Asheville – On December 2, Friendship for Affordable Housing (FFAH) closed on the purchase of the Ramada Inn in East Asheville. The inn had been vacant for years due to difficulties in financing housing for the homeless that the city desired.
In June of last year, FFAH entered into an agreement to purchase the property for $6.6 million. Gaining approvals from city committees was a challenging process, as FFAH was viewed as a high risk. Another motel conversion into homeless residences, Compass Point on Tunnel Road, had received 100 police calls within three months, including one for a homicide. This incident tarnished the reputation of permanent supportive housing (PSH) communities in Asheville.
Additionally, FFAH’s proposal for the site was modified from 113 units of PSH to 50 units of PSH, with 50 units designated for veterans earning less than 50% of the area median income, and 113 units of general affordable housing. FFAH also decided to finance 100% of its construction costs through private-sector lenders, eliminating the need for the $1.5 million the city had set aside.
This decision freed up $5 million in ARPA funding that had to be spent or returned to the federal government. The city opted to split the funding, allocating $278,000 for Code Purple expenses and $222,000 for emergency homelessness assistance. The remaining $1 million came from the city’s capital fund with no strings attached and will be returned. The most significant challenge with these changes was that the council had to approve amending the deed restrictions, which required the property to house only the homeless. The council addressed this in October while a citywide internet outage persisted.
The property’s troubles first garnered widespread attention in December 2021 when the council heard complaints about the Sunshine Community for Recovery and Wellness, which managed resident services. Two residents had recently been found dead, and there were numerous complaints about violence and other unlawful activities. The council attempted to purchase the property but could not secure financing for the $9.75 million asking price. They were also concerned about the property being sold on the open market, as a new buyer could revert it back to a motel. At that point, Shangri-La, a developer from Los Angeles specializing in converting motels into supportive housing, stepped in, allowing the city to assign their purchase contract to them.
At that time, Shangri-La had seven projects in various cities in California and planned to build five in North Carolina, one of which was intended for the Ramada Inn. Neighbors were not particularly pleased with Shangri-La due to their experiences with Sunrise, but Shangri-La partnered with Step Up on Second Street, which promised transformative outcomes.
Tod Lipka, president and CEO of Step Up on Second Street for 24 years, explained that Shangri-La would construct the project while Step Up would manage the property and provide wraparound services for the community. Step Up’s vision was to empower homeless individuals rather than keep them down and out, offering them opportunities to improve their lives.
Lipka described the project as providing people with a home rather than just a house. Residents could have serious mental or physical disabilities that hindered them from living ordinary lives. Those wishing to live at the Ramada would be required not to act out violently and to meet regularly with their case manager. Beyond that, participants were asked about their interests. If many expressed a desire to learn cooking, Step Up would offer cooking classes. This approach aimed to integrate low-functioning individuals into the community, instill ambitions, and provide access to resources that could help them achieve their goals, transforming them from recipients of insults and discouragement into individuals who could contribute meaningfully.
Shortly thereafter, numerous mechanics liens against Shangri-La properties in California were uncovered by members of the press. Subsequently, lenders began requiring Shangri-La to default on their loans, leading to litigation; the State of California alone was owed $149,000.
Problems soon arose in Asheville as Beverly-Hanks acknowledged it had not been paid approximately $400,000 for work performed at the Ramada Inn. Last year, Shangri-La’s lender, Stormfield Capital, foreclosed on the Asheville project. Construction remained incomplete, Step Up never moved in, and the city retained its $1.5 million.