Local contractor Beverly-Grant filed a lawsuit alleging nonpayment of nearly $400,000 by the developers behind the Ramada Inn conversion project.
One of the defendants named in the suit, Shangri-La Construction, had plans to convert the former motel into a permanent supportive housing project for the city’s most vulnerable residents including unhoused veterans. In late 2021, Asheville City Council voted to relinquish the right to purchase the property to Shangri-La and its partner organization, Step Up.
At a groundbreaking in Dec. 2022, Shangri-La CEO Andy Meyers promised the city of Asheville that the development would “go very, very quickly.” The stalled project was scheduled to provide 113 units.
Beverly-Grant provided initial demolition on the site. The complaint alleges the developers owe $392,987 for work completed from December 2022 to June 2023. Prior to the suit, Beverly-Grant filed a lien on the property for the same amount, filings showed.
In the legal filing, attorneys for Beverly-Grant alleged that in the spring 2023, the parties were negotiating for additional work, but the negotiations did not result in an additional contract. According to city permits, Beverly-Grant was taken off the project in early July 2023.
Jason Wightman, a project manager at Beverly-Grant, told BPR he was unable to comment on the project.
The lawsuit names four defendants: River Ford LP and three Shangri-La entities: Shangri-La Industries LLC, Shangri-La Development LLC and Shangri-La Construction LP. The River Ford partnership is an out-of-state entity that legally owns the property, and state records show the authorized representative of River Ford is Shangri-La CFO Cody Holmes.
Under North Carolina law, the defendants had 30 days to respond to the lawsuit. The court filing does not show any response.
After the 30 day clock runs, the plaintiff could file a request for a default judgment, asking the court to award damages. Jeffrey Stahl, an attorney for Beverly-Grant, did not reply to a request for comment.
In California, Shangri-La faces money troubles
The lawsuit is the latest in a string of challenges for the California developer.
Shangri-La defaulted on private loans in seven publicly-funded motel conversion projects in California, according to reporting by The Press Democrat. Three of those projects currently house previously homeless residents.
The California Department of Housing and Community Development launched an investigation into Shangri-La for “program violations” at seven of its properties.
According to the notice, Shangri-La is in violation of “numerous failures,” including “a lack of communication on status of projects, failure to meet performance milestones, and failure to record affordability covenants.”
Due to this “serious breach of contract issues,” the notice said, “the Department has determined that [Shangri-La Industries] is not meeting the Department’s requirements in demonstrating its ability to own, operate, and develop affordable housing developments.”
Ramada Inn conversion delayed indefinitely
The project does not have a target opening date, according to a recent public meeting focused on homelessness. Buncombe County Homelessness Program Manager Lacy Hoyle said the developers are “currently securing additional financing related to interest rate increases.”
Additional work on the former Ramada Inn cannot begin until the $60,000 permit fees are paid.
“Shangri-La has communicated that they are committed to fulfilling the permanent supportive housing project in Asheville and that they are working to secure financing to complete the renovation,” Asheville Mayor Esther Manheimer told BPR in a statement.
The project bypassed the city’s ARPA application process, and the city allocated $500,000of federal American Rescue Plan Act money for the project. The initiative is the only ARPA project listed on the city’s site as not yet “in progress.”
“There are very few providers of this much needed type of housing therefore we’re looking to leverage every opportunity to add available units,” Manheimer said in the statement. ”However, the city’s funding for this project will not be contributed until this project is complete.”
Update: This story was updated to attribute the statement to Mayor Manheimer and not her spokesperson, Jessica Hughes.
