Midtown Raleigh News

Raleigh weighs affordability, history as developers vie for Stone’s Warehouse

The city bought the cavernous southeast Raleigh property, Stone’s Warehouse, intending to bring affordable housing to East Davie Street. Now officials are heading in the opposite direction, looking at three main proposals from private developers.
The city bought the cavernous southeast Raleigh property, Stone’s Warehouse, intending to bring affordable housing to East Davie Street. Now officials are heading in the opposite direction, looking at three main proposals from private developers. cseward@newsobserver.com

Boochie Cheatham hadn’t been inside the quiet old warehouse on East Davie Street for 40 years.

Cheatham, a contract maintenance worker, was sent Thursday to screw particleboard barriers onto the rusted metal doors of Stone’s Warehouse, once the heart of his neighborhood about three blocks east of City Market.

“I never would have seen this come about,” said Cheatham, 42, stepping inside the vast rectangular space. Rows of skylights ran the length of the building, long enough that they seemed to converge with the distance.

Within a few years, this city-owned land could become a new hub where high-rise Raleigh meets historically black and lower-income neighborhoods. With that prospect comes a contentious debate about how the city and developers should serve the gentrifying East Raleigh-South Park area.

Raleigh has in hand proposals from three companies, each offering an ambitious plan and $2 million for the land. The plans could variously bring a cluster of hip businesses, apartment buildings, a charter school, a music venue and a renovated home for the Rex Senior Health Center.

But there’s a catch: Although the city has talked for years about bringing affordable housing units to the renovated historic site, city officials and developers now say that’s looking less feasible.

Instead, staff and a City Council committee have recommended that Raleigh sell the land with no requirement for rent limits, then use the proceeds later to benefit Southeast Raleigh. They say that developers can’t afford to include limited-income apartments unless they’re allowed to put up four- and five-story buildings that would overshadow the old warehouse and its surroundings.

The city used federal affordable-housing money to buy some of the block in the 1990s, and it called for affordable housing last time it marketed the property. A recently failed private development plan would have included 49 limited-rent units marketed for artists.

Community advocates worry that the city is passing up a chance to guarantee affordable housing in its fast-changing core. They want Raleigh to require its suitors to make room for lower-income renters.

“That’ll be three (recent) apartment complexes east of Fayetteville Street that will not have an affordable housing component,” said Daniel Coleman, chairman of the South Central Raleigh Citizens Advisory Committee, at a recent meeting of the council Budget and Economic Development Committee. “The Lincoln, the SkyHouse, and now we’ve got this deal here – so, Mayor, what are we going to do?”

Three proposals

Stone’s Warehouse is a rare opportunity, both for its cavernous interior and its large lot so close to downtown.

“That’s nearly half of a whole city block,” said Grant Meacci, an urban designer for Raleigh.

The city in April asked developers to pitch projects for the site. Of seven original proposals, three are left in the running:

• A plan by Transfer Company LLC has emerged as the front-runner, winning a recommendation from staff and a council committee. The proposal would pack the warehouse and adjacent property with a neighborhood grocery store and cafe, a community hall and space for a handful of small food producers.

Among them would be Videri Chocolate Factory, Locals Seafood, Jubala Coffee, Boulted Bread and an “incubator kitchen” run by HQ Raleigh, according to Transfer.

Transfer is a collection of self-described “hyper-local” developers – Jason Queen, Will Jeffers and Matt Flynn, who have largely focused on East Raleigh – and Steve Schuster, the founder of the Clearscapes design firm.

“Our goal really is to provide a point of pride – a destination not just for the community but for downtown,” said Fred Belledin, a planner for the group.

The project also would include a new 13,000-square-foot building, potentially for use by Trophy Brewing and Pizza Co., and a row of 16 townhouses.

Transfer’s “creative production hub” doesn’t include any designated affordable housing. It also doesn’t leave room for Rex Senior Health Center, now in an adjoining building on the warehouse property.

Instead, the city would use its proceeds from the sale of the land – about $2 million – to fund community development programs in Southeast Raleigh, possibly helping other developers build income-limited housing.

Transfer originally planned to bring affordable units to the site through a partnership with the nonprofit DHIC Inc., according to city staff. In this context, “affordable housing” generally is restricted to people making less than 60 percent of the median income – or a maximum of about $46,000 for a family of four.

But DHIC pulled out of the deal, citing development restrictions and the city’s sale price, according to Transfer.

“If you have to preserve part of the building, then it limits its uses, and you don’t have as much space for the housing aspect,” said Councilwoman Mary-Ann Baldwin.

•  AACRE’s $33 million plan would wrap a five-story apartment building around a 300-spot parking deck and the renovated warehouse, though it would only preserve the building’s front facade and its steel bones, according to city staff.

The warehouse would contain a grocery store, possibly modeled around the upscale, organic-minded Weaver Street Market in Carrboro. It also would include a medical office while keeping the Rex senior center on site in a smaller space.

In all, 10 to 20 of the project’s 200 apartments would be “affordable.” AACRE is led by Jim Anthony, a local real-estate investor and CEO of Colliers International. Kelvin Dumas of Colliers International said he regretted that the plan would build the apartment buildings so high.

• Empire Properties, led by Greg Hatem, wants to build “Progress ’26: An Entrepreneurs’ Village.”

The plan would include space for the Exploris charter school, a medical office, a museum and cultural heritage space – including a section of the Berlin Wall – and an “intimate acoustic music hall” called The Garage.

Hatem would put 49 apartments in an “Entrepreneurs’ Loft,” of which 15 would be designated for limited incomes. The warehouse would be wrapped inside a larger U-shaped building.

Stone’s history

Stone’s Warehouse began life as the Carolina Coach Garage and Shop in 1926. It was the depot and headquarters for an inter-city bus line, hosting “30 large coaches” and 50 employees until 1939, according to the State Historic Preservation Office.

The building has a big, open interior, without columns or interior supports blocking the way.

The same kind of space has proved popular for redevelopment across the Triangle, from huge former warehouses such as the American Tobacco Campus in Durham to smaller garages adapted by many restaurants.

Raleigh paid about $1 million for the Stone’s block, though it doesn’t own three houses on the south end. That sum included about $263,000 of federal Community Development Block Grant funds, which are meant for affordable housing. Because so many years have passed, restrictions on the use of the federal-funded purchases no longer apply, according to city staff.

The warehouse stands near the border of two demographics. Median household income falls from about $51,000 in downtown Raleigh to about $21,000 around Stone’s, according to the Census Bureau’s American Community Survey.

Neighborhood needs

Ray Dunn and Brenda Williams, a married couple and longtime residents of Southeast Raleigh, are intrigued by the plans to rejuvenate the block and think the neighborhood is changing for the better. But they fear the new development and its businesses would be out of their price range. Dunn works in heating and air conditioning, while Williams volunteers for the Salvation Army.

“I think it’ll be more on the expensive side,” Williams said.

Transfer Company says its development would be accessible to the existing community. Its grocery, for example, would aim to draw in “destination” shoppers with unique products but also to serve the local market.

Brianna Rolack, 25, lives just south of the site. She said that the food businesses could be good for an increasingly diverse area.

“Build something that we can all enjoy,” she said.

But Kisha Hatcher, 42, worried that the Transfer development would leave no room on the site for the senior center, which occupies a building adjoining the warehouse.

“We need better ways and means for the elderly,” said Hatcher, who makes grocery trips for older people in the area.

Transfer promises to “assist” with a relocation of the senior center, but the developers haven’t been in touch with Rex to plan such a move, said Lisa Schiller, a spokeswoman for the hospital system.

Final arguments

The Raleigh City Council likely will take up the issue of Stone’s Warehouse in January. It would sell the land at its appraised value (about $2 million), and will not open a public bidding process, instead deciding by the proposals’ merits.

To Coleman, leader of the South Raleigh advisory group, the decision will be a litmus test.

To let Stone’s Warehouse proceed without affordable housing on site, he said, would send a “hell of a message” that “we don’t care about affordable housing.”

But Mayor Nancy McFarlane said the community has long asked for a grocery store and that the $2 million from the sale could go far toward aiding the neighborhood.

“It’s more than just affordable housing. It’s the ability to walk where you need to be. It’s the ability to activate the neighborhood,” McFarlane said. “I think that there’s a lot of pieces that go into making a healthy community.”

As for Boochie Cheatham, the maintenance employee back at the warehouse – he moved out to rural Fuquay-Varina years ago. He’s too used to the country to move back downtown now. But if he wanted to, he’d do it soon.

“If you want something out here now, get in now,” Cheatham said. “In five more years, everything from here to Tarboro Road will be top dollar.”