Greensboro stands by motel conversion project partner, despite $100M California lawsuit

Greensboro officials are standing by their partnership with Step Up on Second, a nonprofit organization recently named in a $100 million lawsuit filed by the state of California. 

The company is involved in a project to convert a Greensboro motel into permanent supportive housing for people struggling with chronic homelessness. 

California alleges that Step Up and its development partner Shangri-La Industries violated contracts and failed to meet performance milestones in work on the state’s Homekey program, an initiative to expand housing options for those experiencing homelessness. Four of the seven Homekey properties are still unfinished. 

Greensboro has so far invested $3 million in a project with Step Up to convert the Regency Inn on O’Henry Blvd. into supportive housing. 

Michelle Kennedy, the director of Greensboro’s housing department, says she is still confident the company can complete its work because they’re not working with Shangri-La on this initiative. 

“I think the red flag for us would be if the same development partner and the same structure of operations were in play for this project," she said. "That would not be something that staff would recommend that we move forward with. “

California’s lawsuit alleges that Step Up and Shangri-La “have such a unity of interest and ownership that the separate personalities of these business entities do not exist.” It says the companies “have the same managing agents, partners and shareholders, and share the same offices.”

Tod Lipka, Step Up’s CEO, denies those allegations.

“We're actually meeting with the state's Attorney General's office this week to clarify those. So they understand because first of all, Step Up doesn't have shareholders," he says. "Step Up is a nonprofit, we're run by a volunteer board of directors. Shangri-La is completely separate, it's a for-profit business, it's a completely separate entity. We don't have the same offices.”

Step Up is partnered with New York-based Slate Property Group on Greensboro’s project. The sale of the Regency Inn property to Slate was originally set to take place last April, but the deal has not been finalized and development has yet to begin. 

Kennedy estimates the project will be completed within one year.