He returned to council to say the numbers were not workable. At a 2013 meeting, Pilos told council he would need 65 points on their scale that topped out at 50 in order to make a project financially viable. At the time, Mayor Esther Manheimer recalled “picking numbers out of the air” with the formulation of the policy. What it offered was, for every ten points earned, a developer could have 10 percent knocked off certain fees and permits and have the value he added to the property tax-exempt for a year. The policy was revised in 2014, but it was far from being viable, as evidenced by two developers who were attempting to use it in their projects.
The other developer, Pace Burt, was applying for a LUIG sort of as a sentence. When he first presented his project to council in December, Councilman Gordon Smith made his usual request for a number of units to be rent-controlled. Burt said he would love to help out, but it was not possible. He would lose $3500 per affordable unit, and the banks were not going to finance a project with that level of losses. After Burt agreed to work with staff on a LUIG arrangement, Smith threw Burt a lifeline.
Before Pilos’ proposal for his LUIG was presented last Tuesday, council approved a number of changes to the site plan. Pilos is now attempting to build a 243-unit residential complex with a small retail component on the former site of Dave’s Steel in the River Arts District. He had intended to humor council with a stronger retail component, but he made the changes to be eligible for HUD funding and attract more private investors. The area just isn’t ripe for supporting retail shops.
As for the LUIG, Pilos wanted five year of tax exemptions with a 50-percent fee rebate even though the changes just approved to make the project viable lowered his point score. The project would remediate a brownfield with Energy Star-certified housing one-eighth of a mile from a bus line. 95 percents of the units would be workforce housing; the other five, affordable. Pilos proposed a magnificent project for a difficult tract of land, but according to the LUIG policy, it now honestly earned only 35 points
What’s more, Pilos’ financers didn’t like the workforce housing criterion. Affordable rents are defined by HUD as less than or equal to 30 percent of the income of a household earning at most 80 percent of Area Median Income. Workforce rents vary from place to place, and in Asheville, they are decided upon each year at council’s retreat. That was too whimsical for Pilos’ underwriter, who insisted Pilos be able to raise rents on his workforce units by 3-percent each year of the rent control; and, as Manheimer pointed out, the projected rents fell well below the upper threshold for this year’s workforce housing. When Councilman Marc Hunt asked if staff recommended those terms, Community and Economic Development Assistant Director Jeff Staudinger replied, “If you want to see this project built, it appears to be a necessary element.”
Members of council appeared unanimous in their understanding that the LUIG wasn’t workable, but Councilman Cecil Bothwell advocated for the rule of law, however miserable it might be. He spoke against the “flexibility and almost sloppiness” in administering it and giving exemptions. Smith found “a lot to like” in the project, but he faulted it for providing only a token amount of affordable housing and commercial uses. He described the LUIG policy as “a very imperfect tool.”
As council batted about the number of points they thought would carry in a motion, Pilos, looking like he needed to slip some nitroglycerin under his tongue, slipped out the back. Approving a 40-points incentive package with only Smith and Bothwell dissenting, Manheimer asked for somebody to please, “drag Harry out of the bathroom.” After the hearing, as reporters chased Pilos’ attorney, Lou Bissette into the hall, Bissette attempted to locate Pilos. The next day, Bissette confirmed Pilos would proceed with the project, as he has dedicated two years of his life into making a go of it. “What else could he do?” asked Bissette.
Next up was Burt’s project. River Mill Lofts offered a 254-unit residential complex with a tad bit of office space at the corner of Thompson and Stoner Streets. 7 percent of the units would be affordable, 85 percent would be workforce, and all would be Energy Star certified. Burt also would build on a brownfield, but his project was 0.8 miles from a bus stop. Landscape architect Clay Mooney explained Burt and staff justified waiving the requirement that the project be within a quarter mile of a bus stop because it was “pioneer” and “an early adapter.” Besides, Burt was attempting to develop a difficult piece of property in a floodplain, and it wasn’t his fault no bus stops were nearby.
When Councilman Chris Pelly asked how staff arrived at 50 points, Staudinger said, “Much the way that Mr. Pilos did.” Gwen Wisler added things up and began by asking if Staudinger had arrived at 30 points by taking 20 and adding 10. As she paused slightly, Staudinger replied, “I would hate to think we were being so random.” After more criticism of the policy from Smith, Staudinger said it was staff’s intention to rewrite a “real-world” policy for presentation before council sometime in June.
Wisler made a motion to waive the requirement for proximity to transit and grant incentives for a 30-point project. The measure passed, with only Bothwell opposed.