Bipartisan Affordable Housing Bills Would Provide 2 Million Affordable Homes

There is some good news for affordable housing advocates in a time of political polarization and partisan rancor: strong bipartisan support in both the U.S. House of Representatives and the Senate for The Affordable Housing Credit Improvement Act (AHCIA), introduced earlier this year as S.1557 and H.R. 3238.

Advocates report that this legislation has broad bipartisan support and that nearly half of all members of Congress, members from both parties in both chambers have signed on a cosponsors of the legislation. Both of North Carolina’s Republican Senators, Ted Budd and Thom Tillis, have cosponsored the Senate bill and at least eight members of the House from the North Carolina delegation, 4 Democrats and 4 Republicans, are cosponsors of the House bill as of July 28, 2023.

The Affordable Housing Tax Credit Coalition claims that passing the AHCIA is “the single most important Congress can take to address our nation’s affordable housing supply crisis.” The Coalition estimates that nearly 2 million additional affordable homes could be financed in the U.S. over the next decade if Congress were to enact the primary unit financing provisions in the proposed law. Passing the new law also is estimated to generate 3 million jobs, $115 billion in additional tax revenue and $333 billion in wages and business income.

The AHCIA would also help address a critical affordable housing shortage in North Carolina. A Cato Institute study published in December 2022 notes that North Carolina needs 900,000 additional homes over the next 10 years to meet the demands of a growing population. Affordable housing and workforce housing is not only a housing issue, but an “access to talent issue.” A 2021 survey of local small businesses in western North Carolina noted by the Cato study emphasized the “pressing need for more affordable housing. Local businesses directly connected this issue to the challenges of being able to find workers and pay living wages.”

Members of the North Carolina General Assembly also have introduced a number of bills in the current legislative session to address the workforce housing crisis and to authorize cities and counties to provide for more workforce housing, inclusionary zoning for small housing units, cottage homes and accessory dwelling units. Legislation also would continue to fund the North Carolina Housing Finance Agency’s workforce housing loan program.

Read the Contract: It’s the Law!

I have often in my law practice advised my clients that the first rule of contracts is: “Read the contract!” Now, after a recent North Carolina Court of Appeals decision, I can emphatically say that it is their legal duty to read the contract before they sign it.

In Mann v. Huber Real Estate, Inc., an appeal arising out a case tried in Durham County, North Carolina (COA 22-956, decided June 20, 2023), the plaintiff, Galya Mann, filed suit for money damages against her Realtor (and other defendants, including the builder). This was a case of a residential real estate purchase of a newly-built home that went very wrong after the plaintiff closed on the deal and moved into her new home. The Court’s opinion stated the problem this way:

“After Plaintiff moved into the home, she discovered numerous latent defects, including improper lot grading and drainage, improper shingle and gutter installation, foundation cracks, no moisture barrier in the crawlspace, improper mounting of the HVAC, electrical issues, water in the crawl space, plumbing problems, and biological growth. The repairs to Plaintiff’s home were estimated to cost between $83,894.72 and $90,594.73.”

Ms. Mann sued the builder, the warranty company and her Realtor. Her claims against the Realtor were that he failed to exercise his fiduciary duty to her by failing to advise her concerning the builder’s pre-printed and “standard” sales contract provisions, including warranty disclaimers and limitations of warranty and liability. The plaintiff’s claim was that “she could rely solely on the Realtor’s representation that the sales contract was a ‘standard contract’ and [that she could] forego her own review of the contract.”  (Emphasis added.) She also claimed that her Realtor should have advised her to get legal advice about the contract before she signed it.

The Court’s majority (two judges in a three-judge panel) noted that a Realtor owes a fiduciary duty to the client, “to exercise reasonable care, skill, and diligence in the transaction of business entrusted to him, and he will be responsible to his principal for any loss resulting from his negligence in failing to do so.”  However, in this case, the Court’s majority determined that the Realtor’s reference to the builder’s sales contract as a “standard contract” in answer to Ms. Mann’s question about the contract did not amount to a breach of fiduciary duty. The Court affirmed the trial court’s grant of summary judgment dismissing the breach of fiduciary duty claim (and other claims) against the Realtor, thus absolving the Realtor from any liability in the case.

On this ruling against the plaintiff, the Court stated: “According to well-established North Carolina law, one who signs a paper writing is under a duty to ascertain its contents, and in the absence of a showing that he was willfully misled or misinformed . . .  as to these contents, or that they were kept from him in fraudulent opposition to his request, he is held to have signed with full knowledge and assent as to what is therein contained.”  (Emphasis added.)

The Court’s opinion further notes: “It is well-established in North Carolina that ‘[o]ne who signs a written contract without reading it, when he can do so understandably[,] is bound thereby unless the failure to read is justified by some special circumstances.’ . . . Here, Plaintiff has failed to present evidence that special circumstances absolved her of the duty to read the contract. Plaintiff thus has a positive duty to read the sales contract and her failure to do so ‘is a circumstance against which no relief may be had, either at law or in equity.'” (Emphasis added.)

One of the three judges in the Court of Appeals panel dissented in part, disagreeing with the majority’s decision on the fiduciary duty question.  The dissenting judge wrote that “I would hold that the trial court erred by granting summary judgment to Realtor on Plaintiff’s breach of fiduciary duty claim, because there is a genuine issue of fact [for a jury to find and decide] as to whether Realtor breached their fiduciary duty to Plaintiff regarding the contract between the builder and Plaintiff.”  The dissenting judge noted that expert testimony was given in the trial that if a buyer has questions about a contract, the Realtor’s duty is to refer the buyer to an attorney.  The dissenting judge stated that he believed that “boiler plate language” in the Realtor’s agreement with Ms. Mann was not sufficient to fulfill the Realtor’s fiduciary duty to advise Ms. Mann to get legal advice, and that “failing to advise her, verbally, at the time she signed the agreement, to seek legal counsel” was a breach of fiduciary duty, because she was questioning the form of the contract.

Ellinger Carr lawyers advise clients on all kinds of contracts, including real estate purchase contracts and builder’s construction contracts. We draft, negotiate and revise contracts for clients. Let us know if you need our advice and assistance on any contracts and transactions you are contemplating, and about any legal questions you may have about these transactions, and we will read and help you understand the contract before you sign.

North Carolina Housing Credit Awards Announced; $1.1 Billion in New Investment in Affordable Housing

 

More than $1 billion in new economic investment is coming soon to build and preserve affordable housing in North Carolina, according to Chris Austin, Director of Rental Investment for the North Carolina Housing Finance Agency.

Housing credits were awarded by the NCHFA to rental housing developers who submitted over 100 applications in a competition for low income housing tax credit allocations in 2020.  The awards announced last Friday, August 14, included 42 projects in 31 counties, supporting equity and debt financing for new construction or rehabilitation of 2,730 apartment units.  Awards also were made to 17 tax-exempt bond projects totaling 1,648 units.

Mr. Austin noted that awards made in January, June and last Friday by the agency “have made this a record-setting year for the number of awards (75), units produced (6,776), and the total development costs of the awards ($1.1 billion).”

This year’s awards include housing credits for developments for both new construction and rehabilitation of existing units.  The Ellinger Carr firm is honored to be part of the teams that will be working to provide more than 1,300 new and rehabilitated affordable housing units in 14 cities and towns in North Carolina.

Since 1973, the North Carolina Housing Finance Agency has financed nearly 300,000 homes and apartments, totaling $25 billion, with housing credit awards and agency loan financing.  The NCHFA is a self-supporting public agency.

The Ellinger Carr law firm advocates for affordable housing and supports clients in their development and rehabilitation of affordable housing in our State and elsewhere in the country.  The firm also expects to advise and participate in financing transactions as part of our ongoing relationship with the City of Raleigh and its Housing & Neighborhoods department with loans in support of affordable housing developments in Raleigh, including not only multifamily housing and community development,  but also adaptive reuse of historic structures and first time homebuyer programs and initiatives.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina.   Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction specialists and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana and New York.  For assistance in affordable housing, commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com,  Sarah Goodin at sgoodin@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com or Steven Carr at scarr@ellingercarr.com.

Home Work: Building Affordable Housing in Wake County and North Carolina; Renters at Risk

North Carolina and Wake County are continuing to keep pace and to set the pace of residential real estate development in spite of months of coronavirus pandemic, and we are bucking the reported slowdown of affordable housing construction elsewhere in the United States, as reported by a recent Bloomberg News article (July 30, 2020), “COVID-19 is Killing Affordable Housing, Just as It’s Needed Most.”

https://www.bloomberg.com/news/articles/2020-07-30/the-u-s-affordable-housing-gap-is-getting-worse?

The Raleigh News & Observer reported in mid-July 2020 on a number of upcoming and proposed residential developments in Wake County, including both market-rate and affordable housing properties.    The article notes that the Raleigh City Council approved a rezoning request from Raleigh affordable housing developer DHIC and senior home developer Presbyterian Homes to redevelop the closed Memorial Presbyterian Church at 1950 New Bern Avenue in east Raleigh.  Construction is expected to commence in early 2021 with 150 units for seniors making 60% or less of area median income.

The Crenshaw Trace development is another senior affordable housing development in Wake Forest, slated to begin construction later this summer by the Taft-Mills Group, a Greenville, North Carolina developer, with 68 units (36 one-bedroom and 32 two-bedroom units) for residents over 55 making 30% to 80% of area median income.  Rents will range from $476 to $1,086, according to the N&O report, and will be supported by a Wake County loan of $731,000.  Wake County Commissioners approved loan funding of up to $12.6 million last April for the building of affordable housing, including the Crenshaw Trace development.

The Taft-Mills Group also expects to commence construction later this summer of the Walnut Trace development, a 180-unit development in 6 buildings on Rock Quarry Road in southeast Raleigh, serving families with 60% of area median income.   The Walnut Trace development will be financed by low income housing tax credit equity funding, Raleigh Housing Authority tax exempt and taxable multifamily housing revenue bonds up to $23 million, and an affordable housing loan of $2,250,000 from the City of Raleigh.

The Taft-Mills Group also recently closed and will commence construction of the Farrington Trace development in Greenville, Pitt County, 80 apartment units serving families with incomes at 60% or less of area median income.  This development is financed with 9% low income housing tax credit equity financing, and loans from the North Carolina Housing Finance Agency.

Renters at Risk

According to the National Low Income Housing Coalition and their Out of Reach 2020 Report, 35% of nearly 4 million households in North Carolina are renters’ households.  The Report states that the North Carolina worker earning an average renter wage of $15.92 per hour could afford a rent of $828 per month, but the fair market rent for a two-bedroom apartment is $919, and thus “out of reach” for many North Carolinians.

According to the Bloomberg News article, affordable housing advocates are also concerned that the COVID-19 pandemic will not only slow down construction of new affordable housing units, but that many people now unemployed due to the pandemic face eviction because they can’t pay the rent.  Pending legislation currently being debated and negotiated in Congress may extend the CARES Act eviction moratorium, which expired on July 25, and provide additional housing and financial assistance to unemployed and other struggling Americans, and to State and local governments to continue funding affordable housing initiatives.   One estimate is that as many as 40% of Americans may be at risk of eviction for non-payment of rent if the eviction moratorium is not extended and renters are unable to return to work.

Ellinger Carr lawyers are affordable housing advocates and we are honored and proud to serve our nonprofit and for-profit developer clients, and as counsel in support of affordable housing and community development initiatives for the City of Raleigh and the City of Greensboro, and other housing professionals and organizations.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina.   Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana and New York.  For assistance in commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com,  Sarah Goodin at sgoodin@ellingercarr.com and Steven Carr at scarr@ellingercarr.com.

 

Home Work – North Carolina Legislators Addressing Foreclosure, Rental and Utility Emergency Assistance, and Workforce Housing

June 11, 2020

Housing MattersAmid news of more than 1.5 million new jobless claimants in the United States this week filing for unemployment assistance, and word that 20 or more States, including North Carolina, are experiencing a new spike in COVID-19 cases, North Carolina legislative leaders are responding with legislation that will provide emergency grant assistance to keep people in their homes, with foreclosure, rental assistance and help with utility bills.

House Bill 1200, introduced and led by House Republican Conference Chair John Szoka, a State Representative from Fayetteville, Cumberland County, would provide $200 million in funding to the North Carolina Housing Finance Agency to implement programs to assist individuals facing foreclosure or eviction and needing assistance making utility payments due to financial hardship resulting from the COVID-19 pandemic.

We support and encourage North Carolina legislators to enact this legislation to empower the NCHFA to provide these emergency grants and assistance to homeowners and renters adversely impacted by the pandemic and the economic fallout and job losses.

We are also monitoring and we support passage of House Bill 1208 which would provide an additional $20 million in funding for the North Carolina Housing Finance Agency for the Workforce Housing Loan Program.  If this legislation is passed, the Loan Program funds appropriated would be allocated during the 2020 housing credit award cycle.  These funds are vital to supporting and increasing the number of affordable rental workforce housing units available to low and moderate income individuals and families in North Carolina. This bill is sponsored by Representative Donny Lambeth, R-District 75, Winston-Salem/Forsyth County, and may be on the legislative calendar this week.

 

Susan Ellinger advises Housing Authorities and Housing Executives

Susan Ellinger will be speaking and leading a housing law presentation on November 15, 2019 in Florence, South Carolina.  The Florence meeting is a gathering of the South Carolina Housing Authority Executive Directors.  Susan, a lawyer and Ellinger Carr founding member, is also former Housing Authority executive.  She will be advising the South Carolina executive directors on new developments in fair housing, domestic violence and requirements of the Violence Against Women Act,  due process rights, housing authority leases and lease enforcement, and training of Authority staff on all of these legal issues and matters.  Susan and other Ellinger Carr lawyers represent and advise Housing Authorities in North Carolina and South Carolina.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina. Providing safe, affordable housing for families, seniors and developmentally disabled persons has long been a part of the work of the Ellinger Carr law firm, in communities in the Carolinas, the Southeast and elsewhere in the United States.

Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders, and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana, Virginia and New York. For assistance in affordable housing, HUD financing, commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com, Sarah Goodin at sgoodin@ellingercarr.com, or Steven Carr at scarr@ellingercarr.com.

Housing Matters

Business Acquisitions from Start to Finish – helping clients buy and sell businesses

Steven Carr, one of the Ellinger Carr lawyers, will be a featured speaker and presenter at an upcoming seminar designed for lenders, loan officers, accountants, paralegals and lawyers on the topic of business acquisitions and helping clients buy and sell businesses.  The program is sponsored by the National Business Institute and will be conducted at the Holiday Inn North-Midtown in Raleigh on Monday, December 16.  For more information about the seminar, or to register for this program, call NBI at 800-930-6182 or log in at www.nbi-sems.com, or contact our office about how to register for the program.

Steven will be leading the discussions on structuring and drafting the acquisition agreement, both for equity interest purchases and asset purchases, and on the ethics of business acquisitions.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina.   Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders, and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana, Virginia and New York.  For assistance in buying and selling a business, starting up a new business, acquiring commercial real estate and other corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Steven Carr at scarr@ellingercarr.com, Sarah Goodin at sgoodin@ellingercarr.com, and Heather McDowell at hmcdowell@ellingercarr.com.

 

Wakefield Commons celebrates grand opening; 80 affordable housing units

A new, multifamily affordable housing community providing homes and serving 80 families and individuals in the Wakefield community of Raleigh celebrated its grand opening on July 27.

The developers, the Taft-Mills Group, hosted a ribbon cutting and grand opening event to thank their investors and lenders in the endeavor. CAHEC is the equity investor, and the purchaser of tax credits for the project allocated by the North Carolina Housing Finance Agency (NCHFA) in 2015. First Citizens Bank was the construction lender and Centrant and the City of Raleigh provide permanent loan financing for these affordable housing units.

Dustin Mills, President of Taft-Mills Group, hosted the event with his partner, former State Senator Tom Taft. Chris C. Parrish, a member of the NCHFA Board of Directors, and Raleigh City Councilwoman Nicole Stewart, also spoke and helped to cut the ribbon.

Sarah Goodin and other Ellinger Carr lawyers served as the developer’s legal counsel in support of the Taft-Mills Group for this development project, including the equity and debt financing and other development activities and legal matters affecting the project.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina. Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction specialists and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana, Virginia and New York.

For assistance in commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Steven Carr at scarr@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com, and Sarah Goodin at sgoodin@ellingercarr.com.

Susan Ellinger advises Housing Authorities and Housing Executives

Susan Ellinger will be speaking and leading a housing law presentation on November 15, 2019 in Florence, South Carolina.  The Florence meeting is a gathering of the South Carolina Housing Authority Executive Directors.  Susan, a lawyer and Ellinger Carr founding member, is also former Housing Authority executive.  She will be advising the South Carolina executive directors on new developments in fair housing, domestic violence and requirements of the Violence Against Women Act,  due process rights, housing authority leases and lease enforcement, and training of Authority staff on all of these legal issues and matters.  Susan and other Ellinger Carr lawyers represent and advise Housing Authorities in North Carolina and South Carolina.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina. Providing safe, affordable housing for families, seniors and developmentally disabled persons has long been a part of the work of the Ellinger Carr law firm, in communities in the Carolinas, the Southeast and elsewhere in the United States.

Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders, and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana, Virginia and New York. For assistance in affordable housing, HUD financing, commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com, Sarah Goodin at sgoodin@ellingercarr.com, or Steven Carr at scarr@ellingercarr.com.

Housing Matters

Practice tips for Housing Authority drug-related evictions

law books

The North Carolina Supreme Court announced its decision on August 19, 2016 in the Eastern Carolina Regional Housing Authority v. Lofton case.  This case was appealed by the Housing Authority from the earlier (2014) Court of Appeals decision entered in favor of the public housing tenant, Ms. Sherbreda Lofton. View the case in this link. Eastern Carolina Regional Housing Authority v. Lofton decision NC Supreme Court 8.19.16 32PA15-1.

The highlight of this decision is that the Court of Appeals went too far in requiring or permitting an unconscionability standard or equitable defense in summary ejectment proceedings.

The Supreme Court said that “unconscionability is not a consideration in summary ejectment proceedings. To prevail in a summary ejectment proceeding under North Carolina law, a landlord must establish by a preponderance of the evidence that a tenant breached the lease.”

And, because this case involves more than a private landlord-tenant relationship, the Supreme Court said that “when the government is the landlord, certain duties arise under applicable law.” In this case, the Supreme Court affirmed the outcome of the Court of Appeals and the trial court decisions ruling against the Housing Authority, “namely that summary ejectment was inappropriate in this case” but “we do so for a different reason. We hold that plaintiff [the Housing Authority] failed to exercise its discretion as required by federal law before pursuing defendant’s eviction.”

Here are some practice tips that follow from our reading of these decisions:  (1) Train your housing management team to provide updates on these new developments in the law; (2) Gather the facts and carefully document the case if the Housing Authority determines that an eviction is appropriate in the circumstances; (3) Provide the tenant with an opportunity to explain any mitigating circumstances that might cause the Housing Authority to determine not to evict; (4) Consult with the Housing Authority’s lawyer, and get a thorough legal review of the case; and (5) Exercise discretion in all such cases, and use common sense judgment about the right thing to do under the unique circumstances of each case.

Note further that North Carolina law expressly provides for immediate and expedited evictions where the court finds:   (1) Criminal activity has occurred on or within the individual rental unit leased to the tenant; or (2) The individual rental unit leased to the tenant was used in any way in furtherance of or to promote criminal activity; or (3) The tenant, any member of the tenant’s household, or any guest has engaged in criminal activity on or in the immediate vicinity of any portion of the entire premises; or (4) The tenant has given permission to or invited a person to return or reenter any portion of the entire premises, knowing that the person has been removed and barred from the entire premises pursuant to this Article or the reasonable rules and regulations of a publicly assisted landlord; or (5) The tenant has failed to notify law enforcement or the landlord immediately upon learning that a person who has been removed and barred from the tenant’s individual rental unit pursuant to this Article has returned to or reentered the tenant’s individual rental unit.

In these cases (under North Carolina General Statutes sections 42-63 through 42-76), the tenant may present evidence in affirmative defense of the ejectment, and to seek to avoid eviction, that the tenant was not involved in the criminal activity and that: (1) The tenant did not know or have reason to know that criminal activity was occurring or would likely occur on or within the individual rental unit, that the individual rental unit was used in any way in furtherance of or to promote criminal activity, or that any member of the tenant’s household or any guest has engaged in criminal activity on or in the immediate vicinity of any portion of the entire premises; or (2) The tenant had done everything that could reasonably be expected under the circumstances to prevent the commission of the criminal activity, such as requesting the landlord to remove the offending household member’s name from the lease, reporting prior criminal activity to appropriate law enforcement authorities, seeking assistance from social service or counseling agencies, denying permission, if feasible, for the offending household member to reside in the unit, or seeking assistance from church or religious organizations.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina.   Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana and New York.  For assistance in affordable housing, HUD financing, commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Steven Carr at scarr@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com and Sarah Goodin at sgoodin@ellingercarr.com.  free-vector-pen-clip-art_005117_3