Property rights and wrongs | Bob Burtman | Indy Week
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Property rights and wrongs 

Hillsborough is a small town, and the rumors have been flying small-town style: Francis Henry is having money problems (highly unlikely); Francis Henry is living in the decaying Colonial Inn (true, at least part-time); Francis Henry wants to tear the inn down, offset by the rumor that he's sold the inn for a huge profit (both false); Francis Henry has two heads and eats children for breakfast.

Actually, that last rumor hasn't been aired, but it wouldn't be a surprise to hear it issued in coming days. Folks are talking about Francis Henry because he owns the venerable, antebellum Colonial, one of Hillsborough's most historic and culturally significant resources, and he's been embroiled in a dispute with the town over what might happen to the inn since he bought it at auction more than three years ago. And though a lawsuit against Henry over the condition of the inn was settled at the beginning of July, the disposition of the property remains very much up in the air.

On one issue, most everyone in town can agree: The inn is in need of substantial repair and renovation before it can reopen in any capacity. An orange-yellow fungus grows in gobs on a drainpipe near parallel rows of jagged and rotting siding. Water drips inauspiciously from a wing roof hours after a rain. Swaths of tar paper cover broken windows and foundation holes, some still accessible to rodents and other intruders. A faded sticker on the front door serves as a sad reminder of the Colonial's better days: "We've been nominated as one of CitySearch's Best!"

Less than two years after Henry outbid a small field for the inn, the town filed suit against him under its newly minted demolition by neglect ordinance. The only property ever cited under the ordinance, the building had suffered through decades of neglect even as it earned a reputation as a classic Southern comfort-food restaurant. Henry had done nothing with the property since his purchase, perhaps because (as he told several sources) he hadn't really looked at it carefully before plunking down his $410,000 and didn't realize how much work had to be done to get it seaworthy again.

The lack of movement worried residents and town officials who see the Colonial as the centerpiece of Hillsborough's historic district, which draws thousands of visitors annually from the Triangle and beyond. So they tried to force his hand by invoking the demolition by neglect ordinance.

Similar ordinances have been passed in many North Carolina cities and towns as a means to prevent the decay of historic properties. Wilmington, for example, uses its ordinance several times a year with great success--in fact, Henry owns an historic downtown house that was cited for having boarded-up windows last year. The ordinances generally ban aesthetic as well as structural deterioration; procedurally, they call for a notification of violations and a 30-day window to make repairs, followed by an enforcement action and a $100 per day fine until repairs are completed.

But Hillsborough watered down its version in response to vague concerns about overzealous enforcement, limiting its scope to matters of "structural integrity" that are open to interpretation, especially given that violations are determined by an exterior visual survey rather than a comprehensive inspection. Instead of prohibiting boarded-up windows as well as more significant structural and architectural blight, the Hillsborough ordinance permits boarding and other temporary fixes as a solution to broken windows or exterior holes. Indeed, Henry made superficial "repairs" to the Colonial a year ago consisting mostly of tacking tar paper over the worst structural breaches. While the violations cited by the town "were not addressed optimally," acknowledges town attorney Bob Hornik, they satisfied the letter of the law.

The ordinance also expanded the standard procedural mechanisms, including a provision that allowed for a six-month delay on any work if the property was listed for sale. Perhaps not surprisingly, Henry put the inn on the market (for $1.7 million) at the end of the 30-day window. The town challenged the validity of the listing and filed suit anyway, but it's hard to see how Henry was afoul of the law on that point.

The flaws in the ordinance helped inspire the town to settle without collecting more than $35,000 in fines that had accumulated in the interim. Instead, Henry agreed to donate $2,500 to the town's historic preservation efforts. Town officials are planning to revisit the ordinance in coming months, though it's not clear if an agreement can be reached to bring the law more in line with others of its ilk. Though folks on both sides are making nice and talking cooperation, an undercurrent of confrontation is still palpable.

Most of the attention surrounding the Colonial has been focused on Henry and his perceived failings as an owner. He's a pretty easy target: A man of independent means whose family foundation has donated substantial funds to the UNC athletics programs (the university's lacrosse and field hockey stadium bears his name), Henry has nevertheless been sued numerous times by people who claim he owes them money. These include his former Rathskeller partners, an ex-landlord, and a fraternity that sold him the 19th-century Martin-Dey house in Chapel Hill.

The latter has been the subject of an equally intense battle over its fate: Henry applied for a permit to demolish the structure in 2002, only to be stymied by the town's Historic District Commission, which held him off for a year and a half. When the town's options expired, Henry idled for another year before selling the place to an acquaintance in New York, though he's admitted publicly that he still controls the property. The Martin-Dey house may yet meet the wrecking ball, much to the chagrin of Chapel Hill preservationists who note that the building is one of only 25 in town dating back to the 1800s.

Whether an eccentric character who doesn't perceive deadlines in traditional terms or a stereotypical rich guy who doesn't like anyone else telling him what to do, Henry has not helped his cause with his recalcitrant behavior, and his reticence with the town and the media has fueled the negative speculation. After returning a call from the Independent, Henry seemed puzzled at being asked questions, finally begging off. "I don't go with the newspapers or magazines," he said.

To be fair, figuring out what to do with the Colonial is no easy problem to solve. Inn owners have gone bankrupt throughout its history, and given the high cost of renovation (estimated at between $1 million and $2 million), coming up with a business plan that has any chance of success will take time and careful planning. Henry's attorney, Gordon Brown, says he's progressing on that front, and though Henry has not provided the details, it's certainly in his interest to use the property productively.

The real lesson from the Colonial has less to do with the personality quirks of its owner than with the basic concept of property rights, a hot-button issue that has become even more heated in the wake of a recent Supreme Court decision. In that case, the city of New London condemned 15 homes in its waterfront district in order to turn them over to a private developer. The increase in property taxes, the city argued, would benefit the public and justify the condemnation.

North Carolina property rights advocates feared a ripple effect from the decision. But state law allows condemnation only for specific public purposes outlined in the statute, such as roads and sewer lines, and experts say it's doubtful that municipalities could replicate the New London land grab without General Assembly approval, another improbable scenario. No chance, in other words, for the town of Hillsborough to try anything dramatic with the Colonial in the name of public interest.

On the other hand, the law protects the Colonial, as well. Unlike the Martin-Dey house, the inn is listed on a state register of historically significant structures, meaning that it cannot be demolished without permission from the town's Historic District Commission, which won't happen. And the ability of the town to craft a better demolition by neglect law provides sufficient protection from disintegration. Conversely, the town can facilitate a positive outcome by offering Henry tax credits or other incentives, for which he's reportedly angling. The town is operating from a position of strength, whether or not it has the will and expertise to flex its muscles.

Town residents would doubtless have been happier if other Colonial bidders had prevailed at the 2002 auction. Jay and Maryann Vigotov of Chapel Hill would have rehabbed the inn in stages, beginning with the ground-floor restaurant and catering facilities. Tom Roberts, who owns a bed and breakfast next door and almost bought the Colonial for $532,000 from the previous owners before they went bust, would have done likewise.

But just as you can't often pick your neighbors, the town couldn't mandate who bought the Colonial then, and can't dictate what the current owner does with the place now. Whether the property is ultimately reincarnated as a restaurant and inn, a private residence or some other enterprise, North Carolina seems to have achieved the proper balance between property rights and historic preservation. All that's left is for the various interests to sit down at the table and act like reasonable adults.

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