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State, Raleigh agree on lease of Dix campus for major park

Posted December 4, 2012 7:16 a.m. EST
Updated December 5, 2012 7:53 a.m. EST

— State and Raleigh officials on Tuesday approved a plan to lease the 325-acre Dorothea Dix Hospital campus to the city, which plans to convert the site into a "destination park."

The Council of State, the panel of 10 statewide elected officials, voted along party lines for the lease, with Republican Agriculture Commissioner Steve Troxler and Republican Labor Commissioner Cherie Berry opposing the plan. Democratic State Auditor Beth Wood abstained from the vote, saying the issue could come before her office for an audit later.

"This is been a really good public-private partnership where we've all worked hard to make today happen," Gov. Beverly Perdue said. "This didn't just happen. It was well planned and really well orchestrated, and I'm delighted for the people of North Carolina."

On Tuesday afternoon, the Raleigh City Council voted 7-1 to accept the lease agreement. 

"Everybody on the council's been very supportive, and we worked a long time for this," Mayor Nancy McFarlane said. "They really do understand what a great thing it'll be for the city and the state."

Councilman John Odom was the lone vote against the plan. He said he supports the park, but wanted more details about the contract.

"I was set to go ahead and vote for it," he said. "But once again, we don't have a clue of what we're buying."

City Manager Russell Allen said officials expect to have the paperwork on the deal finished by the end of the month.

The Dix campus has been owned by the state for more than 150 years. It was once home to a mental hospital, but the campus is now mainly occupied by Department of Health and Human Services offices.

The lease calls for Raleigh to pay $500,000 per year to the state for up to 99 years. As a condition of the lease, the city will lease back to the state the office space it currently occupies until a plan to consolidate those offices elsewhere can be worked out.

The price for the lease would rise by 1.5 percent every year, but the city would get a discount for any property that the state is still using.

Republican legislative leaders and conservative groups called on the Council of State to put off the issue until Republican Gov.-elect Pat McCrory and lawmakers could review the lease. They claimed the deal was bad for state taxpayers, especially those outside the Triangle, and accused Perdue of rushing the vote to burnish her political legacy.

Senate President Pro Tem Phil Berger said the Senate would look at legal options to terminate the lease.

"There's is been a lot of talk for a number of years about what to do with the Dix property, but this particular proposal just came out of the blue over the last week, week and a half," said Berger, R-Rockingham. "If there are viable options, then I'm interested in proceeding with attempts to undo this."

McFarlane dismissed the notion that only Raleigh residents will benefit from a Dix park.

"What's good for Raleigh, what's good for Charlotte, what's good for all the cities is really good for the state of North Carolina," she said. "The more business and tax dollars we can generate, everybody benefits."

Berry was the most vocal opponent of the lease deal during the brief Council of State meeting, calling it a "raw deal" for taxpayers that was rushed through the council for a quick vote.

"I believe this lease is way below fair-market value," she said, adding that she feels the deal restricts the state's ability to renegotiate the leases of nonprofits already occupying space on the Dix campus.

The Dix property has been appraised as high as $86 million, but a study by the General Assembly’s nonpartisan Fiscal Division and Program Evaluation Division values the lease deal at $22.6 million.

Raleigh officials worked for months on a deal to buy the Dix land from the state, but the two sides couldn't reach an agreement on the value of the property.

"We just knew it was going to be a long process, and tried to work through as many different scenarios as we could until we found one that work for everybody," McFarlane said.

Democratic Lt. Gov. Water Dalton and Democratic Attorney General Roy Cooper noted the state has leased land elsewhere to cities and counties for $1 per year to encourage development.

"It doesn't have to be at fair-market value. It's a fair return," Dalton said. "Raleigh has been the best city in the nation to live, work (and) relocate. This will add to the values all around Raleigh ... and any appreciation in the property comes back to the state."

Perdue said there was no rush to approve the lease plan, noting that she's worked for more than three years to find a way to keep Dix as a park.

"The city will grow to more than 1 million people in less than two decades. This is a good conservation investment as well as an economic development investment," she said.

Cooper called it "short-sighted" for people to view the deal strictly in monetary terms, saying it's an investment in the region's future that will generate private development and tourism.

Private boosters of the park idea on Monday pledged $3 million to help Raleigh officials draft a master plan for the site.

"Great cities in America have great parks," said Greg Poole Jr., the leader of the Dix Visionaries group.

Democratic Secretary of State Elaine Marshall said the lease plan wasn't perfect but noted "the search for perfection sometimes can paralyze people." She said plans for the future of the Dix campus have been debated for years.

"This is a plan that will stand the test of time, and this is a plan that will preserve a legacy – the people's legacy of North Carolina," Marshall said.

Perdue said she would like the revenue generated from the lease to go to mental health services, but Cooper said the money "would not even begin to dent" the problems North Carolina faces in mental health treatment.

"It is critical that this state address our issues with the mentally ill," he said. "It's an issue we need to deal with, but I think we should move forward with this (lease)."

Lawmakers will have to decide how to spend the money from the lease, and the uncertainty over mental health funding has prompted mental health advocates to oppose the state's deal with Raleigh.