East Asheville Ramada Inn property slated for homeless housing lost to foreclosure
ASHEVILLE - The Ramada Inn property in East Asheville has been foreclosed on by lender Stormfield Capital after California-based developer Shangri-La defaulted on its $6.3 million loan.
Shangri-La made promises to transform the former motel into 113 units of permanent supportive housing for the city's homeless population. The project has been plagued by a series of delays and litigation. In December, a default judgment was granted against the developer after contractor Beverly-Grant alleged nonpayment for its work done at the property.
Shangri-La purchased the property in September 2022 for $9.75 million, according to prior Citizen Times reporting.
Initially, the property was intended to become a permanent high-access shelter, a project pursued by Asheville City Council until it abandoned those plans in December 2021.
After outcry from the hotel's neighbors and uncertainty from financial partners, the city made a quick pivot away from the purchase of the Ramada, and authorized the assignment of its contract to purchase the property to Shangri-La, which announced it would convert the property into homeless housing.
The project was to be done in partnership with another California-based company and nonprofit, Step Up Inc. While Shangri-La was overseeing construction, Step Up was responsible for lease-up, supportive services and property management. The city pledged $1.5 million to fund the first three years of supportive services.
Tod Lipka, president and CEO of Step Up, told the Citizen Times Jan. 5 that Shangri-La has been solely responsible for the financing and construction on the project.
"Step Up has had no involvement on the financial side of the project," Lipka said in an emailed statement. The role of Shangri-La was to complete the project and deliver it to Step Up "move-in ready" for them to lease.
"We have been devastated by the problems at Shangri La," Lipka said. "Step Up is looking at all options that will enable the project to move forward as our most important focus is getting individuals housed."
According to court documents, the latest filed Dec. 6, River Ford — a "limited partnership" owned by Shangri-La CEO Andy Meyers and CFO Cody Holmes — originally borrowed $6.3 million in September 2022. They failed to make monthly payments per the terms of the lending document and were found in default.
By September 2023, the amount owed by Shangri-La, with interest, late fees and other charges, was $6.9 million. A report of foreclosure sale was filed Dec. 6.
Shangri-La and its attorneys have not responded to request for comment.
The foreclosure was first reported Jan. 2 by Blue Ridge Public Radio.
What's the city say?
From April 2021 to March 2022, the Ramada was temporarily used as emergency shelter. As of the March deadline, while some residents had secured housing, about 25 people were left with nowhere else to go.
A December 2022 groundbreaking at the property, located at 148 and 150 River Ford Parkway, was a hopeful day for the long-awaited project at the Ramada, but it has dragged months beyond its original planned opening.
"While it is important to note that the City of Asheville is not the owner or project manager for the permanent supportive housing project at the site of the former Ramada Inn, it is unfortunate to see this badly needed resource in our community not come to fruition at this time," said Mayor Esther Manheimer in a Jan. 3 emailed statement to the Citizen Times and other media outlets.
Manheimer said the city's funding for the project is contingent upon its completion. It will not be contributed until construction is complete.
"The City understands the importance of permanent supportive housing as a strategy to respond to homelessness and staff will continue to monitor the status of the project to determine if a viable financing plan is in place to proceed with the project as originally envisioned," Manheimer said.
More: Asheville contractor wins default judgment against Ramada homeless housing developer
More: Asheville's Ramada Inn breaks ground on 113 units of permanent supportive housing
Sarah Honosky is the city government reporter for the Asheville Citizen Times, part of the USA TODAY Network. News Tips? Email shonosky@citizentimes.com or message on Twitter at @slhonosky. Please support local, daily journalism with a subscription to the Citizen Times.
This article originally appeared on Asheville Citizen Times: Ramada Inn East Asheville homeless housing foreclosure
