From Staff Reports

Asheville City Council on Nov. 20 rejected an offer of $50,000 to drop claims on loans made to a failed subsidized-housing complex, hoping to find a better offer and recoup more money in a foreclosure sale.

Council voted 4-2 to turn down the offer from an Atlanta investment group that wants to buy McCormick Heights, a privately owned 8.5-acre housing complex near Memorial Stadium.

Primary Vision Bank, the primary investor in the failed project, urged the city to accept the payment. The bank is first in line to recoup its $2.5 million, the same amount the property was last appraised for.

City staff also recommended that council accept the deal, which would cover only a fraction of the $363,200 in loans made to the complex owner, a subsidiary of Progress Energy.

However, if no one bids more than $2.5 million, the city would get nothing, Scott Best, the bankís attorney said.

It was a gamble that at least four council members were willing to take.

Carl Mumpower, Bryan Freeborn, Robin Cape and Brownie Newman all voted to hold out for a better offer.

Newman said he expected the property to sell for more than $2.5 million.

However, Councilman Jan Davis said it was ìcavalierî to reject certain money.

The city had used federal housing funds to make loans to Asheville Mountainside LLC for help with 100 subsidized and market-rate apartments. But a shortage of market-rate renters left the project in the red for many months and eventually contributed to the companyís defaulting on its loans.

The city had attempted to buy the property last spring, hoping to build mixed-income housing, but had abandoned the plan after determining that it would not be economically feasible, given a deed restriction that requires a high percentage of subsidized housing. That requirement would not apply to a new owner.

The city did set aside $120,000 in federal housing money to assist 40 families that had to move out of the complex by summer.

Mumpower said the cityís failure to stop drug dealers from moving into the complex led to the projectís failure.

Jones admitted that the project was a failure, but said that the cityís 19 other federal housing loans made since 1995 have had positive results.

Best said that investors, including former Asheville resident Franklin Young, who now lives in Los Angeles, want to buy the property and build homes for working-class people, such as nurses.

In other action, Council:
ï Unanimously approved a $7.5 million contract with California-based Valley Crest Companies to finish Pack Square Park.†
The contract required city approval because it involved federal money that was channeled to the nonprofit overseeing the renovations.
ï Voted 5-1 to spend $100,000 in local tax money to purchase five hybrid city busses. The money is a 10-percent match of state transportation funds. Mumpower voted against the funding measure.
ï Voted 4-2 to change construction rules at 673 Sand Hill Drive to allow the construction of 23 apartments on six acres. Freeborn and Davis voted against the change.