Raleigh, N.C. — The state Senate on Tuesday approved voiding Raleigh's lease of the former Dorothea Dix site, calling on the city to pay more for a smaller piece of the 325-acre parcel to create an urban park.
An amended version of Senate Bill 334 passed on a 29-21 vote. The measure now goes to the House.
Under the terms of a 99-year lease signed in December by Raleigh Mayor Nancy McFarlane and former Gov. Beverly Perdue, the city would pay $500,000 a year – plus annual escalators – for the Dix site, allowing officials to convert it into a "destination park."
Republican lawmakers criticized the deal, which they said didn't provide the state with a fair return. They also said it would end up costing taxpayers money because state Department of Health and Human Services offices at the site would have to be moved.
Bill co-sponsor Sen. Louis Pate, R-Wayne, called the lease a "double-whammy for North Carolina taxpayers," saying they were subsidizing a Raleigh park while also paying for new DHHS office space.
The legislation, along with a companion bill in the House, calls for the lease to be renegotiated at a fair-market price, with the proceeds designated for mental health programs. Also, DHHS would be allowed to maintain its offices on part of the site.
Sens. Josh Stein and Dan Blue, both Wake County Democrats, argued passionately against the bill, saying breaking Raleigh's lease would reflect badly on the state and noting that a major Raleigh park would create thousands of jobs and benefit the entire state.
"It's not just another park," Blue said. "This is something special, my friends, and I'm not just talking from a sentimental standpoint."
Local business leaders begged Wake County lawmakers Monday to uphold the lease, saying such contracts are sacrosanct in the business community. Tearing up the deal for renegotiation would cause businesses everywhere to fear the state would take similar action in the future, they said.
"If we start this, then businesspeople across the state are going to doubt our sincerity when we enter into any deal," Blue said.
Stein said the ramifications would extend beyond North Carolina's borders, suggesting companies looking to expand would be leery of working with the state.
Blue read a litany of other deals in which the state leased or sold property to local entities across North Carolina for $1, including some in the districts represented by Pate and bill co-sponsor Sen. Ralph Hise, R-Mitchell.
"Should the state go back and collect fair-market value for the other leases it has entered into in the last 10 years?" Blue asked.
Hise responded that none of the other deals involved moving state employees, and he said the Dix lease violates state law by not having a plan in place for dealing with the DHHS offices.
Bill sponsors also argued that the Dix property was given to the state in the mid-1800s to benefit mentally ill people, although they acknowledged they have no plans to reopen Dorothea Dix Hospital there.
"To say that this is about mental health is a farce. It isn’t about mental health," Stein said. "This is about a lease you didn’t like because it was signed by a governor you didn’t like with a city you don’t like."
Republican House and Senate budget-writers cut state spending on the state Division of Mental Health, Developmental Disability and Substance Abuse by $73 million over the past two years.
Stein also reminded senators that the General Assembly passed up more than $1 billion in federal money for mental health programs by voting recently against expanding the Medicaid program under the Affordable Care Act.
"Your short-sightedness is astounding," he told his Senate colleagues. "This is an incredible, once-in-a-lifetime opportunity that you all are throwing away."
Before the bill passed, Pate was able to amend it to ensure a three-judge panel would hear any legal challenges to the voided lease. One of the judges would be from Wake County and the other two would be from eastern and western North Carolina.
Blue questioned the effort, saying such property condemnation cases are entitled to a jury trial, and having three judges overseeing that process would be cumbersome.
"It really is bordering on the nonsensical for us to be building in this special proceeding that doesn’t exist anywhere else for one case, for 325 acres of land," he said.
Raleigh officials have already met behind closed doors to discuss their legal options if the state backs out of the lease.