The City of Raleigh is exploring a lease agreement with a private developer to redevelop a decaying Southeast Raleigh warehouse.
Councilors voted 6 to 2 Tuesday for city staff to draw up a lease agreement with Vann Joines and the Landmark group. Councilors Randy Stagner and Thomas Crowder voted against the move.
Joines, a North Carolina native, partnered with The Landmark Group to propose a live-work affordable housing community for artists at the Stone’s Warehouse development on the downtown block bordered by East Davie Street, East Cabarrus Street, East Street and Chavis Way.
Originally, Joines and Landmark wanted to purchase the property from the city for $350,000, well below the 2008 appraisal price of $2.4 million.
Since discussion in the Council’s Budget and Economic Development committee last week, Joines and Landmark said they would like to lease the property for 99 years for $1. The project would cost about $7.5 million.
To make the situation more complicated, in order for the developers to apply for state tax credits for affordable housing, they must enter into some kind of lease or purchase agreement by the end of January. This issue is compounded by the fact that the area needs to be rezoned in order to be developed as a residential property.
If the developers don’t get approved for tax credits, the lease would be terminated.
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Ideally, city staff would like to go through the Request for Proposal process so that other developers can also bid on the property. In 2008, the city released an RFP for the site, but didn’t get any viable bids.
Putting the property out for bid would delay any development for at least another year.
Crowder said the private sale isn’t transparent and he’d rather the property go out for bid.
While she fully supported the type of project, Councilor Mary-Ann Baldwin said she is wary about the financials. With the property potentially being worth at least $2 million, she didn’t want to give it away.
The city should receive the results of a new appraisal Dec. 15.
Councilor Randy Stagner said the city would be betting on project without knowing if the concept would work.
Gearing the community toward artists might displace other people in the community who need affordable housing.
According to Joines’ plan, the 64-unit community would have apartments built to encourage a live-work environment. Bedrooms would be small to make room for a large living room that could double as a studio. Shared studio space would be available for people in smaller units. The first floor would be used as gallery and retail space.
Although the community would be marketed to artists, anyone who meets the income requirements for affordable housing would be able to live there. It’s possible that the entire complex could be filled with people from the surrounding community who aren’t artists, or artists could come from all over Raleigh.
Mayor Nancy McFarlane was supportive of the project, reminding councilors that the last RFP process left the building an empty shell.
“I think that sometimes opportunities present themselves and we have to consider them for what they are, a great opportunity,” she said.
Councilor Bonner Gaylord suggested allowing the city staff to move forward with negotiating a lease agreement that they can bring back to the council at its first meeting in January. He also suggested going forward with the rezoning process.
Baldwin voted to go forward with the project, but said that if the lease comes back and, “if the developer doesn’t have skin in the game, I’m going to vote no in January.”
