City officials have condemned part of Liberty Warehouse, a Greenfire Development property and Durham's only remaining tobacco auction house.

The Department of Neighborhood Improvement Services notified Durham Liberty, one of Greenfire Development's affiliated companies, that the rotted roof and excessive water penetration in one section of the 200,000 square foot warehouse has made that portion unsafe.

"It means there are structural issues that could cause damage or injury," said housing inspector Burton Rauch.

The area of concern mainly centers on the space occupied by Liberty Arts, a nonprofit sculpture studio.

While city officials are concerned, the damage doesn't require evacuating the building, they said.

Greenfire partners Carl Webb and Michael Lemanski said they recognize the historical value of the building in the Durham Central Park area and plan to maintain it as best they can until they can afford to redevelop.

After Greenfire bought the property in 2006, it let tenants such as Liberty Arts remain under low rents with the understanding that upkeep would be minimal, Lemanski said. The Scrap Exchange, Durham Central Market, and about a dozen other organizations also lease space in the building.

"We could have forced them to pay fair market rent and used that money to improve the property," Lemanski said. "But we haven't because we felt that it was important to protect those nonprofits' ability to be in the space cheaply because they don't have the resources necessary to pay more rent."

Tenants frustrated

Representatives of Liberty Arts, which pays $400 a month, said they are frustrated about the water that pours into their space when it rains.

"We used to complain every time it rained, until they told us there was nothing they could do," said volunteer facility manager and sculptor Michael Waller.

Liberty Arts, a spinoff of Durham Central Park, was created in 2000 to receive and manage a $300,000 grant to build a metal-casting foundry and the life-size bronze bull later installed at CCB Plaza downtown.

Liberty Arts' foundry is housed in the George Watts Hill Pavilion for the Arts, a 1,600-square-foot, semi-circular structure adjoining Liberty Warehouse. Liberty Arts leases the pavilion site from the city, Waller said.

"That is something we can't just move," Waller said.

Last auction house

Liberty Warehouse, built in the late 1930s with an addition completed in the 1940s, is the city's only remaining tobacco auction house. The auction ceased in 1984, but the building's unique history is still apparent via the skylights above the former auction floor and murals left by banks that served the farmers.

Greenfire bought the building for $3.5 million in October 2006 from Walker Stone, the third generation in his family to operate the building, according to Durham County documents.

"If they don't fix the roof there won't be much left after a while," Stone said.

Lemanski said he doesn't think the building will reach that level of deterioration.

Ann Woodward, The Scrap Exchange's executive director, said Greenfire hasn't maintained the building as well as the former owner. "It has big beams that are cracking and there are holes in the roof," she said.

"I do have safety concerns. I am always worried about people that work there, not so much in retail space, but certainly in the warehouse," she said.

But Woodward said the organization has never discussed reporting concerns to the city.

"I think we are grateful for the fact that we are getting an inexpensive rent," she said. The nonprofit pays $1,500 a month for 13,000 square feet in retail and storage space.

The warehouse is Greenfire's second historic building getting scrutiny. In March, the city hired an engineer to assess the structural integrity of a burned-out, roofless Greenfire building that fronts Main and Parrish streets. Since 2006, the city has been pushing for the company to stabilize the almost-century-old building. The engineer's initial report indicated that the building should be stabilized to withstand strong winds but does not appear to be at risk of falling down.

"If I was a citizen of Durham I would be really p----- at Greenfire," said Waller, who lives in Hillsborough. "They bought up all these buildings, and they are letting them fall. They are neglecting them."

Properties improved

Lemanski said it's not true that Greenfire Development has let its properties deteriorate.

Since 2003, the company has bought about 30 properties in and near downtown including its renovated Kress and Baldwin buildings condominiums, and the 17-story SunTrust Tower which it plans to turn into a luxury hotel. All but four of those properties, bought as part of plan to renovate the city's center, were dilapidated when the company bought them, he said. Now only four are in that state, he said.

The conversion of the SunTrust Tower into a boutique hotel and spa, is expected to start in June he said. Following its completion, Greenfire plans to convert the Parrish Street property into a "signature office building."

"We are making a long term investment," Lemanski said. "We put all our eggs in this basket, and we are watching it very closely. There is no one who cares more about the success of an investment in downtown Durham than Greenfire Development."