Tuesday, July 23, 2024

Wilmington HOA invokes CAMA permit in effort to stop boat leases for downtown riverfront

A local business owner is concerned a lawsuit filed by a Riverwalk homeowners association to remove boats from slips along the Cape Fear River could have a lasting impact on his 15-year business. (Courtesy Wilmington Water Tours)

WILMINGTON — A local business owner is concerned a lawsuit filed by a Riverwalk homeowners association to remove boats from slips along the Cape Fear River could have a lasting impact on his 15-year business.

READ MORE: ‘A small business killer’: Owners push back against restricted parking on S. Front Street 

In a September 2023 complaint, Riverwalk Condominiums of Wilmington Homeowners Association requested the removal of boats near the community’s dock, arguing it violates the HOA’s rules and causes a nuisance for residents. It included an 85-foot yacht owned by Rob Pickett of Picket Investments LLC.

According to the lawsuit, Martin Gallan owns three of the condominium’s units, and has the right to all eight of Riverwalk’s boat slips. Doug Springer of Wilmington Water Tours has operated his business out of one of the condo’s units since 2011 and leases two dock slips from Gallan. 

Wilmington Water Tours gives tours of the Cape Fear River, but also runs water taxis between the downtown Riverwalk and Battleship North Carolina.

Gallan leased a slip to Pickett — who once owned downtown’s Dudley Mansion — from April 2022 for his yacht. Springer told PCD, after two years of sparring with the HOA, Pickett moved his yacht in the last few weeks but did not know where it was relocated.

The HOA argues Gallan violated rules by leasing the boat slips to Pickett and Springer. It also claims Springer is operating his business without approval from its board of directors and that the yacht creates a light and noise nuisance for HOA members. The lawsuit states Gallan leased the dock with the intention of harming the HOA by blocking the view of the Cape Fear River. 

The suit claims Gallan admitted receiving a notice of violation from the HOA board of directors in December 2022

Last month, the New Hanover Superior Court granted a summary judgment in favor of the HOA requiring Gallan remove boats and materials stored at the dock. Gallan’s attorney, Gray Wilson of Nelson Mullins, appealed the ruling. A hearing for the case — Riverwalk Condominiums of Wilmington Unit Owners vs. Gallan Holdings LLC — will take place Wednesday morning. 

Wilson of Nelson Mullins is representing Gallan Holdings LLC. He told Port City Daily he couldn’t comment on the pending litigation. He cited his June 21 motion for appeal arguing the ruling would deprive Gallan and Springer of the right to operate their businesses.

Wilson’s motion cites Springer’s previous testimony to the court. In an August 2023 letter, Springer claimed the HOA board of directors filed the lawsuit without notifying the owners of its 28 units.

“It was done in secret from the owners at large,” he wrote.

Springer served on the HOA board from 2015 through 2022 with the two board members who initiated the lawsuit, Jill Willett and George Coffin. Springer told PCD he believed the lawsuit was an exercise in arbitrary authority driven by Willett’s longtime annoyance at the presence of the 85-foot yacht.

The HOA lawsuit also argues Wilmington Water Tours is in violation of a Coastal Area Management Act permit issued by the Division of Coastal Management:

“The authorized docking facilities shall be used solely for transient dockage. Fueling facilities, permanent mooring, or the rental of any slips is expressly prohibited.” 

Springer told PCD the HOA only began to require board approval of leases and businesses in recent years. He refuted the HOA board’s arguments that he hadn’t appropriately communicated with them about his business, noting he’d sent the board his proof of insurance, business license, and other relevant material but never heard back.

“They’re not allowed to approve businesses,” he said. “That’s for zoning to do, it’s not up to them.”

PCD reached out to the board members and their attorney, Thomas Babel of Equitas Law Partners, to ask about their efforts to resolve the issue before the suit among other questions:

  • Has Riverwalk HOA consulted with CAMA on the lawsuit, regarding its argument about the violation of Wilmington’s CAMA permit? Mr. Springer argues the HOA does not have the authority to interpret CAMA.
  • Does Riverwalk HOA keep minutes of its board meetings and make its budget publicly available to members? 
  • Did the board of directors hold a vote for Riverwalk HOA members to initiate the lawsuit against Gallan Holdings LLC? When were HOA members first informed of the litigation?
  • Did HOA board members vote in favor of spending a certain amount of membership fees on the litigation, and if so, how much?
  • How much has Riverwalk HOA spent on the lawsuit so far?
  • Have any HOA members expressed support or opposition to the lawsuit?

Babel said he did not have sufficient time to answer the questions; he directed PCD to the lawsuit to better understand Riverwalk HOA’s position. 

Springer argued the HOA does not have the authority to interpret CAMA and expressed concern the ruling would negatively impact other downtown businesses.

“It could considerably remove all boats from downtown Wilmington that were under this CAMA permit,” Springer said. “It affects 30 of our employees, four water tours business owners, and a 15-year, multi million dollar investment that we’ve made for this company.”

Port City Daily reached out to the city to ask if it has any enforcement or interpretation of the CAMA permits. A spokesperson said it would be the authority of the Division of Coastal Management, which did not respond to PCD.

“The city is aware of the litigation and has been monitoring it, but we have not been asked to intervene or otherwise participate by either party at this time,” Mayor Bill Saffo said.

Springer told PCD he believes the issue is representative of broader problems with insufficient oversight and transparency of HOAs in North Carolina. He cited language from the HOA reform bill, H.B. 542 — sponsored by Rep. Frank Iler (R-Brunswick) last year — which prevents HOAs from enforcing parking restrictions without the approval of the North Carolina Department of Transportation.

“The boat slips are handled much like parking, in that they are assigned to owners,” Springer said. “The HOA is basing their claim on CAMA, but they have not been expressly delegated to enforce CAMA.”

PCD reached out to the Division of Coastal Management to ask for the permit cited by Riverwalk HOA and to ask for their interpretation of the alleged violation but did not receive a response by press.

Springer, who used to be the Cape Fear Riverkeeper, has worked with CAMA in the past. He said when he opened his business, he asked if CAMA had issues. Particularly, he pointed to fine print that said “no rentals.”

“Does that mean a lease? Does that mean 30 days? Does it mean six months?” he asked rhetorically of the docks. “I said, ‘Hey, look, we want to be able to run water taxis off of the Riverwalk … and they said, ‘Doug, our intent for CAMA permit is to provide public access, number one. Number two do it in an environmental, friendly way — a safe way. And what you’re talking about is only going to provide more public access. So, yes, go ahead.”

Springer said since starting Wilmington Water Tours, he’s put 800,000 people on the river. 

“If that’s not public access, I don’t know what is,” he said

Iler told PCD he believed HOAs have the right to use their interpretations of CAMA in court, but do not have the authority to supersede CAMA. 

“They can go to court and say: ‘That’s not the right interpretation’,” he said, “So I mean, they’re free, they have the right to be wrong.”

The representative added he had received numerous complaints from residents alleging HOA abuses of authority and thought reforms, such as requiring greater transparency in HOA budgets and minutes ,were essential.

“It’s just dictatorial things that should be basic,” he said. “Somebody gets a little authority and they think they’re king of their fiefdom.”

The North Carolina chapter of the Community Association Institute — an HOA advocacy and education group — has opposed Iler’s efforts. NCCAI spent $88,648 on lobbying fees in 2023, according to Secretary of State records. 

Priestley Management — Riverwalk HOA’s management company — is a member of the group. PCD reached out to Priestley but was told by a representative of the firm the the Riverwalk HOA board of directors requested all questions be referred to Babel.

PCD obtained emails from several Riverwalk HOA members expressing concerns about the lawsuit and inadequate transparency. In a July 2023 email to Springer, Jeff and Kathy Ryan wrote they had asked about legal fees at a recent board meeting but were only told about efforts to collect HOA fees in arrears.

“I don’t have anything to gain or lose when it comes to the dock situation,” they wrote. “I do have a lot to lose if we as an HOA are going down a rabbit hole with a costly legal fight spending everyone’s funds to benefit a very few.”

Frances Beverly sent an email to Springer expressing similar concerns. Lynn Beverly, the daughter-in-law, told PCD she believes the HOA is neglecting needed home repairs while spending excessive amounts on litigation. 

Springer said the board has called it their “fiduciary responsibility” to enforce CAMA.

“The truth of the matter is, [the board] has no fiduciary responsibility,” Springer said. “It’s already spent $45,000 of our reserves attorney fees and did not let any of the homeowners know about it.”

He said he expects after all is said and done, that number likely will escalate.

Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.

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