AP Wire | 08/31/2002 | With decline of tobacco auctions, towns seek new uses for abandoned warehouses

Tuesday, Sep 03, 2002 - Lexington Herald-Leader

Local

With decline of tobacco auctions, towns seek new uses for abandoned warehouses

BRUCE SCHREINER
Associated Press Writer

MAYSVILLE, Ky. - When David Cartmell steps into the tobacco warehouse, the auctioneer's singsong chant still rings in his memory.

Piles of rust-colored burley once covered the floor, along with a bevy of buyers who every year sent tobacco cash flowing through this river town.

"You don't think it's ever going to end in times like those," said Cartmell, Maysville's mayor and a one-time tobacco warehouse operator.

That era is long gone now. And the warehouse, Independent No. 2, sits empty and run down, yet another symbol of the auction system's decline as farmers increasingly sell leaf directly to tobacco companies.

But the 60,000-square-foot building will soon have a new life as the production center for a company that makes automobile interiors, floor coverings and packaging materials. Another firm has already set up in another part of the warehouse, casting molds for the food industry.

Other towns across Kentucky, the nation's largest burley tobacco producer, are grappling with what to do with abandoned tobacco warehouses. Some have been converted for other uses, some sit empty and others have been torn down.

"It's a reflection of what's going on in the market," said Donna Graves, executive director of the Burley Marketing Association. "It's definitely a sign that the times are changing." Kentucky burley tobacco sold at auctions totaled 95 million pounds in 2001, down from 503 million pounds in 1997. The downturn in auction sales reflects large quota cuts and the switch to contracting with cigarette companies.

In all, 31 warehouses are clustered around Maysville, an Ohio River town 70 miles southeast of Cincinnati.

Just six will still be used this fall for tobacco auctions or receiving stations for contract tobacco. All but 11 of the rest will house an assortment of other ventures.

An auto parts company uses one warehouse to store machinery. A vegetable wholesaler uses one. A pallet maker occupies another. "They can be adapted to nearly anything," Cartmell said. The new tenants of Maysville's Independent No. 2 warehouse were lured by an incentive package that includes no rent for two years with an option to buy.

Gary Van Denend, an engineer for the manufacturing company TRCM, said renovations will be his biggest obstacle. The building needs new wiring, the roof needs repairs and a section of flooring must be removed so equipment can fit in the basement. Plaster has chipped off large sections of one wall.

He plans to start with one production line and a half-dozen workers. Eventually, Van Denend would like to expand warehouse operations to five production lines with 35 to 40 employees.

Stephen Smith, president of die maker CMTS, said he eventually plans to transfer work from his California plant to Maysville. He hopes to employ 10 to 16 people in Maysville within a couple of years. Graves said that many warehouses are in prime locations along highways, but the renovation costs can discourage their conversions. In Lexington, the University of Kentucky leases an old tobacco warehouse near campus as storage and research space for the anthropology department. Another Lexington warehouse has been turned into an auto repair shop.

A warehouse in Carrollton is being renovated by a construction and rental equipment business. But several other warehouses in town sit empty and for sale.

Carrollton Mayor Ann Deatherage, herself a descendant of tobacco families, said it's distressing to see so many for-sale signs. "It's like a little ghost area."

Another former tobacco capital, Durham, N.C., offers a model for the potential of old warehouses. Private developers have renovated the brick warehouses that dotted downtown, turning them into apartments, condos, restaurants, shops and offices. Another project in the works would turn a warehouse into a biotechnology center.

Generous tax incentives helped entice the developers, and economic development officials aggressively sought tenants, one official said.

"I think we have done a good job of respecting our historic past and breathing a whole new life and new energy with a new economy into those buildings," said Bill Kalkhof, president of Downtown Durham Inc., a non-profit group focused on downtown development. Most of the brick warehouses were in good condition, he said. Also, the proximity of Duke University, a major regional airport and Research Triangle Park - the research complex near Durham, Raleigh and Chapel Hill - has contributed to the successes, he said. In contrast, most tobacco warehouses in Kentucky are covered with metal siding. Most are in small towns away from universities and major airports.

In Maysville, the city actively promotes empty tobacco warehouses on the Internet and elsewhere. Negotiations under way could lead to tenants for a couple more buildings.

The city will contribute $100,000 to any agricultural enterprise moving into a warehouse and creating a certain number of jobs. "We're trying to find reuses, and we don't care what it is," Cartmell said.

If the tobacco auction market continues its slide, however, the city may consider offering tax breaks to warehouse owners willing to sell to the city at reduced prices. Cartmell said those warehouses would likely be bulldozed, and the property turned into housing.