After months of delays, the city of Greensboro appears to be cutting ties with Step Up on Second, the organization it tapped to convert the Regency Inn into housing for the chronically homeless. 

In an email to Greensboro City Council last week, Interim City Manager Chris Wilson wrote that he’s uncomfortable “advancing a project with Step Up under the requested terms.”

The company had originally proposed converting the motel into 58 permanent supportive housing units. In February, the organization pitched expanding the project to 201 mixed-use units, saying it could be financed in part via tax credits. Some members of City Council were skeptical. 

“I just really want to be clear on what is it gonna take to get across the finish line for this project," said Councilmember Sharon Hightower. "It's gonna take more money, because that's what I hear. Because if the tax credits don't go through, if you don't have a backup plan, then the city becomes your backup plan.”

The city originally loaned nonprofit developer Partnership Homes $3 million to purchase the Regency Inn site in 2021. The organization was set to transfer the property to Step Up, but the two parties have been unable to agree on terms. 

Wilson’s email revealed the company had requested an additional $285,000 to start work, and declined the city’s request to add performance-based clawbacks to the deal. 

“I believe a partner should give us such assurances and share in the investment of a site. This proposal leaves me without confidence that this can be achieved with Step Up,” he wrote. “As a result, unless directed otherwise, I am asking our team to assess alternative options quickly so that we may move in a different direction.”

Step Up has been embroiled in controversy since being named in a $100 million lawsuit related to its work in California. Among other things, the suit alleges the company failed to meet performance milestones. 

Step Up’s motel conversion deals in Asheville, Fayetteville and Winston-Salem have all fallen through this year. 

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