Asheville – The hot topic at Asheville City Council’s five-hour meeting on April 23 was the proposed business improvement district (BID). In anticipation of 100 attendees, the meeting had been moved to the Civic Center.
Among those who had taken time off work to comment were several suspicious of council “holding them hostage” before scheduled presenters arrived at 7:00 p.m. Many self-described, in not so many words, as wage slaves of the well-heeled who were going to pay the BID tax by raising their rents. They did not want “safety ambassadors” charged with vague orders to report anything unusual, either. Libertie Valance described the BID as a “plutocratic scheme.”
JB McKibbon, who believed his company’s holdings downtown would be paying 10% of all BID taxes, said it best. “Clearly, I wish we were not at a point where we had to spend extra funds in order to get where we felt the city needed to be to be welcoming to our guests and our employees.” He said his employees have been mugged walking to their cars, and they’d had picture-window views of riots in their hotel. Keeping downtown “clean and safe” was a fundamental imperative, but some who followed argued that “clean and safe” was a racist dog whistle.
The message from both sides was that leadership had failed in its job to provide basic city services. So, proprietors with an interest in protecting the rights of their clientele and employees to peacefully be downtown had to find somebody else to do the job.
The city responded by sending out a press release celebrating its award of $4,813,948 to affordable housing projects. Council approved the measure with little ado, as the city has been operating its Housing Trust Fund (HTF) since 2000.
The city can operate a HTF because it enjoys high bond ratings and can raise taxes annually. It works by undercutting other financial institutions by offering lower interest rates to developers. Also, since kids learn in school that for-profit businesses can’t be trusted to act in the best interests of the planet, the city, qua government, prioritizes applicants who locate their projects in areas that support non-automobile traffic, design for low-carbon-footprint lifestyles, and contract with women- or minority-owned businesses. Rent controls are also strongly encouraged.
Funds are furnished from revenues collected via taxes and fees, as well as contributions from developers wishing to build in the city. That is, any large-scale private developer who wants to compete with the city’s real estate business is pretty much forced to make a voluntary contribution to the city to have his project approved. He has the option of having the funds go to the city’s Reparations Fund or the HTF. And then he is shamed in the public eye for raising rents to recover the added costs.
The city uses this model of accumulating market share in places other than real estate and banking. For example, it supports its transit system with hundreds of dollars transferred each year from the parking fund. In short, people who want to drive and do a lot of business downtown must also support the bus system.
Despite the denials, the city is eroding private market share into its own pockets. With its diversified portfolio, it is much like General Electric. The multinational conglomerate once sold light bulbs, but it grew its aviation and health technology divisions so much that it sold its unexciting light bulb business to Savant Systems in 2020.
Compounding this, Asheville has for decades been criticized as a hyper-regulatory market for residential development. Regulations come with costs of compliance that get tacked on to mortgages and rents. As housing costs rise, the city has, albeit not completely, rejected the findings of think tanks arguing for deregulation. Instead, it intervenes by doubling down on studies and programs with administration and enforcement, the costs of which get tacked on to property tax bills. Unfortunately, elected officials aren’t in the business of seeing the end from the beginning, but a “clear path” to the next election.
This year, the city awarded $448,582 at 0% to Mountain Housing Opportunities (MHO)’s Star Point Apartments for 60 units rent-controlled for 40 years; $3,879,366 at 2% to Roers Asheville Affordable for 126 units rent-controlled for 30 years; $40,000 at 2% to Hospitality Houses, “a yet-to-be-formed 501(c)(3),” for two accessory dwelling units rent-controlled for 10-15 years; $300,000 at 0% to MHO for down payment assistance on five homes that would remain affordable for 10 years; and $146,000 at 0% to the Asheville Area Habitat for Humanity for acquisition and down payment assistance for four homes that would remain affordable for 30 years.