State 'disappointed' with Raleigh talking points in latest Dix offer

A lawyer for Gov. Pat McCrory says the administration is "disappointed" in Raleigh's most recent offer to buy the Dorothea Dix property, saying the Mayor Nancy McFarlane and others are ignoring the state's desire to hold on to a portion of the 307-acre campus for a new Department of Health and Human Services campus.

"Given your most recent offer, it appears that, despite our best efforts to negotiate in good faith with the City, we seem to be moving further apart," McCrory general counsel Robert Stephens wrote in a letter dated July 18. "Our disappointment arises out of the fact that the City is now offering terms less favorable to the State than were contained in the April 2014 offer." 

The tenor of the letter suggests that, despite negotiations getting under way in earnest in March, the state and city are still deeply divided over the potential sale of the Dix campus, which many in Raleigh hope will become a "destination park."

Before Friday, the latest formal offer between the two parties was a bid by the city in late April to either buy or lease the property. Part of that late-April offer was a request to add a piece of the Governor Morehead School for the Blind property to the transaction. That property would have connected the new Dix destination park to Pullen Park.

Despite apparent frustration, Stephens includes in his letter a counter-offer to sell 243.95 acres to Raleigh for $44 million. He also included a second alternative, which would involve some property from the nearby North Carolina State University campus. This second offer would culminate with the city acquiring nearly 282 acres for $53.7 million. 

Neither of the alternatives in the state's letter would commit state taxpayers to helping to pay for environmental cleanup costs, although it does mention an as-yet-to-be-negotiated "modest easement" across the Morehead School field near Western Boulevard. 

The deepest gulf between the two sides is the desire by the city to use the entire Dix property, while state officials hope to use a portion to build new offices for DHHS. Currently, the agency has offices scattered through several aging buildings that dot the campus.  

Stephens' letter is addressed to Raleigh City Attorney Thomas McCormick, who was not in the office Friday, according to a secretary.

McFarlane said she had not yet read the state's letter, so she couldn't comment in detail. However, she said the responsibility for environmental cleanup was important to the city. 

"The seller is usually responsible for cleaning up the environmental problems they've caused," she said, adding that one compromise might be for the state and city to share responsibility. 

For her part, McFarlane conveyed a much less confrontational tone than the state's letter, acknowledging the process was taking a long time but that the administration was tied up in negotiations with the legislature over the state budget and other important legislation.

"They're busy. I get it. I appreciate the work they're putting in," she said. 

Negotiations over the Dorothea Dix property, the site of what was once North Carolina's biggest mental hospital, have been going on since 2013, when lawmakers threatened to scuttle a deal that had been inked by McFarlane and then-Gov. Bev Perdue in late 2012. Rather than go to court, the McCrory administration agreed to renegotiate the transaction.

A new deal had been scheduled to be finished by June 1, but the city and state have twice extended their negotiations. The new deadline is now July 31, absent another extension. 

WRAL News has regularly requested communications from both the city and state regarding the Dix negotiations since the late-April offer by the city. Stephens' letter makes clear that negotiations have been ongoing since then, including the exchange of new potential purchase terms, but no documents were disclosed until Friday.

A spokesman for McCrory described those exchanges as "informal" negotiations.

"It's really just been more verbal communications back and forth," McFarlane said. 

Stephens' letter expresses exasperation with McFarlane specifically, saying that the mayor made public comments bemoaning the slow pace of negotiations even while those information exchanges were ongoing.

"As you know, we discussed the efficiency of having formal, written offers being exchanged back and forth versus informal discussions upon which mutual terms and understanding could be achieved," Stephens wrote. "We agreed that conducting these negotiations through the press was neither expedient nor in the spirit of good faith negotiations."

McFarlane said she never meant to convey any disrespect.

"I have not said anything accusatory," she said. "I said it is taking longer than I hoped ... But I think it's important that we keep talking and keep trying to work it out."