Wednesday, November 30, 2022

Wilmington’s Market North asks HUD to double rents, cites debt due to ‘sale of property’

The Market North Apartments, a low-income, HUD-subsidized housing development, is asking permission to double rates. (Port City Daily photo / Benjamin Schachtman)
The Market North Apartments, a low-income, HUD-subsidized housing development, is asking permission to double rates. (Port City Daily photo / Benjamin Schachtman)

The Market North Apartments, a significant part of the Wilmington area’s low-income housing network, were shuttered after Hurricane Florence. Now, the owners have requested a rent increase from the federal government and may be planning to sell.

WILMINGTON — Market North Apartments have been closed for months since sustaining serious damage during Hurricane Florence. Now the property is requesting permission to increase Section 8 rents by more than double, several hundred dollars above market rates.

The apartment complex was purchased by the California-based Foundation for Affordable Housing (FFAH) for $14.7 million in late 2015. The complex has 204 two- and three-bedroom units, the vast majority of which were damaged during Hurricane Florence, displacing over 700 residents.

Seven months after the storm, the complex remains closed, with most of the roofs still tarped. In April, a spokesperson for the management company told WECT repairs were underway and would be completed in a timely fashion, despite an absence of work permits filed with New Hanover County.

Over the last week, calls to both the Market North Apartments were not returned, nor were call or emails to FFAH’s asset managers at the company’s home office in San Juan Capistrano.

However, Market North hasn’t been completely inactive. In late May, the owners filed dozens of work permits, currently being reviewed by the county. Management also filed a request with the U.S. Department of Housing and Urban Development to increase rents; management distributed a notice to displaced residents — a copy of one of the letters was delivered to Port City Daily anonymously. The request itself was confirmed by HUD.

The request calls for rents to more than double, raising two-bedroom units – which currently rent for $637 or $762 – to $1,520, while three bedroom units – currently renting for $883 or $1,052 – would be increased to $1,810. If approved, the new rents would go into effect on at the start of this November.

A letter distributed to displaced residents of the Market North Apartments. (Port City Daily photo / Benjamin Schachtman)
A letter distributed to displaced residents of the Market North Apartments. (Port City Daily photo / Benjamin Schachtman)

The stated reason for the request: “increase debt service due to sale of property.”

What the request does and doesn’t mean

Most of Market North’s tenants have their rent subsidized by HUD Section 8 programs that allow the property owners to deal directly with the federal government. Unlike developments like Jervay, the Wilmington Housing Authority (WHA) isn’t involved in Market North’s decision. Suzanne E. Rogers, the community development and housing planner for Wilmington, also said Market North Apartments was not city-affiliated in any way.

WHA CEO Katrina Redmon said evaluating the request would be solely up to HUD, but added that it wouldn’t affect WHA’s current programs.

A HUD spokesperson confirmed the receipt of Market North’s request and said the department was reviewing material. HUD also noted that the request itself should be available at the Market North rental office – however, the Market North main office at 111 Darling Avenue, at the intersection of Metting Road, has apparently been closed for some time.

HUD did not comment on the request itself, however, Market North’s suggested new rents are considerably over what the department deems fair market value. According to HUD, a fair monthly rent for the Wilmington metropolitan area in 2019 is $1,003 for a two-bedroom unit and $1,404 for a three-bedroom unit. Market North is asking $517 and $406, respectively, over those values.

While it’s unlikely HUD would approve vouchers for rents that far over market value, it’s possible that FFAH is simply hoping HUD will approve the highest possible rates.

Lastly, the county work permits suggest that FFAH does intend to see the apartments reopen, although – possibly – not under their ownership.

Sale of property

The North Market Apartments office has been closed during repeated visits and has not returned phone calls. (Port City Daily photo / Benjamin Schachtman)
The North Market Apartments office has been closed during repeated visits and has not returned phone calls. (Port City Daily photo / Benjamin Schachtman)

Rumors have circulated for some time that Market North Apartments would be sold. Back in 2015, then Chief Operating Officer Darrin Willard told the Wilmington Business Journal that FFAH planned to own and operate Market North long-term, in order to preserve affordable housing in the area (Willard, now FFAH president, did not respond to calls or emails).

According to New Hanover County property records, FFAH is still the owner of the property, most recently appraised at $5.5 million.

Without comment from FFAH, it’s unclear what “sale of property” means. However, it’s possible that FFAH is hoping to pay off debt on the property before repairing and selling it.

(Editor’s note: HUD is currently processing a FOIA request for Market North’s rent increase request which may include additional information about a potential sale.)


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

Related Articles