There has been concern in the community following reports that Shangri-La Industries no longer owns the former Ramada property they purchased to turn into Permanent Supportive Housing. It has created uncertainty about the City’s role, the status of funding earmarked for project supportive services, and just where this all goes from here.
This is a regrettable outcome for our community and for the people the project was intended to serve. We are grateful that no City funds were ever released or paid to Shangri-La or Step Up and we remain committed to addressing the issues of homelessness in our community. What we have learned, however, is that our best response is a collective response.
How did we get here?
Our country and community experienced an unprecedented increase in unsheltered homelessness during the COVID-19 pandemic. In 2021, the City entered into a plan to purchase the Ramada Hotel to meet the need our community has for sustainable housing options for the homeless.
The City pursued the opportunity to establish a permanent emergency shelter at this location and entered into a contract to purchase the property. As part of the process, approximately 80 thousand dollars went towards the due diligence for the purchase. As you would do with an individual home purchase, the City entered into that portion of the process knowing those funds would be non-refundable.
However, with a purchase price of $9.75 M and several million in potential upfit costs, the City could not secure the financial resources to proceed with the shelter plan in that location. Rather than simply cancel the contract, allowing the property to revert to a hotel, the City agreed to assign its purchase contract to Shangri-La, a private developer who had been searching for hotel property in Asheville to create affordable housing. Shangri-La committed to purchasing and renovating the property with private funds. Further, they would engage Step Up on Second Street, Inc., a nonprofit with a robust background in providing Permanent Supportive Housing, to operate the property. In December 2021, the City approved $1.5M to fund Step Up to provide supportive services to residents for 3 years after the property opened.
In September 2022, Shangri-La purchased the property with $9.75M in private capital. No City funds were used, however, the City was able to secure an executed deed restriction requiring the hotel to be used only for housing dedicated to people exiting homelessness.
The City funds for services would only be released to Step Up when renovations were complete and on-site services for our community were being provided. No contract with Step Up was ever executed as Shangri-La never completed renovating the property. In December 2023, Shangri-La’s lender, Stormfield Capital, proceeded with foreclosure and now controls the property.
So where does that leave things?
The City deeply regrets and is disappointed in this outcome. We are grateful that no City funds, ARPA or otherwise, earmarked for the Asheville project were ever released or paid to Shangri-La or Step Up. The City retains the $1.5M previously committed to Step Up. Additionally, the City will continue to monitor the deed restriction requiring the property to be used to serve the community.
What we learned
With both projects attempted at the Ramada location, the City’s goal was to provide responsive action and bold solutions for critical community issues, but in both situations, the City acted alone without community partnerships.
We have since learned that our best response is a collective response. In their recommendations, the National Alliance to End Homelessness focused on the importance of coordinating homeless response through the Continuum of Care. At the time of the Ramada projects, the local Continuum of Care’s role was not well understood or executed.
With the strength of the newly forming Continuum of Care, our community will be best positioned to lead strategy and initiatives on homelessness. The City remains committed to full participation to ensure future efforts like these to address homelessness include City leadership but are not led by the City alone.
Where do we go from here?
The City is eager to learn the lender’s plans for the property in light of the deed restriction. Those plans will be part of an evaluation of the best use of the $1.5M previously allocated to the initial project.
Staff will continue to work with and through the Continuum of Care for future planning efforts on homelessness response, recognizing that this critical community-wide issue is most effectively addressed through that framework of collaborative decision-making.