Raleigh to buy 308-acre Dix property for $52 million

by Andrew Kenney and Colin Campbell, News and Observer, January 12, 2015.

Mayor Nancy McFarlane and state Rep. Skip Stam leaned over a table-size landscape on Monday afternoon, surveying tiny white buildings and houses scattered inside a glass case.

Dozens of reporters and local officials milled around them, crowding the ballroom of the Governor’s Mansion. With her granddaughter cradled under one arm, McFarlane deftly guided Stam across the model of the hills south of downtown Raleigh.

“That’s Western Boulevard … that’s Boylan Heights, and that’s the prison,” the mayor told the Apex Republican.

At the heart of the display was the 308-acre Dorothea Dix property, once a campus for the care of people with mental illness and long the object of Raleigh’s desires. The mayor knew the land so well because she was finally ready to buy it on behalf of the city.

Minutes earlier, McFarlane and Gov. Pat McCrory had announced that the state of North Carolina would sell the entire property to Raleigh for $52 million, while leasing space to the state Department of Health and Human Services on the campus for as long as 25 years.

The near-finished deal closes years of negotiations between the two governments, and it sets in motion plans to turn the former psychiatric hospital campus into a crown-jewel park for Raleigh.

It’s a plan that has long eluded the city. Gov. Bev Perdue agreed to lease the land to the city in 2012, but legislators tore the deal apart in 2013. Only a compromise bill allowed McCrory to begin negotiations anew with the city – and even so, the governor warned months ago that the two sides were moving further apart.

On Monday, though, the two leaders appeared sure of success.

“This agreement allows the creation of a destination park in our state capital, protects our state taxpayers and continues to honor the legacy of Dorothea Dix,” McCrory said Monday. “How’s that for good news?”

For McFarlane, the park would mark the completion of a cause she’s pushed throughout her eight years as councilwoman and mayor, working alongside a slate of local advocates.

The coming years of planning and development will be a “community event,” McFarlane said.

And the finished product, she added, could attract people from across the country. “Today truly is a win-win for all of us,” the mayor said.

More work ahead 

The Raleigh City Council approved the sale terms unanimously during a special meeting Monday morning, after a week of late-stage negotiations.

Hours later, McCrory and McFarlane signed off on the outline of the sale, including the purchase price and the division of responsibility for environmental cleanup.

The parties still must negotiate a contract, and the city must raise the money by the end of this year.

“I think the key thing right now is that, first, we got all the acreage. We all wondered if that would happen again,” said Bill Padgett, president of the advocacy group Dix306.

“Second, we actually own it now. … When we ask for investments to improve the property, that’s an improvement that the city will actually own.”

Joey Stansbury, a representative of the conservative Wake Citizens Coalition, said that the city should hold a referendum and that voters should weigh in on the full cost of developing the park.

“Right now, she’s asking Raleigh citizens to commit to buy the land without a full knowledge of how much it would cost,” he said of McFarlane. Councilman Russ Stephenson said the city would fund the development of the park in phases.

If the council wants to hold a referendum on the spending this year, the panel would have to begin discussions around May, according to City Attorney Tom McCormick.

The deal will allow the state to lease back acreage to keep Department of Health and Human Services offices on the Dix property.

Additionally, proceeds of the sale of the land will go toward state mental health programs, honoring the land’s original use, McCrory said.

Legislative interference?

The governor described the purchase as the first step in a larger strategy of cooperative development between the state and the city of Raleigh, though he did mistakenly call the capital city “Charlotte” a few times.

On Monday, McCrory said he couldn’t speak for the legislature, but he thought the new plan had the support of statehouse leaders.

State Senate leaders had little to say about the agreement Monday. A spokeswoman for Senate leader Phil Berger said he was still reviewing the details of the proposal and had no comment.

And two sponsors of the 2013 legislation to revoke Raleigh’s original lease – Sen. Ralph Hise of Spruce Pine and Sen. Louis Pate of Mount Olive – also said they hadn’t read the new terms.

Several Republican House members, however, praised the deal. Rep. Nelson Dollar of Cary said he thinks it addresses the concerns raised by legislators in 2013. House leaders partnered with McCrory to propose the new negotiations, while the Senate initially voted down the compromise.

“I think it represents a fair agreement between the parties,” Dollar said. “The decision in the General Assembly will be how to ensure that those funds best serve the mental-health legacy of Dorothea Dix.”

Dollar said he doesn’t think any legislators would try to revoke the deal. “This agreement is a far better agreement than the one that was hurriedly put together two years ago” by the Perdue administration, he said.

Final negotiations

Padgett, of Dix306, has been pushing for a Dix park for some 12 years, since the state called a downtown meeting to discuss the land. It’s been a roller coaster, he said, but he likes what he has heard from the latest proposal.

Raleigh is practically alone among sizable cities, he said, in having such a large open property near downtown.

“You’ve got a unique opportunity,” he said. “It’s not that they don’t come around often. They don’t come around. Period.”

The current round of negotiations, between the city and the governor’s office, began last March, when Raleigh offered to buy all 308 acres for $37.93 million. The governor’s office countered in April, proposing a price of $52.2 million for 244 acres.

Representatives of the city and the state met anywhere from once a month to twice a week, often in a Department of Administration conference room. Even when the process dropped out of the news, negotiations were grinding on.

“We didn’t see anything going very far fast,” Padgett said. “We were pushing our mayor hard, and we were pushing McCrory hard.”

The city of Raleigh made its most recent bid in September, offering $52 million for the entire property. However, disagreements remained on how much land would be included in the deal.

“We really wanted to make sure it was all of the property,” McFarlane said.

State and city officials had also disagreed on who should pay for cleaning up environmental contamination at Dix.

The final deal requires Raleigh to assume “all environmental conditions” – but only after the state cleans up the site to “standards acceptable for recreational use.”

The city has no firm estimate yet of cleanup costs, according to McCormick, the city attorney. However, the bill may be fairly substantial.

First, the city and state will split the costs of remediation at the former site of a coal plant, with the state paying as much as $600,000.

Raleigh also will have to deal with asbestos-laced buildings that it likely will demolish, McCormick said. Demolition could cost about $10 million, he said.

The purchase also could carry a cost for Raleigh taxpayers. Any bond referendum would have to take place this year, according to the agreement.

That would likely come with a property tax increase in 2016. If recent bond referendums are an indication, borrowing $52 million through parks bonds would amount to a tax increase of roughly 1 cent, or about $30 more a year for the owner of a $300,000 home.

Leaked news

News of the imminent deal leaked Sunday night, when state Rep. Duane Hall, a Raleigh Democrat, reported on Twitter that there was a potential deal between the city and state governments on the property.

Hall posted the news to Twitter out of excitement, he said, and accidentally beat both city and state leaders to the punch. He was not told to keep the news secret, he said.

Hall later spoke to McFarlane and McCrory; neither seemed upset with him for breaking the news, he said.

Once the state fully approves the sale, McCrory told McFarlane, “then, mayor, it will be up to you to make this dream a reality.”