t use its funds.
They filed the lawsuit in April, as the statute of limitations neared.
So far, they’ve spent $5,500 and owe their attorney another $6,700, with more expenses expected during discovery and a possible trial. They fear the developer and contractor plan to wait them out.
In a February letter from their attorney outlining their demands, the owners say they need more than $1.1 million to fix the units. The cost includes repairing the decks, replacing HVAC units which the owners say are failing after only a few years and installing soundproofing between the units. Also included is $125,000 for the HOA fund to address ongoing issues and pay professional fees.