That "sweeping" NC election bill and an NC HOA gone wild | Hour 1

What's going on? Thank you so much for listening to this podcast. It is heard live every day from noon to three on WBT Radio in Charlotte. And if you want exclusive content like invitations to events, the weekly live stream, my daily show prep with all the links, become a patron, go to thepeakclendershow dot com. Make sure you hit the subscribe button, get every episode for free, write to your smartphone or tablet, and again, thank. You so much for your support. As we do every Tuesday at noon, we chat with Andrew Dunn. He is the publisher of long Leaf Politics. You can subscribe to that newsletter over at longleafpol dot com. He's also a contributing columnist over at the Charlotte Observer, but we never hold that against him. Andrew, Welcome, sir, how are you? I am fantastic good to be back with you. So I was reading your public comment on the election bill, sorry, the sweeping election bill, as I think it is mandated. It's always and you're a former journalist, so I always try to talk about some of these sort of mechanics and the templates that kind of get built into news stories, and this is a good example of it. The word sweeping. It just it gets added in or another one is like the controversial bill or something like that, and once it makes its way into a story, it just lives on in every iteration of that story from then on out, because a lot of times reporters will just you know, copy and paste from earlier versions of a story and just kind of move it over and it that that's how a narrative kind of gets calcified over time, and that's what And so this is one of those words. So they're calling this the election sweeping elections bill. You don't find it to be so sweeping, though, do you? No, it's not. I mean, sweeping is one of those words that is very loaded, right, So it can mean and if you ask the journalist to used it, why they're using it, they would say, well, it does a lot of different things, and it's you know, it's hard to say it does you know, it's an X bill or a Y bill. It's a sweeping bill. Because it does a lot of things. But the reality is is that it's typically used as a pejorative, that it's signaling that it's some nefarious plot to overhaul everything. And you know that's not to say that you could never use the word. I mean, I would imagine there are some bills that would fit the bill no pun intended, but this one does does not. Yeah, I mean really it does a lot of different things, but the vast majority of them are extremely minor. Yeah, I mean, why not. I'm trying to think of a better term to use, you know, uh would do you know, multiple multiple changes or several changes? Yeah, but the sweeping, like you said, it's a loaded term, and it's where I tell people to kind of look for if you want to try to find the bias poking through in a story. I always look at the way. Reporters will use basically synonyms for the word said, you know, because I always when I was doing radio reporting, I always just said said, because it's neutral, it doesn't I'm not loading anything. I'm not kind of conveying anything. But you will see sometimes, you know, people will throw in adjectives that kind of give away a little bit of their what they you know, how they think this story should be told. You know. Anyway, So people when I was. In journalism school, it was hammered into us to only say, said, maybe they don't teach that anymore. I don't know I'm getting old. Yeah, me too, But it's better than the alternative though. So all right, so let's talk what what does this bill do? You say, a lot of the stuff is pretty innocuous, so you want to run through what what this bill does? Sure, and it does a lot. Of different things, like I said, but some of the you know, more technical correction type stuff includes increasing the compensation that county Board of Elections members get by a tiny I think it goes from twenty five dollars to one hundred dollars. And then there's some things around you know, at what level of fundraising you have to file campaign disclosures. I think that goes from one thousand to three thousand. You know, just really minor stuff. But there are a couple things in here that are worth talking about, and your your listeners may already have heard about some of them. You know. One has to do with staffing at the State Board of Elections office. Some of the positions go from you know, career bureaucrats to you could call them political appointees but basically allowing the state auditor to choose who they are. And then there's some changes on how elections or results are audited after the fact. All right, So let's talk about these these hires, right, so you have and you you go through this, you talk about the two classes of workers in state government jobs. There are those that are called covered and those that are called exempt. And covered employees are what. So covered employees are intended to be kind of your your rank and file in state government. These are folks who have administrative positions or frontline workers who are dealing with with with customers. And these are folks who are supposed to be insulated from the political environment. You know, in a best case scenario, you know, you don't necessarily want a new elected official coming in and just firing the entire department in one fell swoop and putting in their friends and relatives. So this is kind of a uh it harkens back to kind of civil service reform from a century ago, right when it. Was all a patronage spoils system kind of a government set up. Exactly. Yeah, all right, so that's the covered employees, and then there are the exempt positions. And this is where people are making hay because they want to what massively increase the number of exempt positions inside the Board of Elections, like I'm thinking, what like thousands of these political appointees and such. Yeah, exactly. A lot of the headlines that I've seen have been like increases political hires by fifty percent, or you know, trying to play it up as some big deal, but in reality, we're talking about seven positions that seven additional at will employees, you know, to put in a more of a corporate governance language, people that the state. Auditor can directly hire and fire and fire. Yep. Yeah. And I've looked at some of the job descriptions and a lot of it is more, you know, senior leadership. There's a communications position in there. I mean, it's things that kind of makes sense that you would want to have your people in there who kind of buy into the mission and the vision for where you're trying to take an office. Right. And this usually when the legislator you get a new governor. Right. We saw this with McCrory, We saw it with Cooper, right where they get a number of these exempt positions they were allowed to hire in their administration. And the point is that if you've got a new leadership team in place, and this goes for business too. I think you mentioned this in the piece, right. You want to bring in people that align with the vision to direct the operator, the entire operation towards the mission's goals. And if you don't have people that have buy in to that vision, then they then they need to they need to leave. I mean that's like, that's pretty standard in the private sector. So so Chakra of Showers the elections Bill not as controversial as one might have deduced from the coverage. Let me ask you now about this other piece that you wrote about over a long leave politics. This economic development tool and everybody's favorite topic and I've covered it over the years. It's the tiff. It's the tax increment financing. That's not what this is called, but it basically operates the same way where you have like a zone where the you take whatever new property taxes are collected in that zone, and you divert them back to that zone for the economic development for a set amount of time, and that's supposed to spur the development inside the zone, make it, you know, nicer. We've got one of these in Uptown Charlotte, for example, where there's an additional property tax revenue that's kicked off and it funds uptown Charlotte's stuff. Right, So this is what North Carolina has already with what's called a development financing district, right right, all right, and so what's the news. I'll try to explain it all a little more without putting your listeners to sleep. You know, it gets pretty wonky pretty fast. But yeah, Basically, North Carolina a decade or so ago created these little districts that cities can create to help pay for new roads and infrastructure. It's basically a financing tool that they can use to borrow the money to help redevelop an area. And what this bill does, it's actually now a law. Governor Joshua signed it into law yesterday, but it kind of attacks the same problem from the other angle. So this is, you know, in these. Districts where the government is borrowing money to do the public infrastructure, this is intended to help it make it easier for developers to make the math work on their developments. You know, a lot of these deals there's a lot of money at stake, there's a you know, there's a lot of loans involved that developers are taking on. And basically what this does is says that we will vent you from a good deal of the property taxes that you would pay on these buildings. Until you get them sold. So it's just kind of a temporary float to help developers make the deals pencil right. So it's not some giveaway to developers because the all of the property taxes go back to normal as soon as they sell the property. And I thought you gave a good example in your piece about you know, for example, a small town's got some you know, big mill that's been closed down and it's just a big eye sore, but nobody can do anything with it, and there's no funding for it. And if a developer were to come in and try to do something, it's a massive risk and it may need infrastructure upgrades and that sort of stuff. And so this would be a tool that they could that they could. Use that's exactly right, and say, you know, the developer wanted to turn that old mill into a commercial building that's going to have offices and whatnot. Basically, what this would say is, you know, we're not going to stick you with a huge tax bill until you can you get tenants in and get the building up and rolling. Right. So, if people want more information on this measure, and Andrew's thoughts on it. You can go to long leavepol dot com as well as this other piece called my public comment. Did you submit that, by the way, the public comment? Did you send that over to the General Assembly? I did not, but I imagine that the right people read it. I imagine you are correct. Andrew. Good to talk with you, sir. Keep up the good word. Appreciate you, thank you, all right, take it easy. All right. For over a year now you've heard me talking about Create a Video. Great local company in mint Hill that has helped more than two million families preserve their memories by turning old photos, VHS tapes, film reels, and slides into lasting keepsakes. Now creative videos helping families and groups create brand new memories while they're traveling. Introducing group travel videos perfect for family reunions, church mission trips, group vacations, destination weddings, student trips, senior adult groups, sports teams. 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And when you do that, ask for Katie. But Pete, can I just email? Well, yes you can. You can email Katie Katie at group travel videos dot com. Group travel videos from old memories to new adventures, preserving life's moments for a lifetime. ALRIGHTY, so came across a story and you know me, I've talked about this off and on over the last few years Hoa's and I came across a story an update basically to a story that's been going on for several years in Catawba County Cheryl's Ford specifically. I was not aware of the history of this, uh, this neighborhood, but it it highlights the need for legislative reform in North Carolina for the way hoa's operate, specifically the way they operate before the developer leaves. So a lot of people don't realize this, but North Carolina has a metric buttload of that's the official data from the Legislative Research Council. That state law is interpreted to mean that it's like the Planned Community Act, and developers use this Planned Community Act in order to do a lot of the developments in North Carolina, like almost all of them nowadays, And this wasn't always the case, right, So what you have is this law that developers either misinterpret that they have to follow or they want to follow because it gives them complete control over the development. And I understand why that would be attractive to a developer right there, fronting a lot of money, they have to go through all the permitting, they've got to put the infrastructure in. Like people don't realize this, but you know, most residential roads are privately built. They get turned over to local governments after they're built and they're built to government standards, but they're built initially by the private sector, and the builders are putting up a lot of money. The developers are putting up a lot of money. And if you were to say, create a neighborhood. In this case, this neighborhood is called Magnolia Cove and it's in chryls Ford, Catalba County. And I think they've got like eighty homes, so not very large, although I mean I'm saying that because I live in and I live in an hoa that's got over a thousand homes. It's pretty big, so not very large, eighty homes. And when the developer is in there building, the last thing that the developer wants or needs is to have a bunch of residents who have just moved in that are now in control of the hoa, right, because you might imagine that could turn into a pretty adversarial kind of a relationship pretty quickly. The developer has complete control as the quote unquote declarant they're the ones that go and get the deeds done right. They're the declarant because they filed declarations with the Register of Deeds and such. They file the paperwork, so they are the declarant, they are also the developer, and they are also then as the declarant the HOA board, they're all of it. And you can see where this might be problematic as well, because they get to write the rules however they see fit, and they get to change the rules whenever they want to whatever they want. And it's just a. Simple majority on that HOA board if it's under the control of the declarent, that's it. And usually the declarant HOA board is like one shot caller that works for the developer or is the developer, right, and then two employees and so the two employees are not going to vote against the boss, right, So there's one person basically making these decisions, so they can rewrite all of your uh they call them the CCRs. For people who don't live in an HOA, these things are called covenants, rules, and restrictions I think or yeah, I think that's right, and or maybe it's conditions. But anyway, these. Are your rules that are like these things. You cannot change these things except for a set process if you are resident controlled. But as a declarine controlled HA, the HA board can just change it. And that just takes one person basically to tell the two underlings, we're changing this, and then they file a piece of paperwork, they file an amendment to their declaration with the Register of Deeds. Boom, You're done. That's it. You control the amount of money that you charge the homeowners. You can give them special assessments, nail them with massive special assessments without any vote of the homeowners. And then if you make such terrible decisions that the property values of those homes plummet or they can't you know, people can no longer sell their homes because the neighborhood gets such a bad reputation. Right, there isn't really anybody to hold liable for that, because the purpose of an HOA at its core is to protect home values. That's really it. Now. I know, residents when they get in power, when they get control of these HOA boards, they go crazy too. And that's what everybody tends to focus on in like a lot of media stories are about you know hoas that go crazy with the you know, finding people you know, oh you have too, you know your grass is too high. That's one hundred dollars a day. Boom. And then we're going to put a lean on your house and we're going. To take your house, and like all of that's egregious too, and there is actually legislation that has been working its way through the General Assembly to combat that. But I want to focus with this story on the declarant the developers when they're in control. This story from WSOCTV by Dave Flaherty or Sorry Farty, homeowners in the Magnolia Cove subdivision in Catawba County said they are facing steep HOA increases, with monthly dues going from three hundred and fifty dollars a month to one thousand, two hundred and fifty on top of a special assessment of ten thousand dollars. This is insane. That's nuts. Okay, that is absolutely nuts. First off, how many amenities do you guys have? Do you have private roads? Or something like? Why? Why are your assessments so low now? Or so high rather now? One of the things that developers do when they are in control of their hoas is that they will hold the monthly assessments at a low cost. They set their monthly assessments too low, too low to fund the maintenance and replacement costs over time. That's called the reserve funds. Right, You always want to be putting money into the reserves. It's like a savings account. And so this way, when you have to replace that monument at the front of the neighborhood, you have money built up in the reserves, so you don't have to now hit everybody with a special assessment to pay for the monument that's falling apart. Right, If you have a pool, you need money to fund the repairs and the ongoing operations, yes, annually, but you also need reserves built up. So this way, when you have to do like you know, replastering or something, you know, doing new tile work or whatever, that you've got the money to do that ten fifteen years down the road. So my reading of these stories and I went looking for a website that's touting all of the amenities or whatever at this community, and I found none. I found some homes listed for sale, but there's nothing in there about like how many pools do they have, do they have like a fitness center, do they have you know, tennis courts, basketball courts, whatever, all of these other amenities. The only thing that I see from these stories is a pool. That's it. One pool, And apparently everybody was charged like twelve hundred dollars when they moved in to pay for the pool, which according to some of these reports does not appear to have ever been built. So they got nailed. And usually they wrap that into the it's like a capital fee, and they stick it in with the mortgage when you or the loan I should say from the bank. So this way you're not paying for it immediately. You just pay for it over the life of your mortgage twenty thirty years. But they get charged like twelve hundred dollars at closing towards this pool. And if there's eighty homes, that would generate about ninety six thousand dollars for the community to build a pool. That may not be enough. I don't know. It depends on the size of the pool, but that apparently has not been built. They also are supposed to have lawn care, which by the way, that should be a separate charge because you're going to change companies and that sort of thing, but you should know what that charge is for the lawn care. But the developer, as the declarant the HOA board, they will set the assessments too low. Why because they want you to buy the house, so they will they will take losses on an annual basis while they're selling the homes and then they bolt, they leave. See, and this is what jams up, Like what's the one is the palisades right down in Steele Creek. This is what jammed them up where they had their massive road work that needed to be done and it was never budgeted, They never were paying for it because the developer was in control of the HOA. And then as soon as the developer gets their bond back from the local governments, they're gone. And all of a sudden, you get these residents that walk in and they're looking at the books and like. We don't have any money. This is a huge problem. This is what as part of the as part of the one cent sales tax referendum in Mecklinberg County for you know, transit or transportation depending on who you're trying to convince to vote for the bond referendum or the sales tax referendum back in November, part of that funding was for a thing called orphan roads. Don't know how much money is going to be devoted to it, don't know which neighborhoods and which roads are going to be on the list. Don't know what criteria is going to be used. However, that was put on that list of funding priorities by the Mecklenburg County Commissioners. Why well, you've got neighborhoods outside Charlotte city limits that had to build to the city code and when they built their roads to the city code, and now they can't get annexed in involuntarily because the state changed that law about a decade ago. Now they can't turn the roads over. So now they have to take the roads private or they got to get them turned over to NCDOT. Ha ha ha. DOT won't take those roads because they're built to different standards that the DOT will not accept, namely, planting of trees between sidewalks and pavement, the hell strip or the planting strip. Whatever you want to call it. Charlotte requires trees and NCDOT won't take trees. Oh and if you think, oh, we'll just cut the trees down, yet no, because we of the tree Ordinance that the City of Charlotte passed, So you probably can't take the trees down. So now you have to fund your roads. See the problem there is like I think I saw as like one hundred and fifty roads something like that in Mecklemburg County alone that are orphan roads. They have no owner, and so they just deteriorate. And the declarant by not funding the roads through putting some money a wave out of the assessments every single year, so in ten, fifteen, twenty years when you have to do the repaving, you've got money there. But that hurts their ability to sell as many of the homes as possible. They would love to be able to say, it's only look, it's only a fifty dollars a month, ehoa fee. Oh my gosh, that's so cheap. Let me buy two houses here, right, And then of course the builder bolts and the residents get to look at the books for the first time, which, by the way, legally they're supposed to be able to see, which aparently was not happening up in Magnolia Cove in Catawba County. They get a look at the books and they realize we have been underfunded. And this is even worse for town home communities because they have shared roofs, they've got shared systems, and so they're having to nail their residents with massive special assessments and massive increases in their monthly dues. And the problem here is the developers are under no obligation to set those assessments at a level that generates enough revenue to cover those costs. Like this is a system that is desperately in need of some reforms at the legislative level. Let me jump over to the text line. Jennifer says, my mother lives in a small two bedroom condo in Quail Hollow Estates and pays over five hundred a month in HOA fees. It's ridiculous. She's had several assessments over the last two years as well. I keep telling her she needs to demand an independent audit of their finances. First off, all of those finances should be available to all residents by the management company. Also, it's my understanding that some of these properties in Quail Hollow Estates share chillers and such. I don't know if the condo does, but I would imagine it does. But in these types of shared residences, you are always going to have higher assessments because you're paying for roof, you're paying for siding, right, You're paying for HVAC stuff, you're paying for lawn maintenance. So the bills are always going to be higher. And single family homeowners do pay those same things. They just pay for them all at once. Like every single family homeowner should be setting aside money for a roof replacement in fifteen or you know, thirty years whatever, it's twenty years, thirty years. But a lot of homeowners don't. They they borrow, they take credit or whatever. But yeah, also there are amenities as well that you have to pay for. Say, that's what I mean, Like you can make the determination that the assessment is too high, and so I don't want to buy there, right, but you need to know what those numbers are before you buy. And this is why developers as when they're in control of the HOA boards, they always set not always, but they usually set them too low. In fact, from this one in this place up in Catawba County, the HOA attorney H. Weldon Jones says, the assessments are being raised again. This is going from a three hundred and fifty dollars a month assessment to twelve fifty a month. Twelve fifty a month is insane. That is insane, along with a ten thousand dollars special assessment. And by the way, these homeowners apparently have filed complaints against the builder. Guy got his license suspended, his general contractor license suspended a couple of years ago for all of this. So it is hard for me to believe that this has nothing to do with any amount of bad blood. But the HOA attorney says, the assessments are being raised to adequately fund the operations of the association. These funds were paid by the declarin for years as a direct result of the sheer number of owners who were delinquent in their assessment payments or simply not paying their assessments at all. Well, you know what, there is a way, There is a way to get that money back. You know what it is. It's to put leans on the homes. And so if anybody tries to sell the home, you have to get your money, right you can. You can, as the HOA take action legal action in order to get those assessments paid. But here's the other thing. A lot of declarents don't like to do that because that looks bad if you're trying to sell the neighborhood, right, it looks bad if you've got a dozen out of eighty homes that are that got leans on them. That might indicate that there's an over zealous HOA or something. See, so they there are competing interests here or a conflict of interests for a declarin to be in control of the HOA, and so some neighborhoods they for when they draw this up, the declarant turns it over to residents at like seventy percent completion. Seventy percent of the homes get built. Now we turn it over. But that's totally up to the declarent. They can set that number at one hundred percent. They can, and then they cannot turn it over if they don't choose to. Like there, there needs to be some sort of policing on these kinds of unscrupulous actors. In the industry. Let me see. Seth says, holy smokes. Regarding the increase, Is that HOA run by the Allians? I don't know that's that would be. It's a good question. The helliat says, I would just set my house on fire and walk away. That's Kevin says. The real question is why hasn't the legislature took up this problem with the developer. I'm not aware that lawmakers are even aware of this stuff. They get made aware of this by stories like this that percolate up, it's obvious the developer doesn't want any more restrictions or more accountability in their campaign donations. Make sure that they don't happen. Look, I'm sure that they make campaign contributions to lawmakers in an attempt to protect themselves from regulation. Absolutely. But that's also why when stories like this pop up, I cover them because some state lawmakers hear these stories and they're like, well, that's wrong. And the things that I'm talking about here are not massive reforms. For example, requiring turnover to residents at a certain percentage level of build out set it you know, two thirds sixty six percent of the units get built, you got to turn it over to resident control. A requirement that your. Finances are, that your your budget is balanced annually without any kind of developer contribution, because that's how they do it. By the way, developers will they'll take the losses, so the age, so your your monthly assessments are coming in and let's say it's generating one hundred thousand dollars a month, but your expenses are one hundred and fifty k a month. So then the developer will just put fifty thousand dollars as as a contribution. They'll just throw that in to pay the bills as things arise, and then the residents don't know that they're actually running deficits. And then they get control of the HOA and they realize, Holy Toledo, we're running a fifty thousand dollars a month deficit. So you could put a requirement in that the books balance based off of HOA assessment collections. Seven oh four says our town home master insurance policy went up thirty percent in one year. That will drive quail hollow number as well. Yeah, the insurance rates. Why would anybody even want to live in a neighborhood with an HOA? Never ever would I even consider it. Yeah, but Sherry, here's the thing I would say, probably the majority of neighborhoods that are getting built now are part of this planned Community Act in North Carolina. All right, that'll do it for this episode. Thank you so much for listening. I could not do the show without your support and the support of the businesses that advertise on the podcast. So if you i'd like, please support them too and tell them you heard it here. You can also become a patron at my Patreon page or go to dpetecleanershow dot com. Again, thank you so much for listening, and don't break anything while I'm gone.