Dix Bill Looks at Property’s History through Fogged Glasses

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Filed Thursday, State Senate Bill 334, with its strong language condemning the Dorothea Dix lease, caught city officials and park advocates wholly off guard when it announced the drastic plan to retake control of the property.

The bill seeks to undo the lease by exercising an option granted to the state, which allows it to condemn and seize the property through eminent domain.

In justifying this decision, the bill’s authors looked to the history of the property and the laws which first allowed it to come into being. They should have looked a little closer.dix submittal

From the bill: “Chapter 1 of the Laws of 1848-49 authorized acquisition of that property in trust for the use and benefit of the North Carolina Hospital for the Insane; some or all of the deeds provided that the conveyance to the State was in trust for the use and benefit of the North Carolina Hospital for the Insane.”

This is an interesting interpretation of the source material. In Chapter 1 of the Asylums section of the 1848-1849 laws of North Carolina, the Dorothea Dix Property’s “acquisition” is incidental to the act’s true purpose, which is establishing a “State Hospital for the Insane.”

When the land for the hospital is mentioned in the old law, it is only in relation to the requirements it must meet – such as the availability of a “never-failing supply of wholesome water” and “cheerful views.” There is no language that indicates the land itself need be set aside as a preserve or established into any sort of trust.

The law, passed in a pre-Civil War era, did state that if “a person or persons shall make free gift of an available tract for the farm and site of said hospital, said Commissioners are hereby authorized to receive a deed of the same, in trust, for the use and benefit of the North Carolina State Hospital for the Insane.”

The land for the hospital was purchased by the state in three separate transactions spanning 17 years. As such, a land trust for the property was never established. It is unlikely that the hospital would have been allowed to close in 2012 if such a trust existed. The closest there ever was to a land conservancy trust for the property was one suggested in a 2005 joint Wake County and City of Raleigh concept plan.

The hospital’s closure, while not prevented by any trust real or imagined, did lead to an action well in line with the 166-year-old law’s intent of caring for the mentally ill. In 2012, the University of North Carolina agreed to spend an additional $40 million on mental health care.

The bill also makes the argument that the city signed a lease at below fair-market values, stating that the property has been the subject of multiple commercial appraisals and is therefore a valuable state asset.

One such study – conducted in May of 2011 by commercial real estate firm Worthy & Wachtel — determined the property was worth up to $85 million should the real-estate market return to previous heights.

If the city exercises its option to extend the lease to a full 99 years, the state would yield about $110 million from the deal during the course of the lease.

Under the lease agreement, there is no designation for how this money would be spent. A provision in the recent bill would earmark any future revenues generated by the property be set aside in a special fund for mental health care.

While setting aside such revenue is not something the state is required to do, it does seek to benefit the state’s mentally ill population, which was why the property was bought and the hospital built more than a century and a half ago.

It remains to be seen whether the state is within its rights to seize the land. It would certainly establish a precedent that may give pause to anyone looking to do business with the state – namely, that any contract is subject to termination.

10 thoughts on “Dix Bill Looks at Property’s History through Fogged Glasses

  1. Earmarks have become pointless in the current political climate. Look no further than… well, every single state trust fund in existence .

    The legislature will simply cut funding to offset any earmarks.

    Its purpose is to allow them to feign good intentions.

    —————

    Let’s say though, that the state does successfully revoke the lease. There seems to be an implication that the land will be sold to developers. Why? Are we performing a similar analysis of every other piece of public property? If not, then why this one property? If so, are we really ready to turn over every public asset in the name of private profit?

  2. This is all about money and making more of it. No doubt there are political favors brewing in the back rooms. The big commercial developers are drooling over this property. Its a lot of time and work to cobble together large plots of land for development and this one is ready to go in one big chunk, easily subdivided between the greedy. All you need are a few senators in your pocket, ready to provide. The developers’ GOP allies in government are working hard to provide favors back to them.

    They can make that bucolic section of Western Blvd look like the part just to the west of McKimmon Center; Put in a few office buildings, a dozen or so fast food joints, and maybe a nice strip mall or two. Doesn’t really matter — the developers don’t give a damn about what’s left after they’ve made their money.

  3. Wayne is right. Except, sounds like if this land was left to private developers, we’d get something along the lines of “Renaissance Park” just south of Dix. (clear cut acres of mature trees, lots of asphalt roads, and cookie-cutter cluster townhomes). Just terrible and impossible to undo. All in the name of politics so the state can make maaaybe an extra 5-10 million dollars? Worth it? Definitely not.

  4. I feel like I’m living back when the Nazi’s came to power. All the civil liberties of the Jews and other undesireables (the Democrats) were slowly eroded until they all they all ended up with no rights what so ever….

  5. “Under the lease agreement, there is no designation for how this money would be spent. A provision in the recent bill would earmark any future revenues generated by the property be set aside in a special fund for mental health care.”

    Dirty Nazis!

    LOL

  6. “One such study – conducted in May of 2011 by commercial real estate firm Worthy & Wachtel — determined the property was worth up to $85 million should the real-estate market return to previous heights.” I think the interesting part of this is “should the real-estate market return to previous heights.” To the best of my understanding, this has not happened – bringing into question the argument that the lease deal undervalued the property.

    Also, no one would lease land for a park at the same rate they would pay if they were leasing land to develop into residential, commercial, etc. That would be ridiculous, so the comparison is apples and oranges.
    The return to the people of NC is more than just the dollars coming from the lease. Clearly the state officials who brokered this deal felt that the citizens would get something more for our asset. This is a holistic way of thinking that I am not seeing much of in the current legislature.money.

  7. There have also been appraisals that put the value at about $60 to $65 million. At a discount rate of 3%, which the state uses, the present value of the city payments would be less than half of that.

    Termination of that lease should not have any effect on a business person’s willingness to trust the state. The state and local governments have always had the power to condemn land and leases of land. That is why this lease, like all such leases, have clauses dealing with termination and condemnation.

    Does NCGS 146-28, which deals with sale or lease of state property, apply to this land and, if so, were its provisions followed. If yes and no, the lease is invalid and should be terminated.

  8. The reason 146-28 isn’t being used to challenge the lease is because 146-32 authorizes the governor to legally bypass it.

  9. NCGS § 146‑32 appears to allow the Governor to exempt the land from § 146‑28, until you read it all:

    § 146‑32 (3)
    No rule or regulation adopted under this section may exempt from the provisions of G.S. 146‑25.1 any class of lease or rental which has a duration of more than 21 days, unless the class of lease or rental:
    a. Is a lease or rental necessitated by a fire, flood, or other disaster that forces the agency seeking the new lease or rental to cease use of real property;
    b. Is a lease or rental necessitated because an agency had intended to move to new or renovated real property that was not completed when planned, but a lease or rental exempted under this subparagraph may not be for a period of more than six months; or
    c. Is a lease or rental which requires a unique location or a location that adjoins or is in close proximity to an existing rental location. (1959, c. 683, s. 1; 1983 (Reg. Sess., 1984), c. 1116, s. 97; 1985, c. 479, s. 173; 1999‑252, s. 3; 1999‑456, s. 38.)

  10. There’s nothing in what you posted that would make 146-32 invalid. The very first sentence proves it irrelevant to this discussion.