There’s a saying that you can catch more flies with honey than vinegar.
Since 2021, the City of Asheville has implemented this philosophical approach with some hotel developers, allowing them to skirt Asheville City Council reviews if they opt to contribute to city-supported causes, offer living wages to hotel employees or make neighborhood improvements.
That option, known as the by-right process, was made possible when Council voted 6-1 in 2021 to adopt new development guidelines and establish a Hotel Overlay zoning district. The new regulations allow new hotel projects within the district with 115 rooms or fewer to avoid a Council vote if they meet a series of design requirements and contribute to equity-related public efforts.
Since then, 13 hotel projects have gone through the by-right process, with 11 committing more than $2.7 million toward city priorities, according to a newly released City of Asheville public dashboard. In the latest edition of WTF — short for “Want the Facts?” — Xpress took a look at the city’s hotel approval process, what community benefits developers have pledged and what tools the local government has to enforce the law.
Pushing back on growth
In response to vocal community concern about a glut of new hotels, Asheville City Council voted in 2017 to require more hotel projects to come before the Council for approval. Whereas most projects up to 175,000 square feet and 145 feet tall had been approved by the city’s Planning and Zoning Commission, projects of more than 20 rooms and any building over 100,000 square feet were now required to come before Council for approval.
But Council members, developers and some members of the public expressed frustration with that method as well, noting that hotel approvals or denials seemed inconsistent and unpredictable. Dissatisfaction with the process reached a fever pitch after a contentious 4-3 vote to allow converting the iconic Flatiron building from offices to a 70-room boutique hotel in 2019.
The decision spurred a communitywide conversation about hotel growth and the impact on the character of the city, and an eventual 17-month moratorium on hotel development that included public engagement and a study aimed at slowing hotel construction and developing a standardized process for hotel approval.
Scoring points
The public input led to the 2021 ordinance that tried to steer toward a middle ground. The ordinance created a public benefits table. Using it, developers have to score at least 100-220 points, depending on their project’s size and location. At least half of those points must come from a payment to the city’s Housing Trust Fund or Reparations Fund or building permanently affordable housing for residents making 80% or less of the area median income ($52,350 for an individual, $74,800 for a family of four).
For example, a new 100-room hotel in downtown Asheville would need to contribute at least $400,000 to the reparations or housing fund or build 10 affordable housing units. The remainder of a project’s required points could come from a broader menu of options, including investing in companies with a strong social and environmental track record, as certified by the nonprofit B Lab, (120 points), offering a living wage (60 points) or contracting with minority- or women-owned businesses (10 points).
However, if a hotel project contains more than 115 rooms or is located outside of the Hotel Overlay zone, applicants must still come before City Council to receive conditional zoning approval. So far, three projects have been required to use the city’s conditional zoning process. Two of those projects have been approved while one project is still awaiting a Council vote.
Paying it forward
According to the City of Asheville’s dashboard, the city has received $562,000 in contributions through the by-right process: the Elevation Hotel at 52 Broadway contributed $15,000 to the city’s Reparations Fund, $15,000 for Housing Trust Fund and $3,000 for public art. Meanwhile, the Moxy Hotel at 61 Biltmore Ave. contributed $230,000 to the Housing Trust Fund, $230,000 toward the Reparations Fund, $34,500 for neighborhood improvements and $34,500 for public art.
The city expects $1.5 million in public benefit contributions from eight more by-right hotel projects that are under review or in construction. Of those monetary donations, $1.4 million will be contributed to the city’s affordable housing or reparations funds (developers currently don’t need to state which program they are donating to until they apply for a certificate of occupancy).
Two hotel projects approved through the by-right process, Create 72 Broadway Boutique Hotel and Tribute Hotel, have not yet set their commitment amounts. According to the city’s memo, developers do not need to make a final commitment to the public benefit options until the hotel is ready to receive its certificate of occupancy. Until then, the contribution amount is estimated by the applicant. Final amounts and to where may change.
And if developers don’t follow through with those payments? City Attorney Brad Branham explains that the city can withhold a project’s certificate of occupancy if developers do not follow through with the agreement. “This would be our primary enforcement tool,” he adds.
Legally speaking
Branham says that there have been no legal challenges to Asheville’s Hotel Overlay zoning or the accompanying public benefits table since its adoption. He notes that the contributions are not a requirement and that developers could instead choose to apply through the city’s conditional zoning process if they did not want to make donations or other commitments.
While Branham says that he’s not aware of another local government using the exact same process, he notes that many cities across the state offer voluntary development bonuses in exchange for some form of community benefit. For example, the City of Charlotte allows greater density developments if the developers include affordable housing.
“Programs of this nature are quite common,” says Branham. “In all cases, this is purely elective, and these types of voluntary, incentive-based development options are used frequently throughout North Carolina, the legality of which has been well established in our state.”
Editor’s note: This story was updated Aug. 19, to clarify it is a city program that gives some hotel developers options in the approval process.
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