Raleigh, state reach Dix lease deal

Plan to convert land to a park has hurdles

jfrank@newsobserver.comNovember 30, 2012 

Gov. Bev Perdue will ask state leaders to lease the 325-acre Dorothea Dix Hospital campus to the city of Raleigh for as much as $68 million over 75 years, a decade-in-the-making deal to create a destination park near downtown.

Perdue administration officials announced the terms Friday, ending months of feverish negotiations – not finalized until Thursday night – to preserve one of the largest green spaces remaining in an increasingly urban Wake County.

Under the proposed deal, the state would retain ownership of the land and exert some control over its future use. The city would pay $500,000 a year to lease the land, plus a 1.5 percent annual increase, compounded through the length of the agreement to account for inflation. Another provision gives city leaders the ability to renew the lease for an additional 24 years.

“The lease proposal is the best way to preserve the land as a park for our citizens, while at the same time providing a revenue stream for the state,” said Chris Mackey, a Perdue spokeswoman.

The Council of State will vote Tuesday on whether to enter the lease deal. The 10-member panel of statewide elected officials is majority-Democrat but most of the members remain undecided about the governor’s plan, according to interviews. The Raleigh City Council also could vote on it Tuesday.

GOP wants a delay

Republican Gov.-elect Pat McCrory and GOP legislative leaders have asked the council to delay the decision until the new administration takes power in January. The proposal renewed their concerns about whether the state is getting the best deal.

Democratic State Auditor Beth Wood echoed the GOP concerns Friday, saying she was undecided. “It is too rushed for me,” she said. “There are just a lot of unknowns there.”

The total price tag remains undetermined because the city will pay a discounted rate as long as the state occupies the property. The lease deal would allow the Department of Health and Human Services to remain in its existing offices on the property for up to 15 years or until state leaders can decide whether to build a consolidated campus for the agency.

The proposed agreement represents a long-awaited breakthrough for Dix Visionaries, a park advocacy group headed by Raleigh businessman Gregory Poole Jr.

“It’s very fair and balanced for both parties,” Poole said of the terms. “It recognizes the continuing use the state will have of the property for 10 to 15 years, if needed. And it recognizes the reality of the time it takes to master plan this property.”

Poole said it will cost $3 million to $4 million to draft a master plan that specifies, among other things, which of the historic Dix Hospital buildings should remain part of the future park. Environmental studies also will be needed.

City Council position

A long-term lease makes more sense for the city than a big upfront payment, said City Councilwoman Mary-Ann Baldwin. “Nobody knows the environmental hazards that exist there,” Baldwin said. “Say you bought the land for $65 million and then you find out there’s another $65 million of remediation that has to be done.

“That was one of the sticking points in an outright sale. How could you afford to take on that responsibility?

“By spreading it over time, you can deal with a lot of issues, including the master plan,” she said. “This is going to be something done over 20 to 30 years.”

City Council members will discuss the proposal Tuesday in a closed session. A public vote would follow if the council chooses to take action, City Manager Russell Allen said.

To draw up a vision for the park, the city will bring in consultants and hold multiple rounds of public dialogue, Allen said. “That is the part that requires lots of participation,” Allen said. “There will be lots of ideas.”

As part of the Council of State vote next week, Perdue administration officials wanted to include a deal to consolidate the state health department offices at a central campus. A request for proposals went to developers at the beginning of the year and negotiations are nearly complete. But a final agreement won’t likely come this year, leaving the decision to the incoming administration.

The state and city negotiated the cost of the lease using a state appraisal that put the property’s current value of the land at $58 million; the city of Raleigh estimated it at $35 million. It took until Thursday night to reach an agreement on the 1.5 percent annual increase.

Perdue aides hope the revenue from the lease will go toward mental health care, but only the legislature can direct the money. Still, the roughly $500,000 a year won’t make much of a dent; the state spends about $1 billion a year on mental health care.

“In the overall budget, it’s like a rounding error,” said Gerry Akland, president of NAMI-Wake County and parent of a mentally ill child. “It doesn’t have a whole of meaning. It’s not giving the land away, but on an annual basis it’s not going to amount to anything.”

The proposed lease is unusual, Perdue aides said, because the state typically leases its property to local governments for a nominal cost, such as $1 a year. Raleigh currently leases land on the Dix campus at that price for soccer fields.

Conservative viewpoint

But the lease cost didn’t satisfy one conservative group trying to defeat the plan.

Americans for Prosperity, a nonprofit group active in North Carolina politics and backed by GOP financier and McCrory transition co-chairman Art Pope, is making calls to residents across the state labeling the potential deal “a giveaway of taxpayer-owned land.” The state’s AFP chapter is calling on the property to be sold to a private developer at what it expects is a greater price than the current proposal.

Democratic Insurance Commissioner Wayne Goodwin, who supports a park concept but remains undecided on the vote, said he’s received numerous emails from AFP supporters but also “a great multitude” from people in favor. “This is certainly the most citizen input I have received on any single Council of State agenda item during my time as state insurance commissioner,” he said.

Frank: 919-829-4698

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