NC offers to sell 308-acre Dorothea Dix property for $52 million | Raleigh News & Observer

City and state leaders are willing to make a $52 million deal for the Dorothea Dix property, but one big disagreement remains: How much land will become a Raleigh park?

According to offer letters released Thursday, both sides have proposed the $52 million figure. But while Raleigh wants all 308 acres, Gov. Pat McCrory’s administration wants the city to lease back 27.5 acres to house the Department of Health and Human Services “until the state no longer has a use for the property.”

The governor’s plan would also take up to 60 acres of vacant land from N.C. State’s Centennial Campus, allowing DHHS to build a new headquarters on the east side of Centennial Parkway.

“As we have stated from the beginning, the Dix campus is not surplus property, and it is imperative that the state have use of at least the 27.5 acres for a consolidated DHHS campus,” McCrory attorney Bob Stephens wrote in the Sept. 12 letter.

Mayor Nancy McFarlane says the city doesn’t want to buy land only to lease it back for $1 a year. “If we’re going to pay for all of the acreage, we would like to use all of the acreage,” she said.

The mayor said that having DHHS remain on the site would make it hard to create a destination park. “It would change the park from a contiguous rectangle to basically a horseshoe,” she said. “You would have a government complex in the middle of the park.”

Raleigh’s terms – outlined in a Aug. 29 memo – called for the 27.5-acre lease to run for 15 years – not for an indefinite period of time. Both the city and state proposals would let DHHS lease 90 acres around the former hospital’s main buildings for 10 years.

City leaders have said they’re not comfortable with their park coming at the expense of N.C. State’s long-term expansion plans. University leaders have discussed plans to build offices and condominiums on the site eyed for DHHS.

“We have invested in infrastructure on the Spring Hill property and have additional development plans in place that can bring more economic benefit to the region,” Chancellor Randy Woodson said in an emailed statement Thursday, adding that he’s received no request from the governor yet. “We believe any transfer of land would be disruptive to these existing and future partnerships.”

But Stephens argues that the state can’t afford to move DHHS to another site unless Raleigh is willing to pay significantly more. His letter says keeping the department at Dix will save $42 million.

“As you can see, the costs to the state of selling the entire Dix campus well exceeds the amounts being offered by the city for its purchase,” he wrote on Sept. 12.

McFarlane said $42 million could be an exaggeration. “We have some concerns about the validity of those numbers,” she said Thursday. “We feel like there’s other state property (available), but we’re trying to work with them for another alternative.”

City officials have looked at buying land elsewhere in Raleigh to exchange for more acreage at Dix. A March email from a city negotiator sought advice on possible sites from Ed Fritsch, the CEO of Highwoods Properties.

In addition to the acreage dispute, the two proposals differ slightly on who pays the environmental cleanup costs, estimated to run between $10.99 million and $22.68 million.

State officials want the city to assume the responsibility, while Raleigh says it’s now willing to “accept all environmental conditions subject to confirmation of acceptable environmental exposure.” Both sides, however, agree that the state should remain responsible for a former landfill that now houses city soccer fields.

Under both proposals, Raleigh would get a 7.3-acre field on the Western Boulevard side of the Governor Morehead School for the Blind. It would provide a connection from Dix to Pullen Park.

McFarlane said city leaders have discussed the state’s Sept. 12 offer but haven’t responded yet. She says she’s unsure whether the City Council will take any action when it meets Tuesday.