Council Deals Capitalism Another Blow

Asheville City

By Leslee Kulba- CItizens are supposed to get ginned up by whatever shiny object their leaders toss them. Borrowing from Timothy Snyder, opinion leaders “manufacture crisis and manipulate the resultant emotion. To distract from their inability or unwillingness to reform, [they] instruct their citizens to experience elation and outrage at short intervals. [They] deny truth and seek to reduce life to spectacle and feeling.” Asheville’s latest outrage is hotels.

Councilor Vijay Kapoor supported the project, neatly articulating the pros…

At the last meeting of city council, Attorney Wyatt Stevens and others explained how Russell Thomas bought the Flat Iron Building 33 years ago in an effort to revitalize downtown Asheville when it looked “bombed out” and was considered unsafe. He provided office space, charging affordable rents and cutting favors for businesses that had been with him through the years. Built in 1926, the Flat Iron still has its original electrical system.

The elevators are so old, replacement parts must now be custom-built. The building is not sprinklered or ADA accessible. Its HVAC system is 30 years old, and bringing everything up-to-date would cost $10.5 million. Thomas explained preserving the historic landmark was very important to him; and the longer repairs were postponed, the more expensive they would become.

Accountants with Beverly Grant crunched some numbers and found with a sale price of $16 million, an investor making the needed improvements and keeping the office spaces as-is would realize a return of 1.78%. If Thomas were to agree to sell for half the asking price, the return would be only 2.52%. “You can get more than that with a CD, at a bank,” said Stevens.

The property was listed, and several inquiries were received, but only one party was willing to put down some cash, a team of “the best local experts,” including developer Philip Woollcott, Grove Arcade architect Jeff Dalton, design engineer Chris Day, and general contractors from Beverly Grant. They wanted to repurpose the building as a hotel and garner 5-6 times as much income.

Community benefits the hotel would offer included streetscape improvements with a bulb-out for busker crowds, free transit passes for guests and employees, and $2 per room-night in perpetuity as compensation to the city for eliminating six parking spaces. What’s more, the development team was going to pay relocation costs of up to six months’ rent, depending on how long tenants had been in the Flat Iron. Stevens supposed most tenants would relocate even if the buyer opted to keep the building’s current use; repairs would most-likely be funded out of steeply-escalated rents. He added there was a lot of vacant commercial space downtown that other landlords would be happy to rent.

The Opposition –
During public comment, the variation on the theme “Money is evil, so spend it on me,” was represented by members of the WNC Green Party and the Asheville Democratic Socialists of America; which could explain the neglect of supply-side economics in arguments. Other opponents included the usual suspects who regularly attend city council meetings to give voice to the voiceless; namely, the poor, the black, and those not always identifying with their assigned gender.

Arguments against hotels went back to former City Manager Gary Jackson’s white paper, which complained tourists did not pay their fair share for wear and tear on the city. Many spoke as if the historical purpose of cities as commercial hubs was part of a bygone era, with municipalities now being centers where low-income people live on bus lines and everybody enjoys nature and the arts. Hotels were disparaged for providing jobs for maids and desk clerks, which typically can’t pay the $15/hour Just Economics is demanding. And some even insinauted a local, low-income family renting an apartment would patronize local businesses more than tourists cycling in and out of a hotel room.

On proliferation, citizens said there were things the city needed more. The affordable housing crisis continues, so several thought the city should convert the building into subsidized apartments. Then, there was a charm about small businesses as economic drivers, which they lost once they became big, like the firms that were trying to redevelop the property. Referencing Wikipedia, some suggested the building be used for a mixed-use retail space including a cinema, or perhaps a WeWork site. The city, it was said, should be providing for transit, housing, wages, education, and other services before it caters to the hotel industry. Developers, they said, were greedy. They “maximize profit for short-term gain” and use their own money to “subsidize risk and privatize profit.” Developers were “rich,” “white,” and “greedy.”

Any understanding of economics, the city’s design review process, or business basics took a back seat to banking on public naivete. Some spoke as if the developers had jumped the gun in accepting an offer when the building had been on the market only 30 months. They did not see why many businesses wouldn’t, as the buyer under contract had, sink half a million dollars into design without first rights of refusal. The inability to pay for needed maintenance was turned against the owner to label him a slumlord.

Then there were those interested in quality of life. They wanted a vibrant downtown, not with sterile tourists, but with buskers and people sleeping in alcoves. One quoted a columnist in the local daily as saying, “The city’s soul is at stake.” Another faulted city council for not attending a high-school presentation on the New Green Deal or taking any radical ideas seriously. A third said if the developers couldn’t “think outside the box of greed,” they should consult architects or students at universities to figure out another use for the building.

The Supporters –
When the public hearing was almost over, Shannon Van Etten filled a void. “I believe we’ve fallen into a place in our culture that is driven by a mentality of entitlement that suggests that: I have a lot of great ideas, and if you’ll just listen to me and incorporate those ideas and go find somebody to stroke the check, maybe those ideals can manifest to the good of all. To date, after two years of seeing this building on the market and thirty years of progress under Russell’s management, and the work that he has done, we have gotten to a point where we’ve reviewed the numbers, we’ve heard from experts, and there’s a viable solution to beautify that building, make it functional and usable by the community.

“There is only one person that has offered to, by the math, stroke a check. Mr. Woollcott has offered to do that. No one else has offered to do that. This is a free-market system. The property’s been available to the marketplace for some considerable period of time, and, absent any other offers, absent any other funds, I think that we should seriously consider the fact that a man is willing to put tens of millions of dollars into a building that we hold dear, as our own, here in the heart of Asheville – to beautify that building, to use that building, to employ people locally to work in that building, and to cooperate with the authorities here in Asheville to make that work in the most efficient way possible.

“So, the bottom line from my heart, that I would share with you is, we do the math, and we stroke the check. If there’s one check and one check only that’s made available, we should seriously consider that. If there are a lot of other great ideas – first of all, I would say they’re probably a little late to the game – but if these ideas are viable, I think the community that has these ideas should get together, rally, and start a GoFundMe page and come up with $20 or $30 million and compete with that offer. Absent that, if the city council were to determine that we should not allow that check to be written for the preservation of the community as it has been presented to you, I think the city council ought to consider where it should come up with the money to create a better scenario than what is presented. So, in closing, stroke the check.”

Ken Jackson followed with support for developers. “We borrow millions of dollars, we sign joint and several personal guarantees, which means our entire personal fortune – our homes, everything we own – is at risk every time we develop real estate…. I lay my head down on the pillow each night and pray my projects will succeed…. Developers don’t develop if the numbers don’t work.” Even if Thomas were to give him the building for free, he said he’d pay $1,172,000 in debt service at 5% interest over 20 years if he made the repairs and maintained the building’s present use.

“We don’t live in a socialistic system in this country,” concurred Stevens in his closing remarks before requesting a polling of the board before the vote. Had council voted down his request, he would not have been able to return with a revised plan for a year. After Councilors Julie Mayfield, Sheneika Smith, Brian Haynes, and Keith Young voiced disapproval, he withdrew the application. Mayfield suggested Stevens should hold a powwow with the community, and council might consider taxpayer subsidies for adaptive reuses of historic buildings.

Councilor Vijay Kapoor supported the project, neatly articulating the pros and adding that dehumanizing hoteliers and hotel employees as “the machine” to score political points, “needs to stop now.” Manheimer said it was a slap in the face to deny those who invested in the city at its lowest the ability to maximize profits. Vice Mayor Gwen Wisler was silent.

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