City council will meet at 5 p.m. on Tuesday, Nov. 10 in the last-but-one session of the current council. Newly-elected council members Keith Young, Brian Haynes and Julie Mayfield will be sworn in and begin their terms of office on Dec. 1 at 4 p.m.
In its consent agenda, council will vote to rename city Fire Station 8, located at 904 Tunnel Road, in honor of Jimmie Edward Trent, who died on Nov. 13, 1975 after suffering a heart attack while fighting a fire at the Red Chair Restaurant at 1 North Pack Square.
Public Hearing
Council will hear comments from members of the public on a proposed self-storage facility at 852 Hendersonville Rd. The project owners have requested conditional zoning for the three-story, 90,000 square foot facility, which straddles two lots.
One of the lots, which has frontage on Hendersonville Road, is zoned highway business, which allows self-storage uses and a total maximum building size of 100,000 square feet.
The second lot, which abuts Cornell and Forrest Streets, is zoned office, which does not allow self-storage uses and permits a total maximum building size of 8,000 square feet.
Citing the Planning & Zoning Commission’s unanimous vote to deny approval for the project, along with concerns about the proposed building’s scale and its inconsistency with the city’s comprehensive plan and the Shiloh community plan 2025, city planning director Todd Okolichany recommends denying the conditional zoning request in a report to city council.
Eagle Market Place
The troubled Eagle Market Place housing development will ask council to modify city loans and conditions to help the project reach completion.
The project, which will add 62 housing units to the city’s historical African-American business district (“The Block”), hit a major snag last October when a crack developed in the concrete slab of the structure’s second floor. Construction stopped while engineers, architects, contractors, sub-contractors, attorneys, insurers and the project’s major development partner Mountain Housing Opportunities tried to sort out what had gone wrong, who was at fault and how to fix the problem.
Construction resumed in October. In documents attached to the city council agenda, Eagle Market Place LLC says that it is pursuing arbitration to recover the costs associated with fixing the faulty slab. However, the documents continue, waiting for the results of arbitration would delay project completion and further increase costs. Therefore, the project requests modifications to loans already pledged by the city to enable the developers to secure an additional $3 million construction loan.
Requested modifications include changes in the numbers of affordable vs. workplace housing units, disbursement of a $2.9 million loan at 50% construction completion, alterations to the schedule of disbursement for committed Section 108 loans and a reduction in the interest rate of a loan from the Affordable Housing Trust Fund from 2% to 0%, effective immediately.
Boards & Commissions
Council will review applicants for vacancies on city boards and commissions and decide which, if any, applicants council will interview.
Next meeting
The next meeting of city council will be on Nov. 17 at 5 p.m. in the council chamber on the second floor of City Hall. It promises to be a busy session, with public hearings for two potentially contentious topics on the agenda: an amendment to zoning ordinances for utility substations and proposed changes to city regulations on Homestays, a type of permitted short-term rental within a resident’s primary dwelling.
The full agenda for the Nov. 10 meeting can be found here.
City Council should not modify the Eagle Market Place loan package.
One of the key developer-partners in this transaction is Mountain Housing Opportunities, the president of which already makes $100,000 a year, according to the organization’s own IRS filings.
Mountain Housing not only receives millions of dollars in public loans and grants to build the building – after they complete the building, Mountain Housing gets to keep the building and charge rents for it.
By cutting the number of “affordable” apartments, Mountain Housing is simply upping the dollars it will earn on this project.
One of the ways City Hall grows the Housing Trust Funds is by charging interest on HTF loans – by allowing Mountain Housing to have a 0% loan, City Hall will be letting a corporation who pays its president $100,000 a year avoid contributing to the HTF.
City Hally should keep Mountain Housing right where they are.
Most smart cities require that the private investors in a real estate project act first, before asking the city to do anything. Asheville needs to be smart.
MHO has private investors in the Eagle-Market Place, the largest investors are located in Raleigh and they are experienced in financing these types of budget overruns, yes, even $4 million overruns. They have the reserve accounts to fund these overruns. But they will only do it as a last resort. They’re called CAHEC Community Affordable Housing Equity Corporation.
Mayor Mannheim, City Council and city staff should require that MHO get CAHEC and their investors to put more of their CAHEC money into the project before asking the city to reduce the interest rate payments that need to be paid on a 2% loan to MHO for the real estate.
CAHEC and MHO’s investor will not let the Eagle Market real estate go unfinished because these CAHEC investors already took the federal tax credits given to them for the real estate and filed them with their tax returns last year and earlier. Now they are legally required by the IRS to ensure that the real estate is completed, otherwise they will have to give back the tax credits, a very arduous and financially painful task that comes with IRS penalties. The investors typically get a whopping 16% to 22% total return on their investment in tax-credit real estate for rental housing. So let these investors take a hit! Not us taxpayers.
MHO knows this but they will not tell the public or council unless forced to admit it. So Mayor and council, ask MHO what CAHEC’s guaranteed rate of return is for their investors. Tell MOHO to tell CAHEC to pay for fixing the mistake and to accept a rate of return less that 16%. We taxpayers need to call every bluff presented by MHO. Mayor Mannheim is an attorney and she has access to tax credit and real estate attorneys who know this, so we do not need to play this game with Asheville taxpayers and voters, not even on requests for loan interest rate reductions.
CAHEC is $6 billion in size in assets. $6 billion! CAHEC.com states “We are careful to protect the interests of our investors. Keeping our investors informed is also important. Investors work directly with CAHEC’s Fund Management Department. The Fund Management Department provides financial modeling and forecasting, manages debt instruments and equity investments, performs monthly financial accounting, and produces investor reports (audits, tax returns, benefits schedules, IRR calculations). CAHEC’s Community Investments are an array of services delivered that include a number of grants and loans.
…you referenced ‘smart’ cities which does NOT apply here …
“All money is green”
http://timpeck.blogspot.com/2006/03/block.html
In the end, MHO may and hopefully will recover all or the substantial majority of the overruns through lawsuits against the engineering and construction firms responsible for this in the first place. They have recovered about $500,000 already from the engineering firm.
If the city gives MHO a break then there should be some sort of agreement where the city gets back some money out of that litigation in order to make the taxpayers whole.
I am not opposed to the idea of making this a mixed-income development, but workforce housing units should not be subsidized to the degree that deeply discounted affordable housing is.
You make a good point, I have 2 comments on them. Weaver Cooke is MHO’s longtime general contractor for their recent projects. I was told that between November 2014 and this summer, there was more than enough evidence collected to show legally that maybe half of blame stays with MHO. The papers show MHO as the owner and as the borrower of the loan and as the persons originally given the low income federal tax credits and MHO made legal claims in writing that they would responsibly provide oversight of construction. Of course the each side’s lawyers will continue to fight but its expected that MHO will get saddled with 50% of the blame. The bigger point is not that. The bigger point for the city is what was written above about the MHO investors. Millionnaire investors are always in every low income tax credit rental apts project in America, by design and by agreement, ever since President Reagan created the program in 1987. MHO signed documents guaranteeing these investors a rate of return probably totaling the range mentioned of 16% to 22% if you also add in routine tax breaks for real estate losses. I Googled CAHEC and other sites and that seems in the ballpark. MHO needs to go to these investors first and have them foot the whole bill for $4 million overrun for now. When if MHO wins any of the arbitration against the architect, subcontractor, and Weaver Cooke, then MHO can pay that back to CAHEC. The city and we taxpayers should not have been approached and we should not agree to turn the city’s 2% loan into a 0% loan. Mot when MHO does not do good project supervision even when they sign legal documents saying that they will, and not when MHO has not been actively negotiating with CAHEC to have CAHEC foot the bill for now. I guess CAHEC told MHO to go to the city before coming to them.