Asheville contractor wins default judgment against Ramada homeless housing developer

ASHEVILLE - A default judgment was granted against Shangri-La, the developer behind a homeless housing conversion project in East Asheville at the Ramada Inn, after contractor Beverly-Grant alleged nonpayment for its work done at the property.

The judgment was granted for $392,987 — the same amount the contractor said it was short-changed — by the assistant clerk of Buncombe County Superior Court on Dec. 22. It came after Shangri-La Industries and three other associated parties failed to plead or otherwise defend against the lawsuit.

The initial complaint was filed Nov. 3, and a motion for entry of default on Dec. 20.

A default occurs in cases where a party has failed to respond to an initial complaint, petition or court order. An entry of default is the first step to obtaining a default judgment against a party, and allows someone to proceed in the action without further notice or input from the opposing party.

The lawsuit was first reported by Blue Ridge Public Radio in December.

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What's going on with the Ramada Inn?

The groundbreaking a year ago, in December 2022, was a hopeful day for the long-awaited project at the Ramada, but it has dragged months beyond its original planned opening.

The project is led by California-based, for-profit developer Shangri-La Industries, in partnership with another California-based company and nonprofit, Step Up Inc.

Initially, the property was intended to become a permanent high-access shelter, a project pursued by Asheville City Council until it abandoned those plans in December 2021.

After outcry from the hotel's neighbors and uncertainty from financial partners, the city made a quick pivot away from the purchase of the Ramada, and authorized the assignment of its contract to purchase the property to Shangri-La, which announced it would convert the property into 113 units of permanent supportive housing for the city's chronically homeless population.

Shangri-La, the project's developer, is overseeing construction. Step Up will be responsible for lease-up, supportive services and property management. The city will provide $1.5 million to fund the first three years of supportive services for the project.

In April 2022, Asheville City Council also waived reimbursements of $79,500 in due diligence costs that Shangri-La Industries had previously agreed to pay to the city. It was a split council vote, 4-3 in favor. Some council members voiced concerns about Shangri-La seeking money before it had even closed on the property.

The Ramada was slated for occupancy in August 2023, but amid numerous delays, complications with contractors and apparent "financing" needs, a new opening day is unknown.

At a Dec. 4 joint meeting of Buncombe County Commissioners and Asheville City Council, Lacy Hoyle, Buncombe County's homeless program manager, said Shangri-La was "securing additional financing that is related to interest rate increases."

Shangri-La, Step Up and the legal team for Beverly-Grant have not responded to request for comment.

“We are not sure what is going on, but we are hopeful that Shangri-La gets it turned around," Allen Peele, Beverly-Grant vice president, said in a Dec. 30 email to the Citizen Times. "Obviously, we would like to get paid for the work we here hired to complete. That has not been disputed.”

What's in the lawsuit?

In its initial complaint, Asheville-based contractor Beverly-Grant said it entered into a contract with Shangri-La in December 2022 to perform inspections and other construction activities related to ongoing demolition work on the property.

According to the complaint, Shangri-La requested Beverly-Grant increase its scope of work, including further demolition of flooring, accessories and the purchase of a security fence.

In spring 2023, Shangri-La and Beverly-Grant were negotiating a new maintenance contract to include further construction work, the complaint says, but negotiations did not result in a contract. From December 2022 to June, Beverly-Grant said it provided labor and materials in the amount of $392,987 — money the contractor said it never saw "despite numerous requests and continued promises of payment."

They have not had complaints from Shangri-La concerning its work on the property, the lawsuit said.

In September, the Citizen Times looked into complaints over overgrown weeds at the property and concerns around the project's status.

Tod Lipka, president and CEO of Step Up, said in September that the project was still underway, but they had secured a second contractor after the first "didn't work out."

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More: Answer Woman: When will permanent supportive housing open in Asheville's Ramada Inn?

Sarah Honosky is the city government reporter for the Asheville Citizen Times, part of the USA TODAY Network. News Tips? Email [email protected] or message on Twitter at @slhonosky. Please support local, daily journalism with a subscription to the Citizen Times.

This article originally appeared on Asheville Citizen Times: Asheville Ramada homeless housing developer must pay contracto