CHAPEL HILL – The local retirement community that says it seeks to protect its occupants by controlling costs has come under fire for fees that founding partner Bob Woodruff says are completely legal and known to the buyers up front.

“Lawyers handle the closing of the purchase of the home and review the purchase sale agreement, management agreement, and, generally, the declaration of condominium, all of which include all of the financial structure of The Cedars,” Woodruff says.

The Cedars is in Meadowmont Village off of NC 54 in eastern Chapel Hill. The property which was originally constructed in 2004 is nearly complete with one more single-family home to go and an addition to the DuBose Health Center. Woodruff says those construction costs won’t increase the fees at The Cedars and that the fees that are already in place will pay for them.

Benjamin Kuhn of Ragsdale Liggett, PLLC in Raleigh is representing the plaintiffs in the case, former ArtsCenter executive director Jonathan Wilner and Diane Wilner and Chapel Hill commercial real estate broker Edwin B. Hoel, Per Ole Hoel, and Linda Leekley.

Kuhn was unavailable for comment on Monday stating he was preparing for a court case on Tuesday.

He told the Chapel Hill News that the lawsuit is not against The Cedars but against the “substantial developer fees” paid by residents.

He said the lawsuit challenges the one-time membership fee of ten percent of the sales price when a unit is sold on top of the monthly fees of between $2,400 and $5,300.

Kuhn said as much as $30 million could be sought to be returned to former and current owners and that hearings might not begin before summer.

Woodruff says the financial model of The Cedars was approved by the North Carolina Department of Insurance.

He says a screening process is done before a purchase is permitted which restricts based on age, financial qualifications, and health.

Woodruff says the fees associated with living at The Cedars are generally lower than other retirement communities because there is no debt on the property since the investors front that cost.

“The fees are going to pay for the original cost of construction, plus the investment by investors and a reasonable return on that investment,” Woodruff says.

Woodruff says the return on investment is comparable to any business transaction where the landlord expects to profit from his investment.

“Just like if you own an office building, you build the building, you incurred all the costs related to that, and then you collect rent on it into the future,” Woodruff says. “So, it’s a similar-type situation in that we have built all of The Cedars including the clubhouse and health center, and so therefore we should get some kind of return on that on an ongoing basis.”

Special Superior Court Judge William Pittman told The Cedars to stop collecting the ten-percent fee; Woodruff says The Cedars is seeking a delay to the injunction and will file with the North Carolina Court of Appeals.

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