State Politics

Raleigh, McCrory plan to complete Dix deal by May

A dog named “Izzy” rests as his owner Aimee Greene of Raleigh plays fetch with “Walle” Wednesday at the Dorothea Dix campus in Raleigh.
A dog named “Izzy” rests as his owner Aimee Greene of Raleigh plays fetch with “Walle” Wednesday at the Dorothea Dix campus in Raleigh. tlong@newsobserver.com

Despite an N.C. Senate bill that would derail the deal, Raleigh leaders and Gov. Pat McCrory say they expect to finalize a $52 million sale agreement for the Dorothea Dix property by May 5.

Mayor Nancy McFarlane announced the deal with McCrory in January that paves the way for a “destination park” on the 308-acre former psychiatric hospital campus. But a bill filed late last month by three Republican senators would revoke the agreement and sell the land to the highest bidder.

The senators – the same trio that sought to reject the city’s original lease on the property – say the land is worth more than the deal offers, and they propose to start the bidding at $52 million.

The bill hasn’t stopped the final talks between the governor and city officials. The Raleigh City Council has met behind closed doors twice in recent weeks to hammer out the remaining details.

McCrory said this week that he expects to bring the contract to the next Council of State meeting, which is set for May 5. The council of statewide elected leaders would take the final vote on the deal. No approval from the legislature is required to finish the sale.

“We’re in very good contract discussions with them at this time,” McCrory said. “We think we’re in good shape and ready to finalize the details.”

It’s unclear what aspects of the deal remain incomplete. The primary sticking points in months of negotiations were resolved in the terms announced in January. Raleigh agreed to lease back a portion of the property to the state Department of Health and Human Services for as long as 25 years, allowing the agency time to find a new home.

Raleigh pledged to take on “all environmental conditions” – but only after the state cleans up the site to “standards acceptable for recreational use.” The city and state would split the costs of remediation at the former site of a coal plant, with the state paying as much as $600,000. Raleigh also would have to deal with asbestos-laced buildings that it would likely demolish.

McFarlane said those terms are reflected in the final contract the city council is working on now. “No major obstacles have come up, no major changes to the terms,” she said this week.

The mayor said she’s hopeful the legislature won’t get in the way, although “you always have to be concerned about that.

“There’s a lot of support out there for this project, and there has been for a long time,” she said. “We’ve followed the process the legislature laid out for us. I hope they would respect that.”

A two-year process

Negotiations between the city and the McCrory administration have been underway since July 2013, when legislators backed a “standstill agreement” giving the two sides time to reach a new deal.

The new deal replaces a $500,000-a-year lease – worth $68 million over 75 years – that was signed by Gov. Bev Perdue in December 2012. In letting McCrory take charge of talks, Senate Republicans said they were “stepping aside,” but stressed that they could still take action if they didn’t like the governor’s deal.

Now the same senators are following through with that threat. Senators Louis Pate, Ralph Hise and Tommy Tucker have filed Senate Bill 705, which would force Raleigh to outbid private sector developers in order to buy the Dix property.

Tucker said that McCrory didn’t consult the senators about the sale. Tucker says the sale price should be higher in order to cover the costs of a new headquarters for the health and human services agency. And he argues the state shouldn’t foot any of the bill for environmental cleanup.

“We don’t feel like we’re getting the best value we can for that property,” he said.

Tucker’s bill is currently awaiting a committee hearing. If it passes the Senate, it would likely face opposition from some House Republicans. The House appropriations chairman, Rep. Nelson Dollar of Cary, has said the Dix sale “represents a fair agreement.”

Raleigh could also sue to preserve the deal, particularly if the final contract is inked before legislation passes.

A ‘contentious’ rezoning?

It’s also unclear whether developers would bid against the city if Dix goes on the auction block.

Greg Hatem, who’s done numerous developments in downtown Raleigh, said most developers would only consider buying Dix if it’s rezoned to allow denser development.

“You’d be hard-pressed to find somebody who would put up that type of money without knowing if they would rezone it,” Hatem said.

Any rezoning would require approval from the Raleigh City Council, which has long pushed for a “Central Park” on the Dix property. Hatem says that would result in “the most contentious rezoning of my lifetime.”

The site’s current zoning would likely allow for a range of office, residential and retail uses with a three-story height limit, according to Andy Petesch, a land-use attorney who often handles zoning matters before the city council. Bars and nightclubs wouldn’t be allowed.

Raleigh’s long-range land use plan calls for “public parks and open space” on the site. That’s not legally mandated, Petesch said, “but there typically needs to be some compelling or at least justifying factors that would support a zoning that’s contrary” to the plan.

“That’s ultimately a decision for the council to make,” said Petesch, who stressed that he supports plans for a park.

It’s also a decision the city council hopes it will never face. Supporters of the Dix park plan are hoping the Senate bill dies by the end of the month, leaving the Council of State vote in May as the final action for the sale.

Then Raleigh leaders would face the next challenge: coming up with $52 million by the end of the year. A bond referendum is one possibility.

Campbell: 919-829-4698;

Twitter: @RaleighReporter

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