By Catherine Komp,
Newsletter Editor
From gentrification and affordability, to evictions and displacement, housing is a big topic across North Carolina. One strategy some localities are pursuing is “motel conversions,” seen as a faster, cheaper way to get permanent supportive housing up and running for the unhoused. In Asheville, members of the Blue Ridge Public Radio (BPR) news team decided to check in on one of those projects. News Director Laura Lee and Asheville/Buncombe Government Reporter Laura Hackett thought it would be a one off, quick story.
“And then it turned into what we’ve been referring to as an onion, where we peel a layer and there’s another layer and then it’s 1:30 in the morning and there’s another layer and then we talk to another person and there’s another layer,” said Lee.
Those layers started to reveal questions about the City of Asheville’s involvement in the project, the rushed vetting of a California-based developer with a questionable history, and why there were so many construction delays that kept the former location of emergency housing shuttered.
After answering many of those questions, Lee and Hackett published a three-part multi-month investigation “’Secret Sauce’ Expired: the Ramada Inn conversion for Asheville’s unhoused” last October. By December, a local contractor had filed a lawsuit against the developer, Shangri-La Industries, for nonpayment. And last month, Shangri-La lost the Asheville property to foreclosure and became defendants in a $114 million lawsuit by the state of California for fraud and breach of contract.
As news and information outlets across the state continue to cover how local governments are addressing the housing crisis, I thought it would be helpful to re-peel some of those onion layers with Laura Lee and Laura Hackett. We chat about what goes into an investigation like this, what they learned in the process and what questions remain, both in Asheville and in communities across the state that also made deals with Shangri-La and its nonprofit partner Step Up. Our conversation has been edited for length and clarity.
NC Local: What made you start looking into this story in the first place?
Laura Hackett: I had had some context on the fact that the transferring of the purchase agreement from the city of Asheville to Shangri-La and Step Up was kind of a rushed, weird process. It always seemed like there was maybe something more to the story. So I interviewed a representative from Step Up, I interviewed a representative from Shangri-La and was checking in with some folks from the city, just trying to be like, “Hey, how is this project going now?”
I think the biggest red flag for us was that it was a delays, delays, delays story. But there was never a good reason for why the project was getting delayed. There seemed to be an overall lack of transparency about how the project was going and why it wasn’t happening yet. Especially when you go back to when the purchase agreement was given over to Shangra-La and Step Up, they made a lot of big promises that the project was going to finish very quickly, it was going to be amazing, it was going to be all these things. So it just seemed strange that one thing was promised to go so well and to move along and then you just heard delays, delays, delays from everybody you talked to. So that was what got us going.
Then in our efforts to submit public records requests to learn more of the story, we found that somebody else put in a public records request for a lot of emails between city officials during the time that the purchase agreement was given to Step Up and Shangri-La. So we just started looking through it and noticed some interesting communications and started poking from there.
That’s really interesting. So somebody else had filed a public records request, and you saw that on FOIA logs?
Laura Lee: So we have a public records portal here in Asheville. You can’t see who submitted the requests, but you can see what was submitted and the responses. So we started there and Laura points to another one of the challenges here, which is that at the outset of this, we put in our own public records requests that we’re still waiting for, emails and text messages and things of that nature. We understand that we’re on the cusp of getting them. But you know, it’s literally been five months.
When did you learn about the court cases against the developer? And how did you start digging into those cases, considering they were California-based?
Laura Lee: Laura saw an article from Anna Scott at KCRW about some of the struggles that Shangri-La was having in California and that got wheels turning about “Oh, I wonder what some of the legal aspects of that are?”
We actually did go on the LA Courts website and pull records. It just became so high volume, even in just that court system. We limited it in time too; we said we’ll only look back like three or five years. But even with those parameters, there were something like 125 cases. So we started pouring through some of that.
And construction is an industry that’s highly litigated, so having lawsuits isn’t necessarily a sign of something amiss. So we had to do some gut checking there too — talking with attorneys here, talking with attorneys in California to say, “Hey, is this unusual? Put this in context for us, are these sort of exceptional?”
Laura Hackett: And this was helpful for building a pattern and getting a sense of who these organizations were. I went down a rabbit hole of finding all of the Step Up and Shangri-La projects in California. All those properties were under different shell company terms and so they all had unique names and then I had to go figure out what the name of the LLC was and then I would go to see if liens had been filed on those properties. So that was also interesting, we found a lot of cases with hundreds of thousands of dollars in liens on a lot of their different properties.
We didn’t necessarily immediately report on that, but it made us wonder about why they appear to owe all of these contractors all of this money. That helped us ask if something similar might have been happening with Beverly Grant, the local contractor in Asheville working with Shangri-La and Step Up on the project. Seeing what the patterns were in California, from lawsuits to liens and everything in between, and being able to be like, hmm, I wonder if those dots could be connected in Asheville.
You mentioned earlier that the delays were a red flag for you, but so many construction projects do have delays. Could you share what stood out and what types of things should other reporters look out for in local development projects?
Laura Lee: The promises that they were making about speed, that was one of their main selling points. If you go back and watch footage from the groundbreaking, Andy Meyers, the CEO of Shangri-La, talks about how this is going to happen fast, how they can move fast. When you watch the tape of Step Up’s Tod Lipka talking to City Council and other groups in advance of the purchase, that was one of the main selling points, was that they could do this so much faster than anybody else.
Certainly we questioned ourselves on more than one occasion: is there a there there? Is this just normal construction business? Again checking in with people who work in that industry, people on background, to get that context because something might seem out of place to you, but to them is very run-of-the-mill. So gut checking with experts in the field helped give us some direction and some confidence that we were on to something.
And then discovering all these other liens and because the decision making process at the beginning was so short. There wasn’t a lot of time for vetting, so it made us wonder how much could anybody look into any of these groups before they took action? Looking at timestamps on the texts and timestamps on the emails, if the entirety of that process is only a few weeks, it’s challenging to vet anything in that scope of time.
Besides the public records request you’re still waiting for, what other challenges did you come across when interacting with the city?
Laura Lee: Part of the difficulty that we had that they didn’t have in California is that Asheville City got out of this in many ways. They turned over the right to buy the Ramada Inn to this private developer. And so when we would say, “Hey, what are the terms of the contract?”, the City’s response was “that’s a private transaction.” Which is technically true, but it makes it much more difficult when it’s not a public entity and we can’t demand the records from private parties.
Laura Hackett: I definitely had some struggles trying to connect with the City. The spokesperson would be responsive, but then actually interviewing the people who I really needed to hear from and ask some critical questions of, that was really hard and took a long time. It was kind of like pulling teeth to really get the interview set up and to get questions answered.
The city was kind of talking on both sides of the mouth too. Half the time they would be like “Well, that’s not us. Shangri-La owns the building.” They would kind of distance themselves from the project. But then you go back and see them all doing the groundbreaking ceremony together. So I’m like, you can’t distance yourself and be partnering at the same time. That was a little bit of a challenge.
Laura Lee: The delay on the public records too, because a lot of times what you can do in an interview is use the documents to sort of fact check or to point you in the right direction during an interview. And if you don’t have the documents, you don’t know what the email said, you don’t know what the person has said before. You’re having to fumble around in the dark a little bit more than when you have those documents. If a place is responsive and you can get the public records faster, it helps give you context and honestly, it can help the source not waste time either because you already know more when you go in to ask the questions. You can ask more specific questions and be more efficient. Certainly the biggest challenge for my vantage point was not being able to get our hands on those documents, even now.
We believe the City was taking oversight actions because they were continuing to meet with the developers. And there was a stipulation on the deed that the property has to be used for affordable housing. So the city, to try to protect the interest of housing unhoused people, did say we’re going to let you have this right to purchase, but when you buy it, it has to be, I think for 50 years, affordable housing. So they did a little bit of putting a guardrail in place, but it’s not clear.
We’re hoping some of the next set of documents will tell us exactly how much oversight the city attempted to have.
WFDD published a couple similar stories on Shangri-La and Step Up’s deals with officials in Winston-Salem and Greensboro. Was that something you came across in your research and you then shared with other local news outlets?
Laura Lee: In our reporting, we heard Step Up say that other North Carolina locations are doing this as well. We had a graph in our series that referenced that, but we just didn’t have the capacity to go to all those other places, but we sort of put a pin in it and said we need to come back to this.
When you go back and look at the ways in which they convinced other places to do this and the timing of engaging with these two entities, there seems to be some “Asheville is doing it right. Asheville is the first place.” Almost hailing Asheville as a success story, as a way to convince local officials in other places to do this. And then, when Asheville bumps up against these problems, you wonder, are other places gonna bump against these problems? And then when the California $114 million suit happens, you wonder how is that going to affect the operation nationally and across the state of North Carolina?
So we’re in the process of trying to piece that together here with WFDD and WUNC, looking at what’s happening in Winston-Salem, Greensboro, Fayetteville and Wake County.
What questions have you not had answered yet and where do you want to take the story now?
Laura Hackett: I think one of our biggest outstanding questions is what’s going to happen to the Ramada Inn property now. It’s in the hands of the lender, Stormfield capital. I keep trying to call them. They don’t want to talk to me. I’m going to keep trying, but I haven’t had any luck with getting them to communicate any plans or intent for the building. The city has not expressed any knowledge. It’s unclear if they have communicated with Stormfield either, so it’s like OK, now there’s just this deed restricted property still sitting here vacant, is anything going to happen? That seems like a big question.
Laura Lee: I want to see what’s in those emails, of course, I want to know who knew what when and sort of piece together that timeline that we weren’t able to do before. The City allocated half a million in ARPA money for Step Up for the supportive services once the project was completed. Obviously the project is not going to be completed by Shangri-La now. So what happens with that half a million dollars? How does it get reallocated? Does it serve the same population?
The statement from the City says sort of, thank goodness we didn’t write any checks yet. But I think that doesn’t tell the full story because there were resources dedicated to this and there was city officials’ time and city staff time dedicated to this. There’s the time value of money. There’s the cost of the delay. There’s 573 people in our last point in time count who were unhoused, who remain unhoused that are potentially harmed by that delay. So even if we could pick up tomorrow and the property goes to someone who can turn it quickly, there still has been harm here and I think we have an obligation to ask questions that point to the accountability for that harm. Even if it gets remedied.
And then what are the things in place so this doesn’t happen again? What is the vetting process? How are these decisions made? One council member who didn’t speak to us but said in a council meeting when they’re making the decision, something like “this sounds like an old boys [network], they just called up their friends.” That’s not the way that local government should work. We’re going to keep looking to see if that is the case. If that has been the case, what measures are we putting in place to keep that from being the case if it turns out that it is.
What did you learn from this experience that you’ll apply to future investigations into city or county developments? What would you advise other reporters to do also looking at similar issues?
Laura Hackett: This is my first major investigative piece that I’ve ever done and I think it really helped me figure out how to ask tough questions in a fair way. There’s a real art to that. It’s one thing if you’re doing a small story, the stakes don’t always feel as high with the questions that you’re asking. But when you’re really getting into investigative stuff, that’s when you’re hitting up against some raw nerves. You’re trying to get people to talk about things that they really don’t want to talk about. That’s just a whole new skill set of figuring out ways to get people to talk to you and figuring out how to maneuver a conversation so that it is smooth but tough and fair. It was really empowering to learn techniques that can kind of help get you closer to the truth.
Laura Lee: It’s trusting your gut because there were definitely moments of “we don’t have something as concrete as we want in front of us,” but pushing past that and saying, “OK, let’s talk to this person, let’s see if that [makes sense]. I think you can get in your head sometimes on investigative work, asking “Am I just running down rabbit holes that aren’t going to yield anything?” Sometimes you have to go with the hunch and see where it leads you.
Recommended resources
Laura Lee said that because they’re a small team, she’s always looking for tools to make their work more efficient. Facing the large volume of documents for this investigation, they used Google’s Pinpoint, which helps users sift through text, audio, images and videos. A new generative AI feature lets people ask Pinpoint questions about the data to uncover patterns and trends. Learn more about BPR’s experience in this Google News Initiative in this case study and video.
Related reading
The Charlotte Journalism Collaborative has been covering housing since its launch in 2019, with a recent series that explores the Habitat for Humanity model to better understand how it works, its benefits and its limitations. Find stories, in English and Spanish, on addressing displacement and rising home prices, Latino homeownership and remaining obstacles for Habitat’s 40-year-old model.
