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The state is running a ‘homeless hotel’ in downtown Raleigh, lawmaker says

A one-story, boarded-up storefront sits directly behind the old Revenue Building on West Morgan Street in downtown Raleigh, NC, in this photo taken Wednesday, August 15, 2018.
A one-story, boarded-up storefront sits directly behind the old Revenue Building on West Morgan Street in downtown Raleigh, NC, in this photo taken Wednesday, August 15, 2018. cliddy@newsobserver.com

State government is responsible for a rundown downtown Raleigh building that’s been vacant since the 1980s, and one state senator says it’s an example of poor real-estate management.

Sen. Andy Wells, a Catawba County Republican, recently wrote a blog post about a one-story, boarded-up storefront that sits directly behind the old Revenue Building on West Morgan Street — less than a block from the state Capitol. Wells wrote that people sometimes sleep on the window ledge of the building and that the area smells of urine; he describes it as a “rundown building/homeless hotel/public restroom.”

“You would think being less than a block from the Governor’s office would motivate someone in state government to fix the problem,” Wells wrote. “But years of complaints, to administrations of both parties, have changed nothing.”

Department of Administration spokeswoman Nan Sanseverino said that the 114 W. Morgan St. property (which also includes a three-story office building facing Hillsborough Street) was purchased by the state in the early 1980s. At the time, the Morgan Street storefront was leased to a restaurant called JC’s Luncheonette, but the lease for the eatery expired in October 1985.

“The small, one-story building has never been used,” Sanseverino told the NC Insider in an email. “There are currently no plans to utilize the space, as it would require significant renovations, of which there is not adequate money within the R&R budget for, as set forth by legislature.”

Wells says that’s “a waste of resources,” and the Legislature will “have to get involved in creating a system for dealing with real-estate matters around state government. The private sector would probably not let that building sit empty.”

Wells, a real-estate developer in the Hickory area, says the problem isn’t partisan or unique to the current governor: Governor’s terms are simply too short to make key real-estate decisions, which typically involve a 20- to 30-year timeline.

Shortly before this year’s short session began, the Program Evaluation Oversight Committee recommended a study bill to review state-owned property in downtown Raleigh. Among other provisions, the bill called for a “business case analysis” of selling or leasing the old Revenue Building at Morgan and Salisbury “to reduce facility management costs and generate additional revenue.” Senate Bill 759 got a favorable report in June from the Senate State and Local Government Committee, but it didn’t make it to a floor vote before adjournment.

Wells says he’ll continue to pursue the issue, and he supports moving some state agencies’ offices to leased space outside downtown Raleigh.

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He cited the example of the state treasurer’s office, which recently moved from downtown to leased space on Atlantic Avenue just outside the Interstate 440 Beltline. He says that’s a better use of tax dollars, and employees benefit by being in a more convenient location — where they don’t have to walk blocks from their assigned parking spaces.

Leased space generates property tax revenue for local government, and it’s typically better maintained than state property — which is immune from local code enforcement rules. That status would have prevented Raleigh city officials from taking any action about the former restaurant building on West Morgan Street. But some improvements to the property have been made recently, Sanseverino said.

“The doors and windows were boarded up on or about July 5, 2018, in an effort to better secure the structure, discourage entry/trespassing, and increase safety for the passerby and neighboring businesses,” she said. That upgrade appears to be around the time that Wells was asking questions about the building — his blog post was published a few days later.

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