Shazaam! By Royal Decree, the Demiurge Mints Affordable Housing

By Leslee Kulba- A Mainstay Suites hotel was proposed for a parcel at the Brevard Road exit off I-40. It would be four stories with 106 rooms.

The applicant agreed to put windows on the side of the hotel and forbid construction of a drive-thru restaurant on the premises. He further promised to pay living wages and provide a bus shelter, a pedestrian crossing signal with NCDOT approval, an easement for a future greenway, and shuttle services.

Lastly, he agreed to donate $150,000, payable in six annual installments, to a land trust to support a land bank for an affordable housing project.

Mayor Esther Manheimer thanked Councilors Keith Young and Sheneika Smith for coming up with the land trust donation idea. Councilor Julie Mayfield said of the donation, “It’s what has to happen when you build a hotel in this town today.” She then gave her reasons for not supporting the project.

“I think this is a place where we really need multifamily [housing],” she said. “I understand the applicant builds a lot of multifamily, I understand you ran the numbers and it doesn’t work here. Perhaps my greatest academic failing is that I never took economics, so when people say to me we can’t get the numbers to work, I got nothin’. I got nothin’ to say. I never took economics…

But here’s what I do know: There is some relationship between the market and demand. And until we start demanding multifamily housing in more places, we’re probably not going to have –”
“Clearly, you did not take economics,” interrupted Vice Mayor Gwen Wisler.
“You are demanding it!” said Manheimer chidingly with a pound of the table.

[ED NOTE: Since one as intellectual and accomplished as Mayfield can botch the concept, and since schools are probably teaching even worse, “demand” in economics is not a direct measure of clamoring.

Economics is the study of how people vote with their dollars. People are merely using a limited amount of money to buy what is most important to them, be it food and housing, wine and cheese, or drugs. If people are buying a lot of a resource or service, demand is said to be high.

The law of supply and demand defines pricing as a function of those two variables. If demand is high when supply is abundant, prices will be low as vendors want to sell out.

If the number of would-be buyers outstrips the supply of a limited product, vendors can raise the price until that item is no longer attractive enough to be a top priority to some, and still sell out. In a free market, prices are used as data, or signals, helping direct resources toward the products consumers want to buy.

Government is the antimarket. It wields its power to move resources in uneconomic directions. This is presumably done with goodwill, but it only makes markets less efficient, thus subjecting consumers to higher prices that trickle up, down, and all around.]

“We still need housing,” continued Mayfield. “I’ve had two different groups of people come to me in the last month saying the numbers don’t work to do x, and yet x is what this community needs, so I’m going to be a no.”

[ED NOTE: Since one as intellectual and accomplished as Mayfield can botch the concept, and since schools are probably teaching even worse, who wants to invest in a building that the developer can’t afford to finish?

Financial institutions don’t; they’re not going to lend developers money they know won’t be paid back. The whole point of investing, in real estate, for example, is to get more money back, and that’s not a bad thing.

In an honest economy, exchange signals the developer/maker did something somebody else deemed more valuable than his money. If we didn’t have money, we could trade cows or corn.]

Councilor Brian Haynes agreed with Mayfield, reiterating that those with the power to move resources in uneconomic directions wanted multifamily housing.

Manheimer said council should hold a worksession to re-examine the tourism industry. She had considered a moratorium on hotels, but statutes governing moratoria discouraged that.

She said the city collects around $64 million in property tax revenue a year, but only $3.25 million in property tax revenue from hotels.

She said hoteliers “in their mind” were providing the city with more revenue than that, but in Manheimer’s mind, taxpayers were subsidizing the infrastructure and services tourists were utilizing.

In Other Matters –
Sydney Bach cautioned council, in not so many words, not to count their Mission Hospital sale chickens before they hatch.

He said when a nonprofit hospital was purchased by a private hospital in Sylva, the hospital corporation challenged the assessment and had it reduced 70%. He added that no taxes would be payable for the duration of any litigation.

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