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Two California organizations came to Asheville in late 2021, eager to purchase and convert the former Ramada Inn in East Asheville into permanent supportive housing for unhoused people. They pledged to use their “secret sauce” solution to address Asheville's longstanding challenges with how to shelter some of the city's 500 unhoused individuals.BPR's Laura Hackett and Laura Lee examined hundreds of court records and interviewed dozens of sources. The reporting revealed unpaid city permitting fees, lawsuits against the California organizations, a foreclosure on the property and more. In January 2024, Asheville Mayor Esther Manheimer said the city would not proceed with the partners, ending a two-year delay on the project but leaving lingering questions about the future of the site. Learn more in the investigative series below. Have a comment, tip or question about the series? Email news@bpr.org.

City says “lessons learned” in response to failed Ramada Inn housing project

City officials and representatives from Shangri-La and Step Up at the groundbreaking ceremony in December 2022.
City of Asheville
City officials and representatives from Shangri-La and Step Up at the groundbreaking ceremony in December 2022.

After months of reporting about whether the stalled Ramada Inn project would come to fruition – and repeated commitments to continuing to work with the developer – the City of Asheville acknowledged that the situation is “a regrettable outcome for our community and for the people the project was intended to serve” in a statement posted on the city’s website.

The motel conversion project was meant to house more than 100 unhoused people – instead the property remained stagnant for years. The California developers behind the project, Shangri-La and Step Up, face a $100 million lawsuit for alleged fraud and breach of contract for its handling of seven publicly-funded housing projects in California. In December, the developers lost the Ramada Inn property in a foreclosure.

“The city deeply regrets and is disappointed in this outcome,” spokesperson Kim Miller said in the statement.

Earlier this month, Asheville Mayor Esther Manheimer told BPR the city will no longer be working with the Shangri-La and Step Up, and that the city would pull the plug on the $1.5 million it said it would provide Step Up. The money was intended to provide wraparound services, i.e., case management, counseling, crisis care, and other social support for the tenants, the majority of whom would come directly off the street to live at the Ramada.

“The only money the city spent on this project was in due diligence when the city had had the Ramada Inn under contract to purchase, which contract the City transferred to Shangri-La,” Manheimer wrote in an email to BPR. “And the 1.5 million committed to Step Up to provide wraparound services for those that were supposed to be housed at this location, will not be paid by the City to Step Up.”

Lessons learned?

While the city maintains there were no major financial setbacks caused by the failed project, Miller acknowledged that there were lessons learned, both in its initial attempt to convert the Ramada Inn into a low-barrier shelter and its decision to partner with Shangri-La and Step Up.

“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,” Miller said. “We have since learned that our best response is a collective response.”

One way that the city lacked a collective response is through its coordination of the Asheville-Buncombe Continuum of Care (CoC), a federal program that helps communities address homelessness. The CoC did not meet federal requirements in several ways.

“At the time of the Ramada projects, the local Continuum of Care’s role was not well understood or executed,” Miller acknowledged.

The city served as the lead agency for the CoC. In December, the city held a joint meeting with Buncombe County announcing plans to overhaul its Continuum of Care (CoC) and restructure it from a primarily city-led affair into a self-governing entity that is more of a formal and collaborative planning body.

The CoC, up until that point, had been governed by the Asheville-Buncombe Homeless Initiative Advisory Committee, with the city serving as its lead agency since its 2010 inception. During that time, the CoC never had a formal charter or a membership body, despite federal guidelines mandating both.

Emily Ball, the city’s homeless strategy division manager, said of the old configuration: “It’s unclear who’s doing what, how to participate, who has power, what our outcomes are, and where our opportunities are.”

Now that the CoC is restructuring, Miller said the community will be better positioned.

“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,” she wrote.

What’s next for the property?

The Ramada Inn property remains deed restricted, meaning the hotel can only be used for housing that services people exiting homelessness, according to Miller. The property currently belongs to Stormfield Capital, the lender who acquired the property after Shangri-La defaulted on a $6.3 million bridge loan.

The city’s statement did not indicate what, if any, communications city officials have with the lender.

“The city is eager to learn the lender’s plans for the property in light of the deed restriction,” Miller wrote. “Those plans will be part of an evaluation of the best use of the $1.5 million previously allocated to the initial project.”

Stormfield Capital declined to comment multiple times on its plans for the property.

Laura Hackett joined Blue Ridge Public Radio in June 2023. Originally from Florida, she moved to Asheville more than six years ago and in that time has worked as a writer, journalist, and content creator for organizations like AVLtoday, Mountain Xpress, and the Asheville Area Chamber of Commerce. She has a degree in creative writing from Florida Southern College, and in 2023, she completed the Craig Newmark Graduate School of Journalism at CUNY's Product Immersion for Small Newsrooms program. In her free time, she loves exploring the city by bike, testing out new restaurants, and hanging out with her dog Iroh at French Broad River Park.