City Leases Stone’s Warehouse For Artist Apartments

An affordable housing project that gives one Councilor “heartburn” will move forward after a vote by Council this week.

City Councilors Tuesday approved a 99-year lease with the Historic Preservation Foundation of North Carolina for the redevelopment of Stone’s Warehouse on East Davie and South East streets.

The lease will ensure that the community will remain as affordable housing throughout the 99 years.

Councilor Thomas Crowder cast the lone vote against the project. He said he feels “heartburn” over it and would rather have the project go through the traditional Request for Proposal (RFP) process to allow other affordable housing developers to bid on the property.

Lauren Ramsdell

Stone's Warehouse on Davie Street. Photo by Jennifer Wig.

Developers Vann Joines and Landmark Asset Services plan to turn the decaying building into an affordable housing community geared toward artists.

The city will lease the property for an initial payment of $121,154 with an annual rent of $25,308 for the life of the lease with a 2 percent interest rate. In total, the city will receive more than $2.6 million for the property.

Because the project will be built using affordable housing credits, developers have to meet strict leasing guidelines.

By law, developers can’t require that the residents of the community be artists, but the apartments will be built to encourage those kinds of tenants.

Joines said he will work with various groups to make sure residents of the immediate community know about the project and have an opportunity to apply for housing.

During the public hearing, resident Sig Hutchinson spoke in favor of the project. He said he’s been involved with it since the summer.

“I love this project,” he said.

Hutchinson called it a win because it adds affordable housing in downtown Raleigh, focuses on the artists and entrepreneurs, and will foster community.

The project didn’t win all rave reviews. Southeast Raleigh resident Danny Coleman said there are no guarantees the building will continue to serve low-income residents after the affordable housing tax credits run out in 30 years.

“The development doesn’t agree with any of the community plans,” he said.

Coleman likened it to the two failed Kroger grocery stores in the area that he said were built against community plans.

Councilors questioned the length of the lease and the expiration of the tax credits.

Joines said in order to receive appropriate financing, the lease must look like an ownership . A 99-year lease gives the impression of ownership for investors.

Community Development Director Michele Grant confirmed that the tax credits, and the affordable housing component, would only be required to last 30 years.

Rex Todd of the Landmark Asset Services told the Council Landmark has no intention of flipping the property to market rate.

“We don’t do that,” he said. “We have no intention as operating it other than as bona fide affordable housing.”

Because the city will continue to serve as landlord, the city ultimately decides what can be done with it.

Grant said her office can work on strengthening the language in the lease that to require a continuation of affordable housing.

If the developers don’t receive the tax credits necessary to do the project, the lease will terminate and the city will release an RFP.

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