What happened: The city of Sanford has filed a lawsuit in order to effectively regain control of downtown Sanford’s historic Wilrik Hotel.

Why it’s happening: The hotel was the chess piece in an alleged $100,000 embezzling scheme by a leader of the Sanford Affordable Housing Authority in 2016. Former SAHDC board member Robert Woods is currently being prosecuted by the state Conference of District Attorneys. The Wilrik currently operates as low-income housing.

What could happen: Should the city succeed, it’s asking the court to reinstate its deed of trust on the property, and make the SAHDC pay at least $25,000 and reconstitute its board in a way that gives the city oversight authority. It’s unclear what would happen with the property if the city is able to regain control.

A lawsuit by the City of Sanford against the nonprofit agency that owns downtown’s historic Wilrik Hotel is seeking to bring control of the scandal-plagued building back under the purview of local government.

The building, which currently serves as low-income housing, has been the subject of controversy since at least 2016, when the nonprofit Sanford Affordable Housing Development Corporation gained full control after the dissolution of a management agreement with the federally-funded Sanford Housing Authority.

The lawsuit alleges that the SAHDC under the leadership of Robert Woods and Ben Gardner “seized” the Wilrik and “effectively converted (it) to private use” around February of 2016, that “the first act” by the two men was to convey “$50,000 to a banking account of one of Woods’ private business interests,” and that “Woods used at least a portion of this payment … to furnish a penthouse apartment in Baltimore, Maryland.”

Woods was charged in January with embezzling $100,000 from the SAHDC. The charges — which are being prosecuted by the North Carolina Conference of District Attorneys — remain pending as of this writing. It’s unknown whether Gardner has faced or will face any charges.

The complaint, filed in October 2019, details the building’s history beginning with its construction in 1925, its eventual fall into disrepair, its acquisition by Lee County government in 1985, and its purchase by Carolina Power and Light through a company called Wilrik Apartments LLC in the mid 1990s. It was at that time that the Wilrik was first proposed for low-income housing.

According to the complaint, Wilrik Apartments LLC was in 1998 loaned $500,000 interest-free by Sanford and Lee County governments ($250,000 from each entity) on a 30 year repayment plan, purportedly to help cover the cost of extensive renovations. Fast forward to 2011, and Wilrik Apartments LLC “was unable to service the debts on the property,” the complaint reads.

It was around this time that the proposal for the Sanford Housing Authority to acquire the building was first made — back then, the SAHDC was known to be a private creation of the SHA, controlled by its members and used “as an organizational vehicle to hold property for affordable housing.”

The transition of the Wilrik into the SAHDC’s hands became complete in 2013 through a memorandum of understanding which included the cancellation of the city and county’s deeds of trust on the building (“which had been mostly unpaid,” according to the complaint), although the SHA retained control of the building through a management agreement into 2016.

The complaint goes on to describe how, during a series of meetings in January and February of 2016, Woods and Gardner engaged in the “systemic elimination” of any SAHDC board members who were still associated with the SHA and therefore “publicly accountable,” since the SHA’s board members are locally appointed by the Sanford City Council. The result, claims the complaint, was that Woods and Gardner alone remained in charge of a nonprofit board of directors which appoints its own members. Woods apparently left the organization sometime in 2017.

“The City would not have canceled its Deed of Trust on the Wilrik in 2013 if it understood (the SAHDC) to be a privately-controlled entity and not an entity controlled specifically by a public entity … over which the City exercised its own appointment authority,” the complaint reads, going on to claim the January and February 2016 meetings at which members with public accountability were removed amount to “an unfair and deceptive trade practice” that has “alienated” “the City’s legal interest in oversight and de facto control” of the Wilrik.

The complaint requests the SAHDC pay the city “an amount exceeding $25,000” plus any interest, that the court rescind the city’s cancellation of its deed of trust, that the SAHDC be reformed “as to restore the Sanford Housing Authority’s control” over the building, and that the SAHDC pay the city’s legal costs in the matter.

And while the complaint was first served in the fall, sources tell The Rant that the SAHDC has made no effort to respond to the suit, and documents on file at the Lee County Clerk of Court show that a motion by attorneys for the city for default judgment was granted in December.

That process continued on Monday in Lee County civil Superior Court, when a judge heard a request to enter that default judgement officially. That ruling, however, had not been made as of Tuesday afternoon.

A call to Sanford City Attorney Susan Patterson was not returned. The Rant will update this story as more details are made public.