Filling the triangle

by David Forbes August 27, 2014

Despite concerns about affordability and process, Asheville City Council votes for higher-than-average incentives for the 209 unit RAD Lofts project.

Above: The site of the future RAD Lofts development, with dissenting graffiti painted on its sign.

By the time the RAD Lofts project came to Asheville City Council last night, its developer asking for a tax incentive, the development had already caused no small stir. Set for the former Dave Steel site in the River Arts District, the development promised 209 new apartments, combined with businesses, restaurants and a parking deck for $52 million development on a spot that’s currently abandoned.

After it was initially approved last October, however, the lack of affordable units caused concern from some Council members due to the city’s rising unaffordability. This, combined with other fears about rising housing prices in the “East of the Riverway” area (a large swath including RAD as well as the Southside community and other nearby neighborhoods) led it to commission a study on the impacts of gentrification.

At the time, developer Harry Pilos bluntly told Council that he would only add affordable units if they offered him what he considered a worthwhile subsidy.

“I said I would come back and tell you what it would cost, and that’s what I’ve done,” he said on Aug. 26. “We’ve run the numbers. The math is what it is.”

Specifically, Pilos was applying for a tax incentive under the city’s land use incentive program, intended to encourage dense, sustainable, affordable development near transit lines. If approved, the project’s owners would get a tax write-off for five years if they followed through on their development, and the city (the rationale goes) will get the much-increased tax value after that time.

There was, however, a factor that complicated things. The city rates projects that apply for these kind of incentives according to its own system, giving them a certain number of points for things like affordable and workforce housing, sustainability or cleaning up a brownfield site.

When Pilos’ proposal was sized up according to the city’s criteria, it got points for the workforce units, energy-efficient design and cleaning up the former manufacturing site, giving it a score of 35, enough for about $539,000 in tax breaks. But, as the staff report on the issue noted, Pilos issued his own scoring of the project and “has requested 15 more points for Workforce and Affordable Housing than in the published guidelines.” This would give him about $765,000 in incentives including tax breaks and refunds for planning fees. The policy does note that Council can go beyond the usual point system if it feels it’s necessary.

He told Council that he believed the other amenities the project offered merited this increase, and that he’s now offering 11 units of affordable housing, with the rest to fit the “workforce” price range. The “workforce” units are meant for residents making up to 120 percent of the local median income ($42,333 for a household in Asheville). That means a $1,267 a month limit for a one-bedroom, or $1,418 for a two-bedroom apartment.

Those limits are higher than the rents Pilos originally proposed, but he said the city’s subsidy would allow him to keep the commercial space cheap enough to attract local business.

“I need to get to 50 points, guys,” he said. “It’s less about the affordable housing – I could charge more for the units and pay the taxes — but I’m also using the money to help subsidize these small businesses.”

Those businesses included the West End Market, a grocery store, a sushi restaurant, an as-yet-to-be-named novelty and tattoo shop and a larger restaurant.

Vice Mayor Marc Hunt proposed giving Pilos the incentives he requested.

“There’s a lot of helpful infrastructure here that should help inspire more development,” he said. “This policy allows Council latitude. There are many compelling aspects about this project beyond the affordability.”

The proposed novelty/tattoo shop drew some concern from Council member Jan Davis.

“I don’t want this to be a nuisance,” he said, and he worried about the impact “if it’s a culture of drugs or people are playing loud music at night.”

“I’m trying to take a good, moral road on this,” Pilos replied. “It won’t be a problem.”

Pattiy Torno said that while most of the locals and fellow RAD artists she talked to are optimistic about the project, there were some concerns.

“There’s a great desire to see this triangular hole in the middle of our neighborhood come back to use,” she said. “But there’s a lot of concern about the lack of studio space. This project doesn’t bring any studio space online.”

Council member Gordon Smith said that he while he favors the project, he preferred the lower rate of subsidy and proposed that if Council felt the project merited more, it could vote funds directly from its reserves.

“One of the things we’ve sought to do more as a Council is inject more predictability into our process,” he said.

Gwen Wisler also said she was concerned about the message approving Pilos’ higher request would send to other developers going through the same process.

“I’m just not sure we’ve identified what those factors are that justify the additional points,” she said.

But Mayor Esther Manheimer and the other Council members felt the RAD Loft’s economic impact and improvements to the area merited the subsidy Pilos demanded.

“This is good effort and Harry, we’re putting a lot of trust in you,” Manheimer said.

The measure passed 5-2, with Smith and Wisler dissenting, so Pilos will get the incentives he asked for.

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