Cherry Community Organization wins lawsuit against developer
A community group in one of Charlotte’s oldest predominantly black neighborhoods has won a large verdict against a developer after a jury found the developer broke promises to build affordable housing on land purchased for below market value.
The Cherry neighborhood, southeast of uptown, has long been a bastion of low-income housing that hung on even as Charlotte’s skyline grew just over a mile away. But like many neighborhoods around uptown — such as Double Oaks to the north, Enderly Park, Biddleville and Smallwood to the west — Cherry has been reshaped by a flood of new money and residents over the past several years.
A major influx of new, expensive houses has replaced the mostly renter-occupied, and sometimes rundown, homes that rented for several hundred dollars a month.
In July, the Cherry Community Organization won a judgment of more than $1.6 million against developer StoneHunt LLC, the culmination of a long-running dispute over the neighborhood’s future. The case is still ongoing: A judge could triple the damages under North Carolina’s law on unfair and deceptive trade practices, while a separate, related case about another land transfer has yet to be decided. And StoneHunt could appeal the verdict.
But StoneHunt filed for Chapter 11 bankruptcy last week, court records show, which could put the brakes on legal proceedings. The company listed assets of less than $50,000 and estimated liabilities of $1 million to $10 million.
Stoney Sellars, president of StoneHunt, and attorney William Sturges didn’t return messages seeking comment since Tuesday. Richard Wright, who court records show is representing StoneHunt in the bankruptcy case, couldn’t be reached.
“Promises had been made to our community that had not been kept,” Sylvia Bittle-Patton, a longtime Cherry resident and advocate, told the Observer. “It’s vindication, but the victory is bittersweet. We still lost a lot of land. We still have a lot of longtime residents who have been displaced.”
Cherry dates back to the 1890s, when it was built as an enclave to house African-Americans, many of whom worked in nearby homes or businesses. By the 1970s, according to a 1993 Observer story, parts of the neighborhood had become rundown, with many small houses rented by absentee landlords who didn’t maintain the properties.
In 1979, the city of Charlotte loaned the Cherry Community Organization $1.4 million to buy and renovate 127 houses, which it rented out for several hundred dollars a month to low-income tenants, according to a 2007 Observer story. The organization has been through ups and downs – fending off foreclosure in the early 1990s by deeding some properties back to the city and securing a lifeline from Bank of America predecessor NationsBank – but hung on to most of its properties.
The current case’s roots stretch back more than a decade, to 2004. That’s when StoneHunt LLC and the Cherry Community Organization, led by longtime president Phyllis Lynch, struck a deal, according to the lawsuit filed in 2015. The community group sold 8 acres on Main, Luther, Baxter, Torrence and Cherry streets to StoneHunt for $1.1 million, which it said was below market value. The group allowed StoneHunt to demolish the existing houses and develop townhouses, condos and single-family houses.
In exchange, according to the lawsuit, StoneHunt agreed to build at least 21 housing units for senior citizens, as well as six units for disabled tenants and 11 income-restricted affordable housing units.
Lynch, who was ailing and partially disabled at the time of the sale, according to the lawsuit, died in 2007. And as the years passed, Cherry residents started doubting all of the promised affordable housing would be built.
“StoneHunt evicted and/or displaced low-income tenants renting affordable housing units that it had purchased from CCO,” the plaintiffs wrote in their lawsuit.
The new houses built by Saussy Burbank generally cost $600,000 and up. Prices have increased in the past few years, along with the rest of Charlotte’s booming real estate market. New houses listed for sale start at $735,000, and property records show some have sold for more than $800,000.
The neighborhood’s demographics have changed drastically over the past several decades. U.S. Census figures show that in 1980, the neighborhood’s 1,000 residents were 78 percent black, with the remainder white.
In 2016, the proportion of black residents had declined to just 29 percent.
Other affordable housing is being developed in Cherry, alongside the new houses that have been built. Laurel Street Residential is building Baxter Street Flats, with 30 income-restricted units that will be complete by year’s end. And the Charlotte Housing Authority built 81 new units to replace the former Tall Oaks apartments, which were torn down several years ago.
StoneHunt developed 42 units for senior citizens at the Cherry Gardens project on Avant Street. According to legal filings, StoneHunt claimed that fulfilled its affordable housing obligations for the Cherry land.
The CCO, however, contended those units didn’t satisfy the agreement for 11 income-restricted and six disabled tenant units, because they were all reserved for people older than 55.
“You can look in the neighborhood and see what StoneHunt did and did not do,” said Kerry Shad, a Raleigh-based attorney with Smith Anderson. Along with Scott Miskimon and John Harris, they represented CCO. “We felt it was pretty clear there was a breach (of contract).”
Bittle-Patton said the CCO owns 15 properties now, a big decline from its former holdings. The group plans to partner with a developer who specializes in affordable housing to develop the 17 affordable, non-age-restricted units they were promised. The group hopes to use money from the judgment against StoneHunt for that, and is also seeking the return of some of the land they sold that hasn’t been developed yet.
The legal battle has taken a toll. The CCO is trying to raise $750,000 to help cover legal bills and fix up some of the aging houses it still owns.
But lifelong resident Barbara Rainey, vice president of the Cherry Community Organization, said she’s encouraged by the jury’s verdict. She lives across from the century-old house she grew up in, which is now boarded up and slated for demolition.
Said Rainey: “When you do right, it may take a while, but you’ll get victory.”
Observer reporter Gavin Off contributed.
Ely Portillo: 704-358-5041