To fill the gap, Eagle Market Place first spent six months trying to get the engineering group, Design Synergy, PA to assume liability. They did, but their insurance policy was only good for $470,000. The folks at the Eagle Market Street Development Corporation then turned to their partners at Mountain Housing Opportunities. MHO has as good a reputation for making affordable housing projects work as EMSDC had had for not getting its off the ground. MHO accountants suggested increasing rents on about half the units. That would, in Stevens’ words, “enable us to cash-flow this project with a loan.”
But the loan was another problem. Collateralization would be tough, since a $10 million loan was needed, and the development’s assessed value was only slightly more than $8 million. Persons representing Eagle Market insisted the first order of business was to not ask the city for any more funding. Assistant Director of Community & Economic Development Jeff Staudinger provided an overview of the city’s contributions to the project to date.
In 2001, when the project was but a $3 million effort to create ten residential units and 10,000 sq. ft. of commercial space, the city helped EMSDC purchase the property with a $356,619 Community Development Block Grant. The city also applied for $1,100,000 from HUD for the project, but never received $300,000 because a lawsuit hung construction up until that grant expired. After transactional costs and interest, the city still has $718,000, from the other $800,000, committed to the Eagle Market Street. Then, on top of that, the project was awarded $462,600 in HOME Investment Partnership Funds, $800,000 from the city’s Housing Trust Fund, and $3,867,618 from an Urban Redevelopment Loan. In 2012, the project accepted a $2 million loan from the Buncombe County Commissioners and $7 million from the North Carolina Housing Finance Agency.
So, the creative financers suggested asking the city to make some changes conventional lenders couldn’t to the terms of its loans. One would be to disburse the balance of the Urban Redevelopment Loan, which would be $2,867,618, when the project was 50 percent complete. Federal HUD loans are subject to federal regulations. More specifically, since the project is mixed-use, using federal funds on its commercial component would subject the project to Davis-Bacon minimum wage requirements, which Staudinger said would require significant administration and price the project out of reason. However, the city has repaid $218,000 on the $718,000 loan while maintaining the $718,000 balance for Eagle Market with general funds. Eagle Market therefore asked council to disburse the $218,000 of “city money” within ten days of the closing of the construction contract. A third request was for the city to stop charging any interest on its Housing Trust Fund loan. It had been charging 2 percent. “We sincerely hope that we don’t ever have to come before this council again,” said Stevens, “other than to celebrate.”
Members of the public weighed in. David Nutter, board secretary for Eagle Market Place, said the project had been caught in a perfect storm. He urged council to “preserve a living block with an African-American presence on this hallowed ground.” Defeated city council candidate Rich Lee urged council to use any action allowed to restore all units to affordable rents. Dee Williams, also a defeated candidate, said she wanted to see people who looked like her working in shops on Eagle Market Street. She said, “Black lives do matter,” and challenged those who like to work with people who look like them to “think about giving other people a chance sometimes.” Former city councilman and principal for the project Gene Ellison looked beyond racial divides and asked council to do what was best for “us” and not leave an eyesore downtown.
Inquiries were made about other possible sources of funding. Scott Dedman, executive director of MHO, said Eagle Market hopes to recover more from arbitration over the cracked concrete, but nobody wants to bank on that. In order to keep all units affordable, or rented at no more than one-third of household income for a family earning 80 percent of AMI, the project would require $3 million more from the city. To that, Mayor Esther Manheimer said she would rather the city use that kind of money to build affordable housing units more cheaply. Councilwoman Gwen Wisler expanded. Tallying the city’s commitments for the project, she said going into the meeting, the city was going to subsidize 62 units of affordable housing at $83,000 per unit. Normally, it funds affordable housing with contributions of less than $20,000 per unit. If only 24-30 of the units would be affordable, the city would be spending $135,000 to $175,000 per unit. Wisler didn’t buy the line about lost interest not costing the city anything, and she thought the proposal exposed the city to too much risk, so she ended up being the only member of council to vote against the new terms.
Councilman Gordon Smith explained why he disagreed. He said Eagle Market was not just housing, but a transformational project. “I for one am not going to let the perfect be the enemy of the good,” said he. “I think that twenty years from now, people are going to look back and applaud the wisdom and the courage of council to move forward on this.”