A new California developer with familiar faces says it is under contract to purchase the Ramada Inn site, a failed project to create permanent supportive housing in Asheville.
The Los Angeles-based firm, Friendship for Affordable Housing (FFAH), hopes to do what another California developer failed to do over a three-year span: convert a run-down motel into housing for the city’s unhoused population.
“We're well capitalized. The family office behind our company is willing to put up the financing needed to get the project off the ground,” Ari Majer, a principal for FFAH, told BPR.
To help make that happen, FFAH has enlisted several former employees of Shangri-La, the developer who lost the property to foreclosure after months of delays.
The prior attempt was made by California developer Shangri-La and nonprofit Step Up. Both entities face a $114 million lawsuit in California for their handling of state-funded, permanent supportive housing projects. The lawsuit alleges the duo of fraud and breach of contract.
The proposal to take over the site was announced earlier this month at a Continuum of Care (CoC) meeting and first reported by the Asheville Citizen-Times. It includes a $1.5 million funding request from the City of Asheville to provide supportive services for the completed project.
The CoC, a group made up of more than 300 community members, receives federal funding to address homelessness and serves as the planning body for homelessness prevention in Western North Carolina. It recently restructured from a City of Asheville-led entity to one that is community-governed.
The City of Asheville tasked the CoC with vetting the proposal. The CoC plans to have a recommendation prepared by July 11. Asheville City Council is slated to hear a $1.5 million funding request for the project at its July 23 regular meeting. Before arriving at council, the request will visit the city’s Housing and Committee Development Committee on July 16.
Melina Arrowood, CoC’s new board chair, said the CoC’s funding committee will take the lead on vetting the proposal. She said she is optimistic about the decision stemming from a more community-led body.
“I do have a lot of hope that as a group we can have the right strategic vision and
you know help the city and the county make good decisions that will move us towards ending homelessness in our community,” she said.
Arrowood leads the CoC’s 14-member board, which includes people with lived experience of homelessness and healthcare and social services providers.
Then, the full board will vote on whether or not to make a recommendation.
“[The board] is made up of people who have a lot of knowledge in this space and are not afraid to give really good feedback and ask really hard questions,” she said.
“We will make sure that as a group anything that we feel is still outstanding we have covered and then we will vote on whether or not we would like to recommend that the city move this forward, from a funding perspective.”
Proposal aims to continue original plan for Ramada
The Ramada Inn property – located at 148 River Ford Pkwy. in East Asheville – has been held by mortgage lender Stormfield Capital since last December. Its previous owner River Ford, LP – an entity held by Shangri-LA – lost the building to foreclosure after failing to repay a $6.3 million bridge loan to Stormfield.
The site has been deed-restricted for permanent supportive housing since 2021, when the city reassigned purchasing rights to former owner Shangri-La.
As part of its proposal, the new developer, FFAH, requested 100 vouchers from HUD – half for emergency voucher holders and half for a veteran-specific program. It plans to partner with the Veterans Administration to help provide the veteran-specific vouchers. It also seeks $1.5 million in Covid-recovery, or ARPA, funds – the same amount of funding that was previously allocated for Step Up to provide supportive services to tenants.
Majer said FFAH will not complete purchase of the property without the $1.5 million in supportive services funding from the city, as well as the award of project-based vouchers from HUD.
He said he expects the rehabilitation and conversion of the Ramada Inn to cost around $8 million.
The site has already undergone initial demolition work, permitting and design, all which makes the project “ready for a contractor to get right in and start.”
“That's why we're hopeful we can do it quickly,” Majer said.
The funding from the city would support the first three years of supportive services, which would be provided by local nonprofit Homeward Bound if and when the renovation is complete.
Homeward Bound opened Compass Point Village, Asheville’s first permanent supportive housing site, last September.
Jesse Figueroa, a spokesperson for Homeward Bound, told BPR that it is “critical” that Asheville develop more permanent supportive housing as a solution for homelessness.
“I think the community at large was disappointed to see [the Ramada] project fall through earlier this year and so we were really excited to see the new developer come in with a proposal,” she said.
If the project moves forward, Homeward Bound would provide tenants – many who would come from living on the streets – with case management, behavioral health therapy and peer support for those struggling with substance abuse issues.
Figueroa said she’s hopeful about the project.
“It would just make such an impact on reducing that unsheltered homeless count,” she said.
The latest Point-in-Time count puts that number at 219 unsheltered residents, for a total of 739 unhoused people in Buncombe County.
New developer has ties to former Ramada custodian, Shangri-La
FFAH’s 77-page proposal said it has built 375 units of permanent supportive housing in California. All six of those projects, including a series of VA Campus Buildings in Los Angeles 205, Step Up on Western and others, were built in partnership with Shangri-La and its nonprofit partner Step Up.
“Those six deals are doing great,” Majer said. He said that FFAH “had nothing to do” with Shangri-La and Step Up’s failed Homekey projects which are now the subject of the state attorney general’s claims.
“We contracted with [Shangri-La] as a general contractor,” Majer said. “And they were minority partners of some of our projects for a short period of time, but we're in no way related to them.”
FFAH has since “bought out” Shangri-La from the properties, Majer said.
In May, Shangri-La unsuccessfully filed for Chapter 11 bankruptcy protection, The Redlands Daily Facts reported.
Several members of the new Ramada Inn project team have past ties to Shangri-La.
Ayahlushim Getachew, principal of the project, is a former co-owner of Shangri-La. She left Shangri-La in 2019, Majer said, “well before Shangri-La started any development deals,” when it was “just a construction company.”
Matthew Modrzejewski, FFAH’s Director of Development and Construction, and Callum Davidson, the company’s Director of Acquisitions, will also both play key roles in the site’s development. Both Modrzejewski and Davidson previously worked for Shangri-La, overseeing the Ramada Inn site before the project petered off in 2022.
Eric Hall, who worked as the site’s property manager under Shangri-La, has also been employed by FFAH for ongoing management and maintenance at the vacant site.
Majer said FFAH hired Hall, Modrzejewski and Davidson because they all have “good knowledge” on the project.
CoC sees “a lot that’s promising” about project, along with a few concerns
“There’s a lot that’s promising about the project,” Arrowood told BPR. “We know Homeward Bound obviously and they've already done a lot of great work in our community. The VA is very strong and typically well-funded.”
FFAH also has a strong “track record” that includes completing other hotel conversions and previous work with the VA, Arrowood said.
“They have done this before. They've got experience. Their programs that they've built in California are still up and running, doing well.”’
The main concerns Arrowood has heard about the project focus on community safety, law enforcement presence, transit options and how supportive services will be handled for residents.
There were also questions around the success of FFAH’s previous programs, she said.
Majer said his team understands that the community may have concerns.
“There's a whole area of concern of the project failing and then there's a whole other group of people that are concerned the project’s going to work, because they're nervous about the type of project that it is,” he said.
“We believe that we have the capacity to do it. We understand the apprehension that they were burned by an out-of-state developer once before and it doesn't look that different to the people who don't know us,” he continued.
Majer said the relationships that FFAH has built with Homeward Bound and Stormfield, along with former Shangri-La employees who have experience working on the project, will help move the project along efficiently.
“If you just give us the chance to get the award of the funding, we will put up our money to buy the project from Stormfield, show good faith in moving forward as fast as possible. We hope to build trust by accomplishing as opposed to talking.”
