Raleigh business incubator gets 10-day reprieve from city’s eviction

ccampbell@newsobserver.comJuly 31, 2013 

— An embattled Southeast Raleigh business incubator will get another 10 days to stay in its city-owned building, a Wake County Superior Court judge ruled Wednesday.

City leaders had ordered the Raleigh Business and Technology Center to leave the South Wilmington Street facility by 5 p.m. Wednesday. The eviction notice in early July followed an audit report that showed numerous instances of financial mismanagement.

Raleigh also canceled its annual $162,000 payment to the center, designed to nurture small businesses.

But one hour before the eviction was to take effect, attorneys for the center petitioned Judge Lucy Inman for a reprieve in the form of a temporary restraining order. Inman granted a 10-day delay, despite the city’s objections, and scheduled a full hearing on the dispute for next week. If the incubator loses, its staff must leave the building Aug. 9.

Wednesday’s hearing pitted the center’s board chairman, retired Raleigh Assistant City Manager Lawrence Wray, against his former employer. Wray’s attorneys, state Sen. Dan Blue and Dan Blue III, argued that the incubator has a valid year-to-year lease and that the audit isn’t a legitimate reason to end the arrangement. The Raleigh Business and Technology Center owes $1 per year for the property, which has a tax value of $5.16 million.

“We’re trying to make sure there’s some due process and somebody listens to their side of the story,” the elder Blue said.

He added that he thinks the audit only implicates one person of wrongdoing – former center director Bob Robinson, who resigned June 30.

“You don’t dissolve the city when you find an employee that committed a questionable or illegal act,” Blue said.

Deputy City Attorney Dorothy Leapley told the judge that the lease was never formally signed by city officials and isn’t valid. She pointed to the auditor’s report, which indicated that the arrangement wasn’t formalized because the two parties couldn’t agree on the terms. The incubator has occupied the building without paying since it opened in 2000, she said.

Leapley also said the reprieve could lead to more financial misdeeds.

“It would give an opportunity for further improprieties to occur,” she said. “It is troubling that the court would order the continuation of something under criminal investigation for impropriety.”

Raleigh police are investigating possible fraud after the city’s audit found more than $100,000 unaccounted for, some of it in cash withdrawals. The department isn’t yet saying who may face charges.

The audit also reported that the center had questionable contracts with its tenants, as well as with multiple organizations with ties to Wray, Robinson and other board members. It lost its nonprofit status after failing to file tax reports for years.

Raleigh plans to continue leasing space to center tenants for as long as six months while it develops a new business incubator model. Meanwhile, the center’s board is developing a restructuring plan and hopes city leaders will reconsider.

Inman says she won’t weigh those aspects of the case until next week’s hearing. “I can’t allow my personal feelings as a taxpayer ... to affect my analysis of the law,” she said before announcing her decision.

Campbell: 919-829-4802 or twitter.com/RaleighReporter

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