Asheville City Council agreed to prematurely release $300,000 from the Housing Trust Fund (HTF) to Eagle Market Place. Eagle Market place is a joint effort of Eagle Market Streets Development Corporation (EMSDC) and Mountain Housing Opportunities (MHO). The HTF is a revolving loan set up by the city in 2000 to increase its affordable housing stock.
Meet the Immovable Object: For two decades, EMSDC has been trying to give the Block a facelift. Watercolor renderings for the plans show a sleek, New Urbanist design integrating Smart Growth concepts. The plan was to provide downtown housing for police officers and other middle-income wage earners, so they could be environmentally conscious and walk to work, walk their errands, and walk to cultural events.
Throughout the years, developers have come to council requesting financial assistance, only to fall short on their ambitions. In spite of grants, loans, and tax credits, the project has been slow getting off the ground. One reason is the prospect of seeing a return on investment for building low-income housing on prime real estate.
The Block is a historical African-American business center in the heart of downtown. While parts are now functional, some buildings are in ruins, covered in graffiti and awaiting demolition.
Meet the Irresistable Force: MHO is a nonprofit community development organization that specializes in getting people into mortgages, constructing low-rent apartments, and repairing low-income homes. The organization appears regularly on city council agendas for receipt of funds from the HTF or federal agencies. The moving force behind such projects as the Larchmont in north Asheville and the Glen Rock on Depot Street, MHO has a reputation not only for receiving the lion’s share of MHO funds, but for making projects succeed.
In a unanimous vote Tuesday, council bet your money that MHO has what it takes to finally make Eagle Market Street a vibrant, 21st-century community.
The latest design proposes demolitions and renovations to create over 90,000 square feet of mixed-use development built to Energy Star standards. The partnership intends to create 62 apartments, charging rents between $200 and $780. According to MHO, “Apartment amenities include spacious floor plans, balconies, Energy Star appliances, washer/dryer hookups, beautiful interior lighting, ceiling fans, ample closet space with pantry and master bedroom walk-in closet, and long-term storage units for each apartment.” In addition, for just $200 a month, renters will have access to an indoor playground, a fitness center, a computer/business center, and more. (For sake of comparison, there have only been about three Asheville room/share postings on Craigslist for less than $350, and these listings tend to be “420 friendly.”)
7000 sq. ft. of the development will be set aside for commercial space. MHO estimates the apartments will create fifty permanent jobs. In addition, there are plans to locate a business incubator on premises.
Council approved the 2 percent, 20-year, $300,000 loan in March last year, pending the award of tax credits. On August 23, the North Carolina Housing Finance Agency awarded Eagle Market Place $7 million. At that time, MHO estimated the city and Buncombe County had already agreed to provide the project over $4.1 million in grants and loans from the public coffers. But the early release of the funding was only one exception sought by MHO.
Policy restricts HTF loans to covering only construction and land acquisition costs. MHO requested the funds go toward reimbursing soft costs already incurred, including “option fees, building permits, architectural design, engineering, surveying, environmental reports, market studies, and legal fees.” MHO also requested that the city waive its requirement for an independent appraisal and proof of senior loan terms before the city become a secondary lien holder.
Questions were raised during the public hearing about nonprofits like MHO giving resources, such as grant proceeds, to the for-profit EMSDC. City Attorney Bob Oast concurred with MHO Executive Director Scott Dedman that it is common practice in the state for profits and nonprofits to form LLC’s to lawfully work around the prohibition. The property in question will be deeded to Eagle Market Place, LLC; four properties have already been donated by the corporation.
A risk analysis prepared by city staff concluded there was “a very favorable outlook for project success.” The highest risk would be in the early stages of development, before project equity caught up to the value of the loan. Considering the number of large developments that have been abandoned during the recession, in Asheville and across the country, the city was putting itself, and its taxpayers, at risk. Furthermore, the state and federal government would not stand as much to lose as the city, should the LLC fail to deliver.
Currently, the project is delinquent in its property tax payments, but the balance is to be paid in full upon closing. Another concern staff had was about all the new precedents it was setting with the expedited loan.