The California developer who struck a deal with city officials to convert the Ramada Inn to permanent supportive housing for the unhoused has lost the property to foreclosure, leaving the future of the site and the promised services for the city’s most vulnerable in question.
Court documents show the lender, Stormfield Capital, foreclosed on the East Asheville property in December after River Ford, LP defaulted on repayment of a $6,337,500 loan made in September 2022.
River Ford is a legal entity of property developer Shangri-La who purchased after the city relinquished its right to buy the property. The project was a joint initiative by Shangri-La Construction and a nonprofit, Step Up on Second Street.
During the height of the pandemic, the hotel served as a shelter for the unhoused. City officials planned to buy the property and convert it to a low-barrier shelter, but they pivoted just before the sale and assigned their right to purchase to Shangri-La, a developer who promised a quick conversion to alleviate some of the pressures created by unhoused people. Step Up CEO Tod Lipka assured community members that the partnership had the “special sauce” to move the project quickly.
The challenges of unhoused populations have been the subject of much public debate in Asheville. The Asheville Point-In-Time count, which gathers data on unhoused individuals, showed 573 unsheltered people in the city in 2023.
In the summer, the city increased police presence as part of a “Downtown Safety Initiative” aimed at making downtown feel safer and cleaner for residents and business owners. One of the conclusions of the initiative was a “Commitment to Addressing Homelessness” which included funding for services for people experiencing homelessness and additional shelter capacity.
Just two days before the foreclosure sale, city and county officials held a joint meeting and announced an overhaul of their approach to homelessness.
At the meeting, Mayor Manheimer said one of the reasons for the change was “a discussion we were having in our community around the need for additional shelter and what types of additional shelter we needed.”
The hotel has been unoccupied since March 2022 when temporary shelter residents were forced to leave.
Manheimer declined to answer questions about the effect of the foreclosure or the future of the project.
Shangri-La CEO Andy Meyers told BPR in late summer 2023 that he planned to work fast to help the city address the issue of the “chronically homeless.”
“And as long as it seems like we've been messing around in Asheville, we will be done in less than half the time that it takes,” he said, mentioning that comparable projects take between four and seven years. “And probably for half as much money.”
Shangri-La did not respond to requests for comment for this story.
In a statement on behalf of the Community and Economic Development Department, City of Asheville spokesperson Kim Miller said the city staff is “aware of and monitoring the legal proceedings involving Shangri-La.”
“Shangri-La has communicated that they are committed to fulfilling the permanent supportive housing project. However, the city’s funding for this project will not be released until this project is completed,” she wrote.
As part of the 2021 deal, the city agreed to fund $1.5 million in services that were to be provided by the nonprofit partner, Step Up, including $500,000 of American Rescue Plan Act funds. The allocation remains the only project not listed as “in process” by the city’s ARPA office.
“ARPA federal standards require any projects and/or initiatives that utilize ARPA funds to be completed by December 31, 2026,” Miller said in her statement.
Step Up did not respond to multiple requests for comment for this story.
Legal issues mount
The foreclosure is the latest in a series of legal challenges to the developer including a statewide investigation by the California Department of Housing and Community Development into the developer’s management of seven publicly-funded affordable housing properties.
In North Carolina, local contractor Beverly-Grant obtained a $392,987 default judgment against Shangri-La for initial demolition on the site, the Asheville Citizen-Times first reported.
In a November filing, Beverly-Grant alleged that Shangri-La failed to pay the company nearly for work completed from December 2022 to June 2023.
The lawsuit named four defendants: River Ford LP and three Shangri-La entities: Shangri-La Industries LLC, Shangri-La Development LLC and Shangri-La Construction LP. State records show the authorized representative of River Ford is Shangri-La CFO Cody Holmes.
Beverly-Grant and their counsel declined to comment.
