Negotiations begin between Raleigh, state for Dorothea Dix property

ccampbell@newsobserver.comMarch 16, 2014 

— Armed with new appraisals and environmental studies, Raleigh and state officials are restarting negotiations this week on an agreement to turn the 325-acre Dorothea Dix property into a park.

The goal is to craft a new deal to sell or lease the former psychiatric hospital campus to Raleigh, after Republican state legislators tried last year to revoke the lease signed by then-Gov. Bev Perdue in 2012. Gov. Pat McCrory brokered a “standstill agreement” that gave the city and state a year to come up with a new arrangement to replace the lease.

The latest round of negotiations couldn’t start until studies of the property’s value and possible environmental contamination were complete. The environmental assessment arrived this month, and the first meeting with state officials took place Monday.

“I’m just happy we’re moving forward with the process,” Raleigh Mayor Nancy McFarlane said. “We’ve got all the numbers in that we need, and now it’s just a matter of sitting down and talking through it.”

Bill Peaslee, an attorney for the state Department of Administration, said both sides are still reviewing the new information; the environmental study contains 1,000 pages of data. “Everybody’s kind of digesting the documents that we have,” he said. “We know we’re going to meet again.”

The state’s new appraisal could be good news for the city. Appraisers working for the state pegged the value at $66 million – considerably less than the 2011 state appraisal of $84 million that Republicans had pointed to as the land’s fair market value.

Using the $84 million appraisal, a legislative analysis concluded that a “fair market value” lease would have Raleigh paying $1.6 million a year for Dix – more than three times the $500,000 annual payments in Perdue’s lease agreement.

Peaslee downplayed the discrepancy between the two state appraisals. “The previous appraisal was a different time,” he said. “It also appraised more property. I don’t know that they’re really that comparable.”

Raleigh ordered its own appraisal, and it found a considerably lower value: $37.45 million. That number is similar to the city’s appraisal from 2012, which estimated $36.45 million.

The final sale or lease price will depend on how much of the property Raleigh gets for its park. Peaslee said the McCrory administration is interested in keeping about 60 acres at the site to house offices for the Department of Health and Human Services, but Raleigh wants the full 325 acres provided in the original lease.

Environmental study

In addition to the appraisal, both sides wanted an extensive environmental study to identify any contamination from earlier activities at Dix, which include a coal power plant, underground fuel storage and a paint shop.

The study identified petroleum contamination in groundwater near the hospital’s former garage, as well as contaminants that seeped underground from sites that once housed piles of coal. Tests also revealed high levels of mercury vapor in several parts of the McBryde building, the main building of the former hospital.

Toxicologists from the N.C. Department of Environment and Natural Resources will now review whether the test results require any action, Peaslee said.

McFarlane said the findings likely won’t affect the negotiations or park plans. “Given the past uses of the Dix property, there wasn’t anything terribly surprising,” she said.

Progress on the Dix negotiations comes after McFarlane complained in November of a “pattern of delay” from state agencies that had slowed the studies and appraisals. The environmental study – released this week – was originally due Dec. 1 under the terms of the standstill agreement.

Environmental tests got underway in January after the mayor wrote to McCrory asking him to take a “more direct role” in the process. “There was a lot of posturing in the fall, but I think we’re beyond that,” Peaslee said.

The two sides have until June 1 to make a deal before the standstill agreement expires, though city attorney Tom McCormick said the expiration date could be extended.

As city and state officials head to the negotiating table, others want a say in what happens on the Dorothea Dix campus.

Conservative activist Joey Stansbury said the park property will likely cost millions and should go before voters for approval. He called on McFarlane to release more information about the potential agreement. “We have no knowledge into what is being negotiated and the cost that Raleigh taxpayers will have to bear,” he said.

And next week, members of the National Alliance on Mental Illness will speak to the Raleigh City Council.

Mental health advocates

NAMI Wake County President Gerry Akland said mental health should be included in the plans given the site’s history.

“Lost in this whole discussion is the people the facilities provided support for,” he said. “That’s a big plot of land, and some acreage there could be devoted to the treatment of mental illness.”

The Dorothea Dix hospital closed in 2012 when its last patients were transferred to the new Central Regional Hospital in Butner. State officials say the aging buildings are no longer fit to treat mental illness. State leaders promised last year that revenue from the Dix property would be directed to mental health services.

Akland said he fears that the “monied people of Raleigh” are making the decisions on the Dix property’s future, pointing to a recent TV commercial from Dix Visionaries that features McFarlane touting the park’s benefits.

Dix Visionaries, led by Raleigh businessman Greg Poole, has set a goal of raising $3 million for the park. McFarlane said the group is not involved in negotiations about the property.

Poole could not be reached Tuesday, but a spokeswoman for the Visionaries group released a statement saying that “we are pleased to be one step closer to transforming the Dorothea Dix campus into North Carolina’s ‘Central Park’ for everyone to enjoy.”

Campbell: 919-829-4802; Twitter: @RaleighReporter

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