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@NCCapitol

Lawyer worried Dix deal exceeded governor's authority

Posted April 30, 2013

— The lease Gov. Bev Perdue signed allowing Raleigh to build a destination park on the Dorothea Dix property could be challenged and invalidated, a lawyer for the state Department of Justice warned the day before it was signed. 

"Finally, and most critically, we strongly advise against the inclusion of the leasehold financing language," lawyer Don Teeter wrote in December to then-Secretary of Administration Moses Carey and others.

Teeter's emails and other communications between lawyers for the state and the city were disclosed under a public records request by WRAL News.

The leasehold language gives the city the right to borrow against the value of its lease on the property in order to finance the construction of the park. Teeter warned that leasehold financing language exceeded the authority that the Council of State gave the governor in early December.

"(I)f this lease were to be adjudged to exceed the Scope of the Council of State approval, the continued validity of the lease is very much more in question," Teeter wrote. 

Officials with the department declined to comment Tuesday on the issues raised in the documents. 

"These questions may be involved in future litigation against the state, therefore we can’t respond," said Noelle Talley, a spokeswoman for Attorney General Roy Cooper. 

Lease may have exceeded outline

The Council of State approved the lease arrangement for Dix on Dec. 4. The council is made up of 10 statewide officials, including the governor and attorney general. 

At the time, the council had only an outline of the deal but not the actual lease language. Talley said that this was not unusual, although some critics have raised questions about how they could approve a deal without knowing all its details.

Documents disclosed by the Department of Justice Tuesday detail the negotiations and the discussions among lawyers who were building the lease from the point of the Dec. 4 approval until it was signed. They show that the finer points of the arrangement were still being negotiated on Dec. 21, little more than a week before Perdue and Raleigh Mayor Nancy McFarlane signed the deal. 

Teeter essentially warned that the outline approved by the council did not include the leasehold financing language. He says the full lease may have had to return to the council. Failing that, he said, it could be vulnerable to a court challenge. 

In response to Teeter's Dec. 19 email, Carey instructed Teeter to finalize the deal with the city and negotiate any last-minute changes with City Attorney Tom McCormick.

At the time, state House and Senate Republicans warned Perdue not to go forward with the deal, saying they would look for ways to undo the contract if she did.

Months later, after Perdue left office and Gov. Pat McCrory was in power, a bill condemning the Dix lease and returning the property to the state's full control cleared the state Senate. A similar bill is pending in the House. 

The documents released Tuesday don't speak to the legal issues initially raised by lawmakers, but they add more fuel to their push to undo the deal.

“The correspondence between the state’s attorneys and Gov. Perdue’s administration further supports the Senate’s concern that the Dorothea Dix lease is unlawful," said Sen. Ralph Hise, R-Mitchell, one of the sponsors of the Senate condemnation bill.

Sen. Louis Pate, R-Wayne, also said Tuesday he was concerned about the city being able "to encumber" the property. 

However, McCormick said the leasehold financing language is fairly standard, particularly with longer-term leases. 

"I don't know why they would be concerned about it," McCormick said. 

Discussions continue between Raleigh, state 

McCormick confirmed statements by others that negotiations between the city and the state are ongoing.

"There's been a lot of talking," he said.

Rep. Leo Daughtry, R-Johnston, chairman of the House Judiciary Committee, which is handling the bill that would undo the lease, said that Art Pope, a former lawmaker and Pat McCrory's budget director, has taken the lead on negotiations for the state.

Daughtry said he had heard about the leasehold financing concerns but added that he hoped they would be irrelevant by the end of the negotiations. 

"The question is, is there a way to resolve the issue," he said. "I would really like them to explore a resolution to the bigger picture. I hope it doesn't become a concern."

Among the documents disclosed by the Department of Justice were multiple versions of the lease proposed by the city and the state.

Several of those documents contemplate what would happen if the state condemned the property, depending on how much of the property is taken back.

Another issue raised in the process was that the state had borrowed money to improve the buildings on the Dix property. An email from the State Treasurer's Office suggested that the final lease would need to ensure those bonds were not affected by the deal. Those concerns seemed to have been resolved by the end of the negotiations. 

Some of the communications between the lawyers seemed to express frustration with the principals on both sides of the negotiations and their unwillingness to take legal advice.

In reply to Kevin McLaughlin, a staffer for the governor, Teeter wrote about his work with McCormick. McLaughlin reported that McCormick has made suggestions to McFarlane about how she could speed up negotiations between the state and city.

"Based on his reply, she had ignored good advice that he gave her in that regard last week. I told him that I have had such clients as well; might even have one or two now," Teeter wrote.

15 Comments

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  • ratracehwy64 May 2, 2013

    Make NC state give back the land that was illegally given from Dix in the 1980's....hey lets take back the farmer's market....that too was illegal parceling out of DIX land. Meanwhile the homeless are walking the street, no services, no unemployment benefits, great job....One party, two denomiantions and neither one gives a !@#$ about the people...sad

  • Boylan May 1, 2013

    "This will get solved in the courts, not the GOP-controlled legislature which is NOT listening to the will of North Carolinians. They will learn the hard way in 2014." floydthebarber

    Actually most North Carolians are mad that Raleigh got a sweetheart deal that while the rest of NC pays the price. The only people happy are some people in Raleigh and the immediate area.

  • happymom May 1, 2013

    "Just wait and see what you get now. All of you who have and continue to bash Bev will be rethinking your views before the next election."

    I don't like McCory one bit. But that doesn't make Bev any better either.

  • happymom May 1, 2013

    "So nobody appears to be complaining about the intent of the lease- to preserve a pristine landmark in downtown Raleigh for generations to come. This is all just a debate over the details of borrowing against the lease? Who cares! Strike that section and be done with.

    This will get solved in the courts, not the GOP-controlled legislature which is NOT listening to the will of North Carolinians. They will learn the hard way in 2014."

    I, along with many others, are complaining about the intent because is very, very costly and does not benefit ANYONE but people in the Raleigh area. Let's not pretend that a local park will serve all citizens of NC, but they will all have to pay for the the expense attached.

    And let's not pretend that building a local park on the financial backs of all of NC is "the will of the people." It may be your will, but no one has really asked the entire state, have they?

  • ripetomatoes May 1, 2013

    The conditions of the original deed, by law, must be honored.

  • iron fist May 1, 2013

    Just wait and see what you get now. All of you who have and continue to bash Bev will be rethinking your views before the next election.

  • djofraleigh May 1, 2013

    Congratulations to WRAL news for digging up this information! Good reporting must be applauded.

  • superman May 1, 2013

    Bev was the best female governor we have had in over 50 years.

  • floydthebarber May 1, 2013

    So nobody appears to be complaining about the intent of the lease- to preserve a pristine landmark in downtown Raleigh for generations to come. This is all just a debate over the details of borrowing against the lease? Who cares! Strike that section and be done with.

    This will get solved in the courts, not the GOP-controlled legislature which is NOT listening to the will of North Carolinians. They will learn the hard way in 2014.

  • whatelseisnew May 1, 2013

    "Why haven't Republicans gotten rid of the lottery now that they are in charge????"

    It brings in money. I have no problem with the lottery except the money should be going into the General Fund and at least for a few years should be used to replace the money that was stolen from the highway trust fund. Buying a ticket is a voluntary act unlike taxes. I don't mind that so-called poor are buying the tickets. They are simply giving back some of the money the State took from people that pay taxes.

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