Asheville City Council imposes de facto moratorium on hotel construction
Earlier this month, the Asheville City Council barely approved a rezoning for a new hotel on Brevard Road near the Farmer's Market. At that meeting, it was clear that developers would have to bribe the council members with six-figure donations to fund affordable housing.
Councilmembers said hotel developers need to understand that they have to offer a lot of sweeteners if they hope to get their projects approved.
That lasted two weeks.
Last Tuesday, the Council opposed a 103-room extended stay hotel between Mission Hospital and McCormick Field, despite overwhelming community support and almost a million dollars in bribes-- I mean DONATIONS. Rather than see their project formally defeated, the developer withdrew the petition before a vote could be taken.
The developer offered:
- to spend $125,000 for new playground equipment for nearby Lee Walker Heights neighborhood
- job training for Lee Walker Heights residents
- $500,000 "donation" to the city's Affordable Housing Trust Fund
- preferential pricing for Mission Hospital patients and their families
- preferential pricing for families of Child Crisis Center clients
- job training for ABCCM clients
- free bus passes to staff and hotel guests
This is far more than the Brevard Road project developer had to pay to win approval.
But it still wasn't enough for Councilmembers Keith Young and Brian Haynes. Vice Mayor Gwen Wisler was also expected to oppose it and when Mayor Esther Manheimer said she would oppose it, too, the developer withdrew the plan.
Not a single objection was raised about the project itself.
Instead, Council blocked it until they could examine how much hotels and motels "cost" the city.
Council obviously believes lodging is a net loss for the City, despite decades of studies showing that tourism is a net benefit to government revenues. The Mayor and Council say they need more money to pay for basic city services required to support tourists. (Residential development is a net cost to local government, which is why cities always try to attract businesses and tourists.)
"I don't personally feel comfortable continuing to make decisions about additional hotels until we've figured out how to address our lack of revenue diversity to be able to support the real needs that we have around infrastructure improvements," Mayor Manheimer said. "I'm talking about everything from repairing sidewalks to cleaning to repairing streets and potholes and building out the capital infrastructure in our pipeline right now."
What does "revenue diversity" mean?
It means getting control of the room tax.
The hotel industry went to state lawmakers about 35 years ago and lobbied for the tax. They created the Tourism Development Authority to act as administrator of the funds. The money is to be used to generate tourism.
The City Council wants to control that money and use it to fund basic services inside City limits.
But to do that, the law needs to be changed.
It's unlikely the NC General Assembly would do that, unless the hoteliers and tourism industry leaders were on board the idea.
Council appears ready to block every hotel project until tourism leaders cave, and relinquish all or part of the funding stream.
The Mayor and Council have moved from demanding bribes to win approval to now taking hostages.
We are to believe from their statements last week, that there are four "NO" votes on the 7-member Council for ANY hotel project.
That's a moratorium.
And if hoteliers, developers, and tourism officials want it lifted, they'll need to pay the ransom and help the City overhaul the law. Which appears to be the course the TDA is taking:
Buncombe County's Tourism Development Authority will pause its annual hotel tax-funded grant program next year as part of an effort to better address the area's infrastructure needs.
Explore Asheville President and CEO Stephanie Pace Brown outlined a plan Wednesday to establish a steering committee that would tackle Asheville and Buncombe County's long-term sustainability needs. It comes as the region has experienced unprecedented growth in its tourism industry as well as a litany of growing pains some attribute to the development of hotels and the ongoing focus on tourism.
There are other options the City could examine - like a prepared food and beverage tax, a general local option sales tax, or an additional lodging tax.
Of course, they could also choose to fight the power grab and work to defeat the current councilmembers. But there's little change that's going to happen, given the local political culture.
You can see the video of the discussion here.
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