Divided council votes to accept bid for downtown Raleigh site

City leaders on Tuesday triggered what amounts to a public auction for a valuable city-owned lot on Hillsborough Street in downtown Raleigh, but not before some argued that the council should scrap the process in favor of encouraging the construction of a grocery store there.

The city council voted 5-3 to accept a $3.1 million offer from The Lundy Group for properties at 301 Hillsborough Street and 320 West Morgan Street in the heart of downtown. The 1.2-acre site is currently a surface parking lot for Campbell University Law School.

The city’s acceptance of The Lundy Group’s bid doesn’t guarantee a transaction.

The move opens up a 10-day period that starts when the city advertises the offer in local media, which Raleigh officials said will likely happen later this week. During that period, other developers can submit offers on the land at that time so long as their offers are at least 5 percent higher than the published bid.

When the l0-day period is over, Raleigh must accept the highest bid, repost it and start another 10-day bidding period. The cycle continues until the city fails to receive an offer higher than the one it posted.

Before accepting the bid on Tuesday, council members argued over how much say the city should have in the type of business that moves onto the downtown site.

Council members Russ Stephenson, Bonner Gaylord and Kay Crowder opposed the move, with Stephenson quoting from the city’s Downtown Experience Plan in saying the site should be used for a grocery store.

Under the bid process, the council must consider a sale to whoever submits the highest bid and developers aren’t required to disclose details of their plans.

If the council scraps the bid process in favor of grocery store recruitment, “We won’t have to sit here wondering who will offer this or that,” Stephenson said.

Gaylord said he was under the false impression that the council could pick and choose which offer it likes best and wasn’t restricted to considering the highest offer.

Responding to a question from the group that voted against accepting Lundy’s bid, the city attorney said the council could opt to keep the land even after the bid process is over.

The majority of council, meanwhile, argued that the market will dictate where a grocery store should go and that the city is too far along in selling the land to change its mind.

The Lundy Group submitted its offer in February 2014. The sales process was prolonged by the city’s decision to rezone the property to make it more marketable, which it did in May.

“This could cause a lack of confidence in our ability to make decisions among the development community if we’re going to be changing our minds all the time,” Councilwoman Mary-Ann Baldwin said.

Stephenson responded to Baldwin by saying the community at-large might “wonder what kind of city we are if we don’t act on our own vision.”

“If I was an investor … I’d want clear identifiable goals,” he said.

The properties are zoned as DX-20, which allows for an array of uses – apartments, retail, hotels, office space, a grocery store – and buildings as tall as 20 stories.

The Lundy Group wants to build a tower with “residential over commercial over retail with some structured parking,” Jim Baker, the company’s founder, said Monday.

Other details of the Lundy plan, such as the building’s height, depend on how much the company ends up spending on the land, Baker said.

Many developers are interested in the project, so the bidding process could last weeks and significantly drive up the cost, Jim Greene, assistant city manager for economic development, said Monday.

Baldwin, the council member, said the council might be able to use the money it makes selling the Hillsborough property to entice grocers to build elsewhere in downtown.

This story was originally published July 21, 2015 at 4:52 PM with the headline "Divided council votes to accept bid for downtown Raleigh site."