Asheville City Council

Reorganizing the Grove Arcade’s financial structure — necessary to take advantage of new tax laws — touched off a lengthy battle during the Asheville City Council’s Dec. 14 work session.

Aaron Zaretsky, executive director of the Grove Arcade Public Market Foundation, told City Council that the foundation is in final negotiations with a corporation that will invest in the Grove Arcade to qualify for lucrative historic-preservation tax credits.

The major rub, however, is that the city (which owns the historic structure) must agree to a new lease arrangement — before the end of 1999. If it doesn’t, Zaretsky said: “The whole project stands to lose a million dollars, due to new tax laws taking effect. The lease has to be completed in the year before construction can begin.”

The new agreement is a complicated one, admitted City Attorney Bob Oast, and City Council members where miffed that this was the first time they were hearing about it. “Why are we hearing this now?” asked Mayor Leni Sitnick, looking amazed.

The foundation, responded Zaretsky, only recently became aware of the impending tax changes, and this was the first opportunity they had had to come before Council.

The city’s lease with the foundation, Oast pointed out, stipulates “that the financial structure for the rehabilitation was subject to change, depending on the availability of such things as tax credits, and possible participation of other financial partners.”

He later added that this particular deal would yield the largest historic-preservation tax credits in the state’s history — a dollar for every 94 cents invested.

Under the current proposal, the investor would still participate in the project as before, but, instead of having only one for-profit subsidiary corporation, there would be two limited liability companies — one responsible for developing the building’s second, third and fourth floors, and another for developing the mezzanine and basement.

The city would also become, in effect, a silent partner in one of those limited partnerships — an arrangement that fulfills the tax requirements, keeps the city informed about the project’s progress (without getting involved in day-to-day operations), and requires no additional investment.

“That keeps us in the loop,” Sitnick agreed.

Two years ago, the city issued $2.5 million in certificate-of-participation bonds on behalf of the foundation, which pays the debt service on the bonds. One hitch in the new lease agreement, which led to 35 minutes of discussion, is that the city could not terminate its lease with the Public Market Foundation for five years, to satisfy the new tax laws.

“What is the benefit for the city in doing this?” asked Council member Barbara Field.

“The benefit for the city of Asheville is, you’re taking a 1920s building and making it the centerpiece of that area, with a $16.5 million renovation,” Zaretsky replied. “Plus, you’re getting 60 revenue-making businesses and employers.” And, they later figured out, $135,000 a year in new tax revenues.

“What are the risks in doing this?” persisted Field, not yet satisfied.

The risks, Zaretsky said sarcastically, are that the city gets stuck with a building worth $16.5 million.

Zaretsky said the new investor is a publicly traded company on the New York Stock Exchange — but, because the agreement is not yet final, the foundation can’t divulge the corporation’s name. “In terms of large corporations, though, I’d rather see them get tax credits for renovating low-income housing or historic preservation, rather than for some off-shore oil drilling,” Zaretsky observed in a later telephone interview.

“The investor would have no say in any day-to-day operations — they wouldn’t want to — they just want the tax credits,” clarified Council member Terry Whitmire, who structures similar tax-credit deals in her job at Mountain Housing Opportunities. Throughout the discussion, Whitmire attempted to educate fellow Council members on the complicated laws governing such federal tax credits.

All told, the discussion on the new lease took about an hour-and-a-half. “Believe it or not, I feel better,” commented Sitnick.

City Council will vote on the proposed lease agreement as a separate item, during its Dec. 21 meeting.

I-26 connector not a done deal

After a brief debate on the definition and merits of a charette, City Council ordered staff to create a sensible plan for eliciting public input on the Interstate 26 connector project.

Citing recent opinions on the current plans for the connector — expressed at both the Transportation Advisory Committee meeting and at Council’s West Asheville community meeting — Mayor Sitnick introduced the notion that “the public is not ready to settle on this issue, and that there is a lack of consensus in the community.”

City Council still wants the project completed on time, noted Sitnick. But she also suggested that the city consider holding a design charette.

“I think it has exciting potential,” seconded Vice Mayor Chuck Cloninger, who also serves on the TAC with Sitnick. “It’s worked with other projects; I think it could work here. And I think it could be done without slowing down the project.”

Council member Field was less enthusiastic.

“The last couple of charettes we’ve done around here, like on the RiverLink [project], haven’t been very successful,” argued Field.

She added that charettes are expensive — and, because they typically bring in experts from all over the country, charettes may also be too technical for the general public.

A charette is an intensive design workshop, in which a team of specialists works with volunteers and staffers to create a plan for a project, usually in no more than a few days.

Council member Charles Worley noted that he feels the N.C. Department of Transportation did a good job with new construction on Amboy Road and was receptive to public input on the project. Perhaps this is a good opportunity to provide such input on the connector project, he continued. Council member Brian Peterson seemed to agree.

Big boxes (and party lines) drawn

The city Planning Department presented Council with proposed amendments to the Unified Development Ordinance, including one to encourage large retail stores to construct their buildings in ways that enhance surrounding neighborhoods.

“Asheville is the regional-services and retail center for Western North Carolina, with stores like Wal-Mart, Lowe’s, Sam’s Club and Home Depot,” explained Senior City Planner Gerald Green. “The ordinance is aimed at new structures, primarily in the highway district, so they get more favorable reaction to their development in the community.”

Under the proposed amendment, new structures containing more than 75,000 square feet of space would have to meet standards (for building design, color, landscaping, lighting and pedestrian amenities) that reflect the values and character of the community in question. In exchange, developers would be allowed to build larger buildings.

For example, Green said the recently built, 104,000-square-foot Lowe’s on the Smokey Park Highway could have been as big as 112,000 square feet, under the new guidelines.

“One project we were working with — a sort of test run — went very well,” noted Green.

“Designed-based zoning — an excellent direction to go in,” declared Council member Field, an architect.

A second proposed ordinance — which would make it easier to build detached garages on narrow lots — was not so well received by Council.

The city now prohibits detached garages in front of homes facing the road, but city staffer Carl Ownbey said the proposed amendments came about after three homeowners came before the Planning and Zoning Commission because their plots are too narrow to locate garages anywhere but in front.

“I thought we were trying to discourage people from placing their parking garages facing the street,” chided Field, “to keep with our philosophy to make Asheville a better place.”

Ownbey said the new ordinance was intended to enable Planning staff to handle the problem without going before P&Z. The City Council said the Planning Department should reword the amendment??? so it says just that.

Council will also be considering an ordinance to extend Asheville’s extraterritorial jurisdiction one mile north of the city’s corporate limits, to zone about 616 acres in the Reynold’s REYNOLDS??? Mountain subdivision.

The topography of the area is very steep, explained Planner Mike Matteson, and staff has recommended What Is Short Form??? R-??? zoning (residential, single-family, low- and medium-density) for the area in question.

All Both??? Are There More Than Two??? the ordinances will be considered at a public hearing at the Dec. 21 City Council meeting.