Nadav Shragai put together an excellent paper on The US-Israeli Dispute Over Building in Jerusalem.
It includes an important overview of Sheikh Jarrah-Shimon Hatzadik neighborhood's history and mixed demograhics, plus issues of foreign Arab investment in the area.
Point of No Return notes the neighborhood's tangled ownership issues.
The British consulate in Jerusalem, which is literally next to the Shepherd Hotel plot, wasn't so neighborly in raising the first fuss with the US about the construction.
For now, I'm giving the last word on the matter to this video.