Asheville – Asheville City Council approved taxpayer subsidies for land transactions for two low-income housing developments. The stated objective was to address the shortage of housing affordable to households earning no more than 60% of the area median income (AMI).
The first subsidy came in the form of a discounted land sale. Early in 2020, the city purchased 319 Biltmore Avenue from Duke Energy Progress, best known as the former site of Matthews Ford. The purchase price, $5.3 million, was far less than the assessed value of $13,132,900, but it was what Duke had paid in 2014 and was still considered fair-market value. Duke had planned to build a substation on the site until the city intervened on behalf of public fears, with the promise of using the land to construct affordable housing.
Following a request for proposals (RFP) process in which the winning bidder withdrew, the first runner-up, Laurel Street Residential, came before the city council requesting approval for a 215-unit, mixed-use, largely residential development. The developer proposed availing 43 units to people earning no more than 60% AMI and another 22 units to people earning no more than 80% AMI. Laurel Street was in negotiations with the Housing Authority of the City of Asheville to procure Housing Choice vouchers for about half of the “affordable” units, all of which would be rent-controlled for 30 years. Amenities would include a residential lounge, a fitness center, a computer room, a mail room, greenspace, and on-site parking. About 1,000 square feet of the project would be set aside for use by a (presumably to-be-determined) nonprofit. The city’s subsidy would begin with selling the land to Laurel Street for $1. On top of the $5.3 million purchase price, the city had invested about $0.4 million in site improvements and was committed to paying an additional $0.4 million to get a traffic signal on Biltmore Avenue for ingress and egress to the site.
Councilwoman Antanette Mosley said this would be the first time the city had partnered with a majority-black development firm. She added that this was among the most well-credentialed firms with which it had done business as well. Its president and CEO, Dionne Nelson, was a member of Delta Sigma Theta who graduated from Spelman College and obtained her MBA from Harvard. The presenter, Co-Senior Vice President of Development Ronn Stewart, graduated from Clemson and studied architecture at “the” Ohio State. The firm also “has committed to 30% MWBE (Minority-and/or Women-owned Business Enterprise) participation in the project’s construction.” Mosley said she was “very proud” to support the proposal.
Councilwoman Kim Roney, following through on her promise to push for more environmentally-conscious design, wanted to know if this apartment complex was going to provide car chargers and was told it likely would. Councilwoman Sandra Kilgore, concerned about the residents in this food desert who might not have enough time or money to catch a bus and buy groceries, suggested using part of the 1,000 square feet for a small grocery store. Speaking during public comment, Jared Wheatley suggested that if the council wanted to create more affordable housing, members should stop adding non-housing elements to projects placed before them.
Councilwoman Sheneika Smith asked how the developer of this mixed-income development intended to foster a sense of community among the residents of his project and those of the adjacent, exclusively low-income Maple Crest Apartments. She suggested that Stewart’s firm conduct a community survey “and see what they want.” The project’s approval was unanimous.
The second deal on the agenda was a request from Mountain Housing Opportunities (MHO) for a 0% interest, $850,000 loan with payment deferred for 40 years. The city was also expected, at some time in the future, to be on the hook for another $661,100 to bring it on par with project funding anticipated, but not yet approved, from Buncombe County and the Dogwood Health Trust, each. In typical fashion, MHO’s request required bending of policies. Years ago, former Interim County Manager George Wood cracked down on the absence of fiscal responsibility the organization’s modus operandi posed for handling taxpayer dollars; his predecessor, Wanda Greene, previously remarked that she didn’t ever expect to see MHO pay off at least one particular loan. The perception was that MHO would get free money at 0% interest with a balloon payment and then, decades down the road, refinance the loan with similar terms. On the bright side, MHO does add a considerable amount of quality, well-maintained, affordable housing to the city’s inventory.
The city, therefore, went into this agreement cautiously. The staff report noted, “The request does not fall easily into the Housing Trust Fund Policy,” and so the city required a deed of trust to secure the loan and assign itself first position. On the day of the meeting, MHO agreed to additional terms; namely, “If the project does not commence construction within three (3) years of the property purchase, MHO will be required to sell the property and the city shall be entitled to the full proceeds of the sale, even if in excess of the loan amount, less any value attributable to improvements made by MHO as well as due diligence costs expended by MHO in an amount not to exceed $100,000. If the property is not sold, or if the proceeds from the sale are not enough to repay the loan, the city may seek any other legal remedies pursuant to the deed of trust in order to ensure repayment. If tax credits are approved for the project within the three (3) year time period, this deadline may be extended for up to two (2) more years. ”
The land in question was 1.31 acres at 16 Restaurant Court, behind the Mountaineer Inn on Tunnel Road. The City Council had previously approved an award of $1 million to another developer for constructing affordable housing at that site, but his project fell through before any money changed hands. MHO was now proposing the construction of 50-60 apartments rent-controlled as affordable to households earning no more than 60% of AMI for 40 years.
As a special touch, 10-12 units would be reserved for people in foster care who have reached the age of ineligibility; that is, kids who don’t have mom’s basement as a fallback position. Staff reported that the National Alliance to End Homelessness had found, “between 31% and 46% of youth exiting foster care experience homelessness by age 26.”
Manheimer observed that it was very expensive for the city to be supporting affordable housing through land acquisition, but Roney added that if the city wanted to pay reparations, it was going to have to return more land of equal or greater value than it now possessed. The Council approved MHO’s request unanimously.