City Council regular meeting — October 26, 2021

Community Development Programs Director Paul D’Angelo said that this is the consideration of a resolution amending a Grant Agreement with Haywood Street Community Development for additional due diligence costs in their pursuit of the development of approximately 42 permanently affordable rental homes. Review:

• Haywood Street Congregation has proposed the development of approximately 42 affordable apartments with the potential for 5550 sq. ft. in community space on a .83 acre on a parcel located at 343 & 357 West Haywood Street.
• Haywood Street Congregation is an urban ministry with its main headquarters located at 297 Haywood Street.
• Core programs include weekly worship, a clothing closet, community garden, a free community lunch known as the Downtown Welcome Table, and Haywood Street Respite, which offers a safe place for adults experiencing homelessness to stay on a short term basis after being discharged from a hospital.
• Haywood St. has formed a 501(c)3 non-profit, known as Haywood Street Community Development (HSCD), with the intention to provide permanent affordable housing to the most vulnerable members of the Asheville community.
• HSCD is partnering with Ward Griffin of Grace Construction, a local development firm with over 80 years of development experience, and Austin Tyler with Dewey Property Advisors, to purchase, develop and construct the project.
• While HSCD has been serving the homeless community for quite some time, this will be their first effort towards developing a permanent residential apartment project with onsite supportive services.
• HSCD hopes to construct its first development consisting of a single building with approximately 42-units, to be leased with permanent affordability deed restrictions requiring rental of units to households earning 80% and below of the Area Median Income ("AMI"), with a goal to have up to half of the apartments at or below 30% AMI as may be reasonably feasible, and approximately 5,500 square feet of community space.
• Last year, the City was working on an agreement to sell City owned property located at Asheland Ave. to HSCD for this affordable housing development and HSCD incurred costs in due diligence and design in anticipation of being able to purchase that property.
• However, after significant input from the community, it was determined that the Asheland property was not an appropriate site for this development.
• Due to the aforementioned reason, as well as due to a need for the type of affordable housing proposed, the City is exploring a partnership with HSCD to develop the affordable housing project on a different site and has committed $71,000 in due diligence funding in the form of a Grant Agreement, with $10,000 in an earnest money deposit for the purchase of the site and $61,000.00 for due diligence investigations, including surveying, environmental site assessments, geotech analysis, title examination, and civil and architectural site planning, and any other investigations of the site as may be necessary or desirable, at the discretion of HSCD.
• The Grant Agreement also states that HSCD and the City shall work toward the goal of an additional grant agreement ensuring comprehensive opportunities including purchase of the West Haywood Street site and construction of the development.
• With the property under contract, HSCD is asking for an Amendment to their Grant Agreement and an additional $225,000 in grant funding to pursue those additional investigations and due diligence of the site, using Affordable Housing Bond dollars as the City’s funding source.
• HSCD reserves the right to return to the City for additional grant agreement funding to include purchase of the site and construction of the development if due diligence items point towards the successful development of a 42 unit affordable housing community.
• Additional “Eligible Project Costs” could include site infrastructure costs, including without limitation, abatement, demolition, mobilization, erosion and stormwater control, excavation and grading, materials testing, retaining walls, guard rails, fencing, sewer, water, fire, electrical, and gas lines and other infrastructure improvements, landscape, streets, sidewalks, parking lots, related engineering costs for site work and any other costs approved by the City Manager or his/her designee.
• If the purchase of the property does not proceed to closing, Haywood Street will assign the rights to and provide copies of any and all due diligence items to the City who will be the rightful and final owner of the materials. Committee(s):
• The Housing & Community Development Committee unanimously recommended moving this forward at their meeting on October 19, 2021. Pro(s):
• The approval of the amendment to the Grant Agreement will allow the developer to continue their due diligence work and finalize their other sources of financing necessary to move forward with the purchase and development of the property.
• The City will gain 42 new permanently affordable housing units under 80% AMI, with a goal of up to half of the apartments at or below 30% AMI and approximately 5,500 square feet of community space.
• This development aligns with the City of Asheville’s Consolidated Plan goals of prioritizing the development of affordable rental housing to individuals & families at or below 60% AMI. Con(s):
• Funds are granted towards the due diligence phase of this project.
• A final successful project depends on HSCD obtaining financing, securing project zoning approvals and receiving clear legal title for the property.
• If HSCD is not able to clear these steps, then the parcel may not be purchased and a project may not be constructed.

Fiscal Impact:

• With the approval of this amendment, a total of approximately $296,000 will be allocated towards this project utilizing the previously approved budget from the 2016 General Obligation Bond Program. Mr. D'Angelo and Interim Director of Community & Economic Development Nikki Reid responded to various questions raised by Council (and those which he could not respond to were addressed by Pastor Brian Combs), some being, but are not limited to: confirmation that if the project doesn’t get built, does the City need to reimburse the Bond program; how much did HSCD spend on the Asheland project and is our investment "payback" for that failed project; what commitments has HSCD received and what conversations have taken place for other funding sources; what due diligence did the City perform in order to support funding for this project; have there been other circumstances where the City has committed due diligence funds at this early stage in development; and what is our Fund Balance amount. Mayor Manheimer said that we have asked community partners to step up and help serve the community, especially in serving the population that is intended to be served by this project. Others, i.e. Homeward Bound, A-B Community Christian Ministries, Helpmate, who are providing housing for this population, have used their own funds for their due diligence, and they seek help from the City for their capital expenses. We are at the due diligence stage in this project and possibly this money will not be recoverable. This group has never done this and there is a risk associated; however, we have asked our community for these type projects. Pastor Brian Combs said this is not a low barrier shelter
• it is 45 deeply affordable permanent apartments at 339 West Haywood Street on .83 acres. It will include 24 one-bedroom, 18 two-bedrooms, and 3 three-bedrooms. It is a mixed-income development with 23 homes at 30% AMI (people making up to $15,000/year), all Housing Choice Voucher residents; 9 of the homes will be at 60% AMI (people making up to $30,000/year); and 13 of the homes will be at 80% AMI (people making up to $42,000). One hundred percent of the units are affordable in perpetuity. The goal of the project is based upon studies stating there is only one AMI category that is urgent and that is the 30% AMI category. We need this due diligence funding in order to move to Phase 2 of this project
• schematic drawings, stormwater erosion, sewer, more accurate proforma, and move through the Technical Review Committee and the Planning & Zoning Commission. He explained the relationship between the Haywood Street Congregation and the HSCD noting that the HSCD is a completely separate entity from the Congregation; however, the two non-profits are connected. His role is an interim project manager who has voice, but no vote on the board. He explained how this project is different from the Congregation in that the Congregation’s call is that they welcome people without conditions. They anticipate they will have a zero percent vacancy from day one. They will work with the Housing Authority. They may do minimal marketing, e.g., a sign in the ground. They will reach out to applicants of color and lean on their relationship with the Interdenominational Ministerial Alliance, Racial Justice Coalition, advertise in many Black churches, and seek guidance from Board members and staff of color. Regarding keeping the property safe, they have learned the focus needs to be on visitors rather than residents. We offered to start a neighborhood council with WECAN to address issues and problems. They will have cameras, key fobs for entrances and closed stairwells, resident policing program and a safety plan with the Asheville Police Department. Regarding property management, they have had significant conversations with Givens Estate. He then explained their neighborhood engagement over the past few months and invited them to join their Board. They believe the neighborhood engagement is an indefinite process. Mr. Ward Griffin explained their capital funding. He said it is largely dictated by the amount of debt that the project can carry once it’s stabilized. They anticipate refinancing the project with a HUD loan once the property is stabilized
• and that is based on the amount of income it produces. They have made funding requests to Dogwood for $2 Million and the County for $2 Million in ARPA funds. The balance would be from the City’s Housing Trust Fund and other programs/grants to be determined. In response to Councilwoman Wisler, Mr. Griffin said that their total investment request for funding from the City would be approximately $2-2.5 Million. There have been initial conversations with City staff but he didn’t think staff has made a final determination of where those funds would come from. Councilwoman Wisler was concerned about the gap in funding if the County or Dogwood do not fund the project. She felt it was premature for the City to be committing to that level of funding with such a large gap in the total funding needed, especially since we are basically committing to $2-2.5 million for this project. Mr. Griffin responded to Councilwoman Kilgore when she asked about maintenance of the building in the short- and long-term. Councilwoman Roney wondered if this project doesn’t close and we have information from the due diligence phase, can we use the information in a different way. Mayor Manheimer said that it would be specific information to this site that the City doesn’t own. Councilwoman Kilgore noted that the information can possibly be sold to another developer of the site and we may get some of that money back. Councilwoman Roney said that one of the concerns of the neighbors is traffic. She noted the many ways that this project is close to transportation resources. Mayor Manheimer asked what would be the detriment to HSCD if the City asked to see the agreement with Givens for the management, written documents from Dogwood and the County on their funding commitments. Pastor Combs said they need one of the three primary partners to take a risk. He said that all partners are waiting for the City to take the risk first. They have been waiting for 8 years on this project and if this is delayed, it would probably be another year or two of the same meetings. Mr. Griffin noted that they had an option on the property which ends in January 2022 and that is with a 30 day extension. Vice-Mayor Smith noted the City always has to go first and assume the risk. She said this type of housing is such a great need in our community and we are serving the most vulnerable people. When Councilwoman Mosley asked if we could use ARPA for this due diligence cost, City Manager Campbell said she will check; however, the City has already put out a request for proposals for use of these funds. Two individuals spoke in support of the amendment to the grant agreement for the Haywood Street Community Development for various reasons, some being, but are not limited to: need for deeply affordable housing for our community on West Haywood Street; and there has been substantial engagement with the neighborhood and they expect there will be continued engagement on the design and management of the project. Three individuals spoke in opposition to the amendment to the grant agreement for the Haywood Street Community Development for various reasons, some being, but are not limited to: there is only one access road into the neighborhood, and it is already very congested at times, especially at the intersection of Clingman and Hilliard; project is too large for this neighborhood; development is not keeping with the fabric of the community; additional traffic and crime concerns; and doesn’t meet the goals of the WECAN Plan. Mayor Manheimer said that members of Council have been previously provided with a copy of the resolution and it would not be read.

This item was removed from the Consent Agenda for discussion and/or individual vote.

Background:

• PSNC Energy donated the structure and land at 8 River Arts Place to the City in 2012.
• The City renovated the structure and opened it to the public in 2017.
• It was available for short term rental for events and the attached public restrooms were available from dawn to dusk.
• The Master Plan for the Riverfront was completed in 2015 and long term plans were always to secure an appropriate single tenant for the property.
• The main room has 1,064 square feet of indoor space and roughly 1,300 of outdoor deck space for use by the tenant.
• The City’s Real Estate Office issued a Request for Proposals in May of 2021.
• This process was designed to incorporate an equity lens at every stage.
• Community Outreach was an important component of the process and took place during the Spring of 2021.
• Each applicant was asked to address how their proposal would enhance the revitalization of the River Arts District and support City Council’s Strategic Goals. Applicants included:
• Asheville Buncombe Community Land Trust
• BeLoved Asheville
• Effulgence Skin & Wellness, LLC.
• Flying Bike, Hood Huggers International, and Asheville Hiking Tours (Proposing “RAD Excursion Hub”)
• GRIND, LLC. (Proposing “Black Wall Street AVL”)
• The Grind’s proposal entitled “Black Wall Street AVL” was chosen by the Staff Selection Committee because it will celebrate Black history, encourage retail activity by Black artists and businesses and provide cultural event space.
• Grind LLC has proposed to pay $1,500 per month or $18,000 per year in rent and are requesting an initial 4 year term with an option to renew for another 4 year term.
• This rental rate is on par with area fair market rentals in the area and considers the ongoing public use of the adjacent public restrooms. Committee(s):
• The Planning and Economic Development Committee recommended approval at their meeting on October 11, 2021. Pro(s):
• The tenants’ program will act as an economic development engine for the River Arts District
• Black owned businesses will have an opportunity to partner with Black Wall Street AVL and sell their products at this location.
• The building will provide event space for cultural and educational events.
• City will be receiving fair market rent for the space. Con(s):

None Fiscal Impact:

• Rental revenues will be used to offset the costs of utilities and maintenance.

Background:

• A Biological Certification to analyze water samples from the City’s water distribution system is required by the NC State Laboratory of Public Health.
• Water Resources’ Laboratory is required to comply with EPA’s Revised Total Coliform Rule.
• The Water Resources Laboratories are required to use an approved Standard Method (SM-9223B) of analysis.
• Colilert is one of the most reliable and quickest methods to produce accurate results.
• Using Idexx Corporation as a Sole Provider for Colilert/Simplate Products will ensure continued certification by NC State Laboratory of Public Health and compliance with the EPA’s Revised Total Coliform Rule.

Vendor Outreach Efforts:

• Idexx is a Sole Source Provider of the Colilert and Simplate products. Committee(s):
• None Pro(s):
• The Water Resources Laboratories will remain certified as required by the NC State Laboratory of Public Health.
• Ensures Water Resources meets all mandated State and Federal regulatory requirements for the Safe Drinking Water Act/ Revised Total Coliform Rule.
• Colilert is a reliable product that provides for accurate results and ease of use for employees. The analysis is simple and fast, allowing time for employees to focus on other duties. Con(s):

None Fiscal Impact:

• $25,234.64 per year, with a plan to request a set price for a three year period. This is a planned cost included in each fiscal year budget. Funding is allocated within the Water Resources Operational Budget.

Background:

• The City of Asheville maintains an Employee Health Center (EHC) providing basic medical services staffed by one Physician Assistant and one Medical Assistant with oversight by a part-time physician.
• The previous contract for physician oversight was with Advent Health Hendersonville.
• Advent chose not to renew the contract.
• A Request for Proposals (RFP) process for selection of a new provider was completed and the RFP selection committee chose Marathon to provide oversight and management of EHC.
• Under the new contract, Marathon will provide the services of a part-time physician, increasing physician hours to 20 hours a week from 10 hours a week with the current physician. Marathon will add a medical assistant and a practice support specialist.
• The additional staff will expand availability of appointments for employees, shifting health claims costs from the market.
• Marathon strives to provide a patient experience focused on wellness before, during, and after a visit resulting in lower costs, improved outcomes and better health.
• Marathon will provide acute care, medical procedures, preventive care and screenings, annual well visits and physical examinations, workplace injury support, care referrals and follow-up visits.
• Other enhancements include the addition of an online scheduling system and secure messaging, ability to conduct acute care and health coaching via phone or video through a new patient portal.
• Contracting with Marathon will reduce the costs for supplies as they purchase at scale.
• Having access to Marathon’s expanded network will increase the offerings to employees and expand access to quality health care. Pro(s):
• Ongoing access to certified medical providers including physicians to provide oversight for both personal and workers compensation-related care.
• Access to Marathon’s large network will increase the offerings to employees and provide greater access to quality health care.
• Expansion of wellness programs and resources for employees.
• Greater utilization can result in better containment of health insurance claims costs. Con(s):
• None.

Fiscal Impact:

• The adopted FY 2021-22 budget for management of the EHC is $784,628.
• The annual cost of the contract is slightly higher at $864,400 for staffing, supplies, wellness programs and management of the EHC.
• For the remainder of Fiscal Year 2021-22 funds will be redirected from the existing EHC and health claims budgets which are part of the Health Insurance Internal Service Fund.
• The additional costs will be offset by the elimination of contractors for services that will be provided by Marathon in the future.

Community Development Programs Director Paul D’Angelo said that this is the consideration of a resolution approving a Mountain Housing Opportunities (MHO) request to extend the maturity date of Housing Trust Fund Loan (HTF) 2001-02 (Compton Place) from December 7, 2021, to December 7, 2031, reduce the interest rate from 2.25% to 0.00%, and modify the loan payments to annual principal only payments of $3,962 with a balloon payment of approximately $100,380. Background:

• MHO received a HTF loan in the amount of $140,000 in December 2001 for Compton Place to construct 40 affordable rental units for low-income senior citizens on Eliada Home Road.
• The project serves seniors who are 55+ and who earn 50-60% of the Area Median Income (AMI).
• This project was completed in March 2003.
• Per the promissory note, the principal amount is deferred until December 7, 2021, with annual interest payments of $3,150.00 each year.
• To date, $52,960 of interest has been paid on this loan.
• Per MHO, Compton Place’s cash flow does not support a loan large enough to pay off this loan and other debts.
• MHO intends to bundle Compton Place with other older properties, submit them for an allocation of 4% tax credits (non-competitive) with North Carolina Housing Finance Agency (NCHFA), and complete a moderate level of rehab.
• This would involve restructuring the financing and paying off the existing debt on other loans.
• Community and Economic Development (CED) attempts to work with our development partners who wish to extend their affordability periods, add additional affordable units, improve cash flow for reserves, etc. Committee(s):
• Housing & Community Development (HCD)
• October 19, 2021
• unanimously approved to move forward to City Council Pro(s):
• By approving MHO’s request, affordable units are preserved for an additional 10 years while also providing MHO with the opportunity to complete moderate rehabilitation of the property.
• HTF dollars are preserved.
• This loan is not being forgiven but extended.
• The City has received annual interest payments for the last 20 years.
• It will not collect future interest payments, but will instead receive an annual principal only payment of $3,962 with a one time payment of approximately $100,380 in December, 2031. Con(s):
• None.

Fiscal Impact:

• No effect on the general fund.
• This loan was made utilizing the Housing Trust Fund. While the Housing Trust Fund will not receive a balloon payment of $140,000 in December as anticipated, this money will be repaid to the City annually over the next 10 years with a balloon payment in December, 2031. Mr. D’Angelo responded to Councilwoman Wisler when she asked how reasonable it would be for Mountain Housing Opportunities to pay back the capital in the next 10 years given the fact that the first 10 years the cash flow did not support the loan. Mayor Manheimer announced that there were no advanced sign-ups for this item Mayor Manheimer said that members of Council have been previously furnished with a copy of the resolution and it would not be read.

Vice-Mayor Smith , Chair of the Boards & Commissions Committee, said that this is the consideration of appointing a member to the Planning & Zoning Commission. The term of Guillermo Rodriguez, as a member of the Planning & Zoning Commission, will expire on August 14, 2021. The following individuals applied for the vacancies: Sherrye Coggiola, Roosevelt Harvin, Ricardo Seijo, Sara Wilcox, Lee Arevian,, Kenneth Bussey Jr., Darin Prosser, Mike Falknor, Kelsey Simmons, Matthew Allen, Howard Wolkowitz and Nicholas Dugan. On September 14, 2021, City Council interviewed Ricardo Seijo, Sara Wilcox, Kenneth Bussey Jr. . Sherrye Coggiola and Roosevelt Harvin were unable to attend the interviews. On October 26, City Council interviewed Sherrye Coggiola, Darin Prosser, Mike Falknor, Kelsey Simmons, Matthew Allen, Howard Wolkowitz and Nicholas Dugan. Howard Wolkowitz was not eligible to serve due to his residency. Each member of City Council voted for their top one choice. Kenneth Bussey Jr received no votes; Ricardo Seijo received no votes; Sara Wilcox received one vote; Sherrye Coggiola received no votes; Darin Prosser received no votes; Mike Falknor received no votes; Kelsey Simmons received 4 votes; Matthew Allen received no votes; and Nicholas Dugan received 2 votes. Therefore, Kelsey Simmons was appointed as a member to the Planning & Zoning Commission, term to expire August 14, 2024, or until Kelsey Simmons’ successor has been appointed.