The potential developer of a Fayetteville housing project is facing controversy in Asheville
Almost three months after the Fayetteville City Council voted to set aside up to $5.4 million from the American Rescue Plan Act for a California-based nonprofit to create housing for the homeless, questions about the project’s developer have emerged in the wake of a significant delay in fulfilling a similar obligation in Asheville.
Step Up, of Santa Monica, California, which works to build supportive housing for the homeless and those at risk of becoming homeless, and Shangri-La Construction, a Los Angeles-based developer, presented plans to the City Council in August to convert the former Night Inn, at 511 S. Eastern Blvd., into 137 studio apartments for the homeless. City spokesperson Loren Bymer said Monday that Step Up first contacted the city in February.
In a brochure given to council members by Step Up, the partners estimated construction would take seven to eight months to complete and touted successful projects in San Bernardino, California, and Asheville.
But the photos for the Asheville project — described in the brochure as before and after shots — show an architectural rendering of that project because, as Blue Ridge Public Radio reported last month, in the 22 months since the city of Asheville entered into a contract with Step Up and Shangri-La, construction has yet to begin.
The station reported Oct. 10 that, despite a groundbreaking ceremony in December 2022 with an estimated completion date of July 2023, only initial demolition has occurred at a former Ramada Inn that Step Up and Shangri-La promised to turn into 113 apartments for the homeless. Furthermore, according to Blue Ridge Public Radio, Shangri-La owes the city of Asheville $67,031 in fees, which a city employee said must be paid before work commences.
Shangri-La faced more than $2 million in liens in its home state of California in the spring after allegedly failing to pay contractors for more than six months, Blue Ridge Public Radio reported. Federal court records show that the developer was also sued in 2016 and 2022 on allegations they failed to pay contractors for work on various projects in California. A jury found in favor of the contractor, according to court records.
City declines comment
Chris Cauley, Fayetteville’s director of economic and community development, said Friday that he could not comment on the allegations against Shangri-La but provided further details on the current status of the local project.
“Basically, what’s happening is just like any other property transaction,” Cauley said, explaining that Step Up is negotiating the cost of the property.
According to Cauley, Step Up is in discussions with the owner of the 3.93-acre South Eastern Boulevard site. Step Up had entered into an informal agreement with the owner about a price, Cauley said, but that agreement fell through because the owner had made upgrades to the property.
Initial coverage: Fayetteville hotel to be converted into apartments for the homeless. Here is where and how
Cauley emphasized that if the Night Inn site doesn’t work out, the project will still go on.
“Whether it’s the Night Inn or another property, Step Up is committed to working in Fayetteville, and City Council has committed to working with Step Up,” he said. “This is a project/service that is desperately needed in our community.”
City spokesperson Bymer said Friday that the city would not comment on the allegations against Shangri-La.
“It would be inappropriate for the city of Fayetteville to comment on this topic,” he said. “It would be more appropriate for the nonprofit to speak on this topic.”
Bymer said Wednesday that the city has not been given pause about the project.
"The city looks forward to hearing proposals and evaluating plans from nonprofit organizations that are designed to assist residents to transition out of homelessness and provide services for long-term success," he said.
Councilman Mario Benavente said Monday that he was not concerned because it is not certain that Shangri-La will be involved, as no official contract has been signed.
"There's not too much to worry about only because our agreement is not yet finalized," he said. "We're at the stage still where the City Council has made it clear that we're interested in investing up to this amount into it, and the ball is sort of in Step Up's court to find a suitable location ... At that point, they'll have to come back to City Council."
Shangri-La and Step Up had not responded to requests for comment as of Wednesday afternoon.
Got a tip for a follow-up on this story? Government watchdog reporter Lexi Solomon can be reached at ABSolomon@gannett.com or 910-481-8526.
This article originally appeared on The Fayetteville Observer: Shangri-La Construction may come to Fayetteville while battling controversy
