Ben Schachtman: Alright, Nikolai. For the last few weeks, you’ve been covering the mold crisis situation at the Holly Plaza public housing complex, located in Onslow County. The town moved all the residents out to test for mold, then scrapped any hope of remediating those apartments when they realized how extensive the problem was. Now, there’s a federal lawsuit. You’ve been poring over the 37 pages of this thing, give us the major takeaways.
Nikolai Mather: So the claim was filed on November 27. The lead plaintiff is Briana Paull. She's a mother of four and has lived in Holly Plaza since 2020. She's also been an outspoken advocate for the tenants, showing up to town meetings and candidate forums. Last month, she came to an early morning meeting to tell town officials about the mushrooms growing from her walls.
Paull is just one of the plaintiffs, though — there are many others who have joined this case who have similar stories to hers. The last count I heard was 56. Ultimately, if they win this court case, the payout will benefit every tenant impacted by mold, regardless of whether they've signed up or not.
BS: What are the potential outcomes for this case? How do you think this could play out?
NM: Well, they can either settle or go to trial. Settling would probably save all sides some money, which I know is a priority for the town of Holly Ridge. It's hard to say how long going to trial could take — could be several months, could be several years.
It's important to note that not every tenant has signed up for this lawsuit. And it seems like the reason why is money. Holly Ridge has offered lease buyouts to every resident, but you can only sign on if you agree to not pursue legal action against Holly Ridge. Some residents are willing to go to court to try for a bigger payout. But, like, a lot of folks in this neighborhood live on less than $1,000 a month. They will lose housing by Jan. 1. Some of them simply can't afford to wait for a payout that's not guaranteed.
Anyways. We'll know more pretty soon. Once the defendants receive a summons, they have to respond within 21 days.
BS: Well, let's talk about the defendants, too — the company that managed Holly Plaza, various contractors — but also the town itself.
NM: You know, one thing that the town of Holly Ridge has been stressing is how they don't want to place the burden of fixing things on the taxpayer. The thing is, this case has the potential to be extraordinarily costly. According to the lawsuit, the plaintiffs are asking the jury to determine the amount of restitution and punitive damages. But given the fact that this is a federal class action suit, that amount is certainly going to exceed $5 million. For context, Holly Ridge's 2022 budget was $8 million.
BS: Although, as you said, we’re a long way from a resolution where we see how much residents actually benefit from the suit.
NM: That’s right. Now I have a question for you, Ben. Several Holly Ridge town residents have been asking me how these legal proceedings will impact them — specifically, like, will the town go bankrupt, and will this increase our taxes? You've covered plenty of lawsuits against the government, what can happen?
BS: Well, most of time, the government has insurance — but sometimes, insurance doesn’t or won’t cover it. Back in 2018, a wrongfully convicted man won a settlement against the City of Wilmington, which paid $7 million out of its general fund over several years.
NM: And if a city takes a big enough financial hit, what could happen?
BS: Well, worst-case scenario is a town can actually be dissolved because it’s just not financially solvent. Back in 2017, the town of Centerville, voted to dissolve itself and, after the General Assembly voted to approve it, the town vanished. A more recent law gives the Local Government Commission (L.G.C.), part of the State Treasurer’s office, the power to dissolve towns — they did that to East Laurinburg, which ceased to exist in June of last year.
Towns can also go bankrupt, just like a person. That happened to Asheville in 1930. Just like a person, it had to tighten its belt to make it out of bankruptcy – the city cut its budget in half, cut back its fire and police departments, laid off its whole street maintenance crew, cut salaries, abandoned or leased away city properties. It was kind of nuts — and that’s a large part of why the LGC was created.
NM: So, besides dissolving towns, the LGC can step in in other ways, right?
BS: Yes the LGC. can actually take over a town or city’s finances, although they’ve done that less than a dozen times in about 90 years. So, it does happen, but it’s rare — and from my experience, it’s usually financial mismanagement and dwindling tax bases in rural areas – I’ve never seen a town taken out by a lawsuit, but I don’t think it’s impossible.
NM: We’ll have to wait and see.
BS: For sure — but for now, Nikolai, thanks for your reporting.
NM: Thank you for yours!
