Stonewalling at the Stoneyard?
Developer’s token donation to housing trust fund is waiting on permits
Two months after City Council approved plans for the River Arts District’s biggest development to date, the project’s developers have not yet made the affordable housing cash contribution that was part of the deal, though the city says the check is in the mail, in a manner of speaking.
Last November, Saluda-based Altinvest Investment Consultants, which maintains an office in Asheville, promised to donate $50,000 to the Asheville Affordable Housing Trust Fund in lieu of setting aside a portion of the planned Stoneyard Apartments’ 133 units as “affordable”.
At first neither Enquiring Minds nor the Vice Mayor of Asheville were able to determine whether Altinvest had done anything to make good on its commitment, which members of the public have called “miniscule” and “puny” considering the project’s $19 million price tag.
“I’m not sure of the status of the $50,000 promise. I am copying [City Manager] Gary Jackson to find out,” Vice Mayor Gwen Wisler told Enquiring Minds in an e-mail that showed a copy sent to Jackson.
A week passed with no word from Wisler, nor from Jackson by way of Wisler.
But late Friday Chris Hnatin, of the city’s Community Development Department, responded to a query from several days earlier.
“The $50,000 contribution is to be made at the time the first building permits are pulled,” Hnatin said. “That hasn’t happened yet.”
The $50,000 amounts to 6.6% of the $750,000 donation suggested last June by then councilman Gordon Smith, and 28% of the $175,000 put forward by Wisler at the time the project was approved in November. Smith and Wisler ended up being the only councilors voting against the project, with Wisler saying “it flies in the face of our values” considering the present housing crisis.
Standing “on its own merits”
Under current federal standards, a one-room “studio” apartment has a rent cap of $518 per month for a single renter making up to $25,763 per year. A family of four with an income of up to $36,780 a year could be charged no more than $711 a month for a three-bedroom unit.
And since Asheville continues in the grip of an affordable housing shortage of near-epic proportions, council members raised the question as soon as Altinvest rolled out its plans: Would the developer consider designating 26 of the Stoneyard units – about one in five – “affordable,” rent-wise?
In a word, no, said Altinvest partner David LaFave. The project’s business model would not accommodate that kind of rent structure; moreover, he said, Altinvest wanted it “to stand on its own merits.” He also cited the prohibitive cost of building in the epicenter of Asheville’s most notorious flood plain.
Nobody asked LaFave to explain how the inclusion of affordable units would affect The Stoneyard’s “merits,” nor did he elaborate.
“They don’t want the great unwashed worming their way in there,” one observer said.
LaFave did say later that although the rent scale has not been finalized, he expects a studio apartment at The Stoneyard to rent for $750 to $800 monthly, with a single bedroom unit costing about $1,100 and a two-bedroom flat going for $1,300 to $1,400.
“We take this very seriously”
Altinvest’s outright refusal to compromise its pricing structure appears to be rooted in its own corporate structure: it is not a developer per se; it’s an investment equity management company. It finances a given project by first selling subscriptions to individual investors, thus creating a cash pool that allows a property to be acquired by using equity, not debt. Subscribers’ funds are held for a specific length of time – typically four to six years in its own case, Altinvest says – after which the property, with additions and improvements, or simply an increase in market value, is sold and the profits shared out among the subscribers.
“Since we don’t profit until you make the designated preferred return for that offering, you can be assured that we take this very seriously,” Altinvest’s website says.
For her part, Wisler told Enquiring Minds, “I continue to stand by my vote against this project but respect my fellow Council members.”