Saturday, July 13, 2024

Developer charged Wilmington residents thousands for HOA that doesn’t really exist. So, where’s the money?

Telesis is a for-profit developer that specializes in public-private housing projects; through its management company, Telesis allegedly charged residents of Wilmington's Jervay Communities tens of thousands of dollars in HOA fees, but never formed a proper HOA with resident board members, meetings, or transparency on how the fees were being spent.

FEMA officials have set up shop at the main office of Jervay Communities in Wilmington. The agency knew for over a week about the impending evictions, as did local officials, but apparently could not warn tenants. (Port City Daily photo / Benjamin Schachtman)
Jervay Communities was recently in the news after storm damage led to mass evictions — but a different kind of issue has a much longer history. (Port City Daily photo / Benjamin Schachtman)

WILMINGTON — Residents of Jervay Communities say they are still looking for answers after over ten years, and thousands of dollars spent on residents’ association fees — despite the fact that the Jervay HOA only exists on paper.

Related: Local and federal officials met before Wilmington evictions, but say they couldn’t warn tenants

According to interviews and email records from the Wilmington Housing Authority (WHA), not all residents were charged the HOA fees, but those that did paid thousands of dollars between 2006 and 2012 years. The same emails show WHA at one point promised refunds — but, to date, haven’t been able to get Telesis, the private for-profit developer who owns Jervay, to the table.

Residents spent a decade looking for answers

Several residents of Jervay Communities approached Port City Daily to discuss the history of HOA payments made to the Jervay HOA; some had paid fees and some had not, but all spoke on condition of anonymity for fear of retaliation from Telesis and its management company.

It is not clear why some were charged HOA fees and others were not — the covenant governing the association dictates that both those who own and lease units were by definition members of the HOA, “lessee of record of such Residential Unit shall be deemed the Residential Unit Owner for all purposes under this Declaration (including, without limitation, the payment of assessments and the exercise of voting rights hereunder).”

Residents said they paid from 2006 to 2012, when Telesis’ management company for Jervay told them they didn’t have to pay fees anymore.

Over those years, residents said they reached out for answers from three different WHA Chief Executive Officers —- Benjamin Quattlebaum, Michael Krause, and Katrina Redmon.

Quattlebaum, who was also one of the founding directors of the HOA, declined to comment. saying “I will have to refer you to the Wilmington Housing Authority for any information regarding issues related o to the WHA/Jervay.”

WHA essentially fired Quattlebaum in 2007, declining to renew his contract after a federal audit showed the authority has misspent about $745,000 in federal funds and a subsequent audit questioned nearly an additional $888,000. Quattlebaum has since maintained there was no wrongdoing, calling it an accounting problem, not an ethical violation.

Jervay Communities HOA

The residents' association, essentially an HOA for Jervay communities, was legally formed in 2002 -- but it has never included elected resident members. (Port City Daily photo / North Carolina Secretary of State)
The residents’ association, essentially an HOA for Jervay communities, was legally formed in 2002 — but it has never included elected resident members. (Port City Daily photo / North Carolina Secretary of State)

The Jervay Communities apartments and homes are technically a public-private housing project, a partnership between WHA and Telesis, a D.C.-based developer.

As CEO of the housing authority, Quattlebaum oversaw the privatization of the Jervay property under the U.S. Department of Housing and Urban Development’s Hope VI program in the early 2000s.

In 2002, the process of privatizing Jervay also created a residents association, which like other HOAs is a non-profit that could assess fees and use them to maintain the property. According to the 2002 covenant, the Jervay HOA – known legally as the Jervay Place Residents Association, Inc. – was initially run by three directors, including Telesis founder and president Marilyn Melkonian, as well as Quattlebaum.

The covenant required Telesis to hand the HOA over to an elected board, made up of residents, after 75 percent of the units were sold, or ten years had passed, or at an earlier date decided by Telesis; in legal documents, this is referred to as “the transfer.”

The 2002 covenant specifies when Telesis was legally obligated to “transfer” the HOA to a residents’ board. (Port City Daily photo / New Hanover County Register of Deeds)
The 2002 covenant specifies when Telesis was legally obligated to “transfer” the HOA to a residents’ board. (Port City Daily photo / New Hanover County Register of Deeds)

“Transfer date” shall mean that date with is first to occur of (i) ten (10) years after the date of the first Residential Unit to a Residential Unit Owner [other than the developer], (ii) the date on which fee simple title to seventy-five percent (75%) of all Residential Unites are or maybe be permitted to be built upon the Development Tract has been transferred to Residential Unit Owners, and (iii) such earlier date as Declarant may elect in its sole discretion,” according to the covenant.

The first houses were sold around 2003 and within several years the development had reached the 75 percent mark.

Still, except as a legal technicality, the HOA was never formed — Jervay residents paid fees, but had no elections, no representation, and no idea where their money was going. It was a residents association that excluded the residents.

Hope for answers, promise of refunds

Quattlebaum was replaced by Michael Krause in 2008.

According to emails between Krause and a resident, WHA was aware that some residents were being charged HOA fees by Telesis while others were not, and that the HOA had not materialized — there had been no elections and residents had been given no idea of what their fees were being used for. One resident wrote Krause to say her family had spent over $6,000 in HOA fees since buying heir home.

On July 20, 2012, Krause wrote a Jervay resident in response to these complaints, saying he was taking action:

“Sorry it has taken me so long to get back to you regarding the issues you raised in your letter.  Firstly, the letter was well written and raised legitimate points. Since receipt of your letter, I have had conversations with Ms. Melkonian and others at Telesis,” Krause wrote.

“A follow-up conversation will be had on Tuesday of next week. I can assure you that afterward, I will promptly provide you a formal response to each concern raised. We are committed to providing a safe and comfortable living environment for all residents in Jervay and will certainly be equitable when it comes to the HOA and its associated fees and responsibilities,” Krause concluded.

A month later, on Aug. 21, 2012, Krause followed up with a resident, writing to say the WHA was pursuing oversight of the HOA to ensure fairness and transparency.

Krause wrote, “I have been working on it. As recently as yesterday, I had a conference call regarding several issues with the management of the property, including the HOA. It seems as if we are moving toward the housing authority overseeing the HOA.”

Krause also promised legal action to ensure refunds to residents who had been paying HOA fees.

“I have mandated that the HOA dues collected to date be returned to the residents. In that we are assuming additional responsibilities, it is a little bit of a process that requires the involvement of legal counsel for both parties. Within the next three weeks, I will likely be calling a meeting of the homeowners to advise of all the changes. I will, of course, be sending a mailing out as well. I can’t give details regarding the changes at this point until I hear back from our legal counsel,” Krause wrote.

Residents’ efforts stall out

Krause promised a meeting within three weeks — but within three weeks he was fired from the WHA.

Krause’s termination followed a widely publicized arrest for DUI after he was stopped with a BAC of .35. It was Krause’s third DUI, his second while serving as CEO, and the board stated they had been given little choice but to dismiss him.

When Krause left, efforts to address residents’ HOA concerns seem to have stalled; he could not be reached for comment.

While Telesis apparently discontinued the HOA fees, it still did not form a board with resident members, and all discussion of refunding the thousands of dollars residents had already spent seems to have died out.

Nearly two years later, in March of 2014, a resident connected with Paul D’Angelo, a planning manager for WHA. D’Angelo told the resident “I’ll get to the bottom of this.”

Several months later, WHA named Katrina Redmon as the new CEO; Redmon confirmed that D’Angelo looked into the issue and that WHA learned that Telesis’ management company had “funds in an escrow account — I don’t know, and couldn’t say, how much.”

D’Angelo left the WHA earlier this year for a position in Asheville, but confirmed by phone that he had spoken with at least one resident about the issue, but that any decisions about the situation would have had to been made by WHA’s leadership.

Where things stand now

The management company in charge of Jervay Communities provided shipping containers to store the personal belongings of displaced residents. But for how long? That remains unclear. (Port City Daily photo / Benjamin Schachtman)
Telesis’ management company provided shipping containers for evicted residents after Hurricane Florence — but hasn’t provided many answers to a number of questions about the Jervay Communities. (Port City Daily photo / Benjamin Schachtman)

It’s been at least twelve years since the first HOA fee was assessed, and six years since Krause “mandated” that residents would get refunds.

But as of late 2018, there is still no HOA member board, no refunds, and very few answers.

Redmon said WHA was continuing to work on the issue, but said it was ultimately Telesis’ decision.

“That would be Telesis. That’s something I have spoken to them about, and it’s in their hands. And I’m trying to work with them to see what they’re going to do about that,” Redmon said. “I’m doing what I can from my end, and my predecessor did too. But it really is… Telesis is wrapped up in that.”

Last month, residents from the Jervay apartments were evicted after Telesis cited storm-related damage — although many single-family home residents remain. The management office for Jervay is also closed for renovations. Brendella Blanks, spokesperson for Telesis’ management company has not returned repeated phone calls (her phone goes to voicemail, which is full).

Several calls were also placed to Telesis’ D.C. office. Port City Daily spoke to several representatives, outlining questions about the Jervay HOA – as well as questions about when evicted residents might be able to return. Telesis representatives promised to return the calls with information but, so far, have not.

Jervay Residents Associatio… by on Scribd

Jervay HOA Covenant – Port … by on Scribd

Send comments and tips to Benjamin Schachtman at, @pcdben on Twitter, and (910) 538-2001.

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