State rejects $38 million bid for Dix property

By Andrew Kenney, News and Observer, April 10, 2014.

The state has rejected the city of Raleigh’s offer to buy 308 acres of the former Dorothea Dix psychiatric hospital campus for about $38 million and instead has responded with a counteroffer.

The state does not want to sell the entire property, according to a letter from the governor’s office. Instead, Gov. Pat McCrory proposes to keep 64 acres for use by the state Department of Health and Human Services and sell 244 acres to the city for about $52 million.

It would be too costly to move the DHHS offices currently on the campus, the letter says, and the state doesn’t want to sell the land below “fair market value.”

McCrory sees a chance for a “win-win-win” solution to the long-running debate over the former psychiatric hospital, according to the letter. Rep. Nelson Dollar, a Cary Republican and a chief budget writer, said that the new proposal might satisfy the legislature, which nearly shot down an earlier deal.

The governor wants a new central park on the property as well as space for a “consolidated and more efficient Department of Health and Human Services,” according to the letter. He also wants proceeds from the sale of the land to benefit mental health services in the state.

Raleigh Mayor Nancy McFarlane said Wednesday night that the response was a sign of progress in the negotiations, though she did not comment on its details. Last summer, McCrory and McFarlane agreed to try to work out a deal by June 1.

“I’m glad that they’ve responded with an offer, and it just shows a willingness to talk about it and negotiate,” McFarlane said. “I plan to meet the deadline. I think that’s really important to us.”

The fate of the Dix campus has been debated since 2002, when the state announced it would close the 150-year-old psychiatric hospital off Western Boulevard and replace it with one in Butner, about 30 miles north of Raleigh. The state hired consultants who drew up various options for the property, including selling it for offices, stores and homes.

In 2007, former Raleigh Mayor Charles Meeker offered $10.5 million for the property to turn it into a park, to a resounding scoff from some lawmakers. Rep. Paul Stam, a Republican from Apex, said at the time that $50 million would be more appropriate.

The park seemed a done deal late in 2012, when Gov. Bev Perdue, a Democrat, agreed to lease Dorothea Dix to the city for $68 million over 75 years.

Republican lawmakers, however, saw a bad deal, and the state Senate voted in March 2013 to revoke the lease. With that threat hanging over the plan, McCrory and McFarlane agreed to put the lease on hold and work toward a compromise, calling it a “standstill” agreement effective through June 1 of this year.

Dollar signaled Wednesday night that a deal along the state’s new terms could satisfy the legislature.

“Well, I think that’s a much more reasonable and sound proposal,” he said. “I think you have to look at the details of the proposal, but I would think that the proposal before the administration would be far more welcomed in the halls of the General Assembly, and far more reasonable – far better than what was hastily arranged at the end of the last administration.”

McFarlane declined to comment on the specifics of the new state proposal – such as the state’s refusal to sell all the land – because she was still reviewing the offer and the land it includes, she said.

The land offered for sale by the state includes soccer fields built on a former landfill near Western Boulevard, the area leased to The Healing Place of Wake County on the eastern side of the property and the cemetery where psychiatric hospital residents are buried.

North Carolina’s government would keep land near the top of the hill where the DHHS offices are located. The city had offered to buy the entire Dix campus and lease the buildings and parking used by DHHS back to the state for up to 15 years at $1 per year.

The state also rejected the city’s proposal that the state pay for environmental cleanup costs, which may total $10.9 million to $22.7 million. The governor’s office argues that the cleanup wouldn’t be needed if Raleigh didn’t want to build a park on the site.

Bill Padgett, a longtime advocate for a new park at Dix, also took the exchange of offers as a good sign, though he still wants to see a park with more than 300 acres. Padgett thinks that environmental costs, acreage and price will be the topics of discussion in the next few months.

City Attorney Tom McCormick declined to comment on the details.

“We haven’t had a chance to go through it yet,” McCormick said. McCormick expects the city will respond next week.