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Senate | March 21, 2013 | Committee Room | Appropriations

Full MP3 Audio File

And our Sargent in Arms, we’ve got Ed, Charles, Justin, and Billy with us today, always do a great job. Senator Hunt, are you ready? Alright, Senator Hunt, Senate Bill 334. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] Senator Hise, are you ready? [SPEAKER CHANGES] Good morning, ladies and gentlemen. It’s a pleasure to be able to speak with you this morning on Senate Bill 334. First of all, I’d like to give a little history. In 1848, there was some civic minded citizens who conveyed a piece of property to the state of North Carolina. That property is some of what you see up on this slide that’s before you. There’s 307 acres plus or minus that was conveyed to the state of North Carolina with the stipulation that it would be for the mental health uses in our state. I believe that on December 28th, 2012, we departed from that vision that those people had back in those days and I believe it is time that we right that wrong. The, our proposal would direct that the state of, Department of Administration to release a portion of the Dorothea Dix campus to the city of Raleigh at a fair market value, allowing the city to move forward with its vision of a worldwide park, a world-class park for residents and visitors and I think that’s very important. I think there’s a location there that would be highly suitable for that but I think there’s some other uses for the land that we must maintain the promise and the direction of those early property owners who said that it should be for the mental health of, assistance for our citizens. This bill designates the proceeds from the new lease agreement that will fund mental health programs in the state and it preserves a portion of the property to house the consolidation of, initially we said 2500 state employees but we have determined that there is a correction to that and at this time Mr. Chair I would like to submit a technical amendment. [SPEAKER CHANGES] OK. Send forth your amendment. [SPEAKER CHANGES] I believe it has been distributed. [SPEAKER CHANGES] OK. [SPEAKER CHANGES] It’s being distributed right now. [SPEAKER CHANGES] OK. Senator Pate, I think everybody’s, I think got it or close to getting it. [SPEAKER CHANGES] If I may comment on the amendment then Mr. Chair? [SPEAKER CHANGES] Yes, go ahead. [SPEAKER CHANGES] Really, we have found that we don’t have that many HHS employees up there and the amendment corrects that, it’s just purely technical. I move the adoption of the amendment. [SPEAKER CHANGES] OK, you see the amendment. Any discussion, debate on the amendment? If not, we have a motion, all in favor say aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] Any opposed? Alright. Ayes have it. Alright, go ahead Senator. [SPEAKER CHANGES] Alright, thank you Mr. Chairman. Furthermore, this bill that’s before you instructs the Department of Administration and the Department of Health and Human Services to go back to the 2007 State Government Facility’s Master Plan which really started these discussions going on and go back and use that as a way of identifying property that’s in that 307 acres plus or minus and report their findings to the general assembly by March 2014. This bill maintains the purpose for the property, outlined in the original deed from 1848 and at this time Mr. Chairman I would like to turn the proceedings over to my colleague Senator Hise. [SPEAKER CHANGES] OK, Senator Hise? [SPEAKER CHANGES] Thank you members of the committee, two purposes that we’re going through and the reason for this re-??. The first Senator Pate spoke on, the funds in the agreement were not set aside…

… this was originally asked in the property value for the treatment of mental health, as the terminology would now use, for providing for those sick. The second is that under state law it did not account for the relocation of state employees from a property that they were currently on, as was required. Furthermore, the lease itself provides for condemnation by the state and ending by the state. We think it is very important that this lease may move forward at a part, but that it do so at a fair market value, to provide for mental health in this state as this property was originally intended. And so that we can make plans under the 2007 master planning process that we began, to relocate those state employees or to consolidate them on the site as we see fit moving forward. According to the plan, there are two proposals, as you will see in this presentation, the green areas that come from that master plan, that could very much be available for lease to the City of Raleigh who would be given a right of first refusal for use as a park. You will see that in this are two areas that they have placed for that, depending on what will fit best for the consolidation and relocation of state employees moving forward. I think that covers most of the technical. The lease value, the value of the property that the state had appraised in 2011 comes in at $84M. I think this lease represents somewhere in the neighborhood of about 1/16th of what the state would be doing in an equivalent lease. [SPEAKER CHANGES] Senator Hunt, you have an amendment I understand. [SPEAKER CHANGES] Thank you Mr. Chairman. The memo has been distributed. Let me preface my remarks by saying that I have been a long-term proponent of the ?? Park for the whole thing. This amendment is intended to give the city an opportunity to renegotiate the deal, assuming this bill as presented passes. The amendment simply says that the land will be appraised as park land or open space. Previously the appraisal contemplated what would be considered the highest and best use, which would be commercial development, and that’s how it got to that $84M appraisal. This amendment simply says instead of considering it at commercial use, it would be appraised as open space or park land. I encourage your support of this amendment. [SPEAKER CHANGES] Any questions for Senator Hunt of the amendment? Senator Hise. [SPEAKER CHANGES] Members of the committee, having a little opportunity to look over the amendment and going back to the lease value of the property, the comps that they used in determining the value ranged somewhere from $129,000 an acre to $391,000 an acre. When you look at the land that was the soccer park in this appraisal, which is separated out. It’s 60 acres that they assume meets the use of the property as open use, that 60 acres drops in appraisal value to about $33,000 an acre. Extrapolate that out to the rest of the property, it would drop this value, the leased 300 acres, to somewhere in the $9M value range. I think the purpose is to provide the funds for mental health of the full use of the property given. I’m not a member of the committee, for the integrity of the bill, I would ask that individuals not support the amendment. [SPEAKER CHANGES] Any other comments? Senator Blue. [SPEAKER CHANGES] Mr Chairman. In the first place, there was a legitimate negotiation and a legitimate lease and an end to. I’m reluctant to say that the city has to go back. By the way, a city which is a public entity, which is part of the state, should not have to go back and renegotiate terms that they have already negotiated. I understand what Senator Hunt is trying to do, because he can hear the whistle of a train when it is coming down the track just like I can. I think it’s really a sad day when one governmental unit cannot rely on another governmental unit or the …

...each specifically to abide by the terms of the deals that it makes. I think that Senator Hunt's amendment tends to lessen the hypocrisy of this bill by saying the city can go back and negotiate it...as...based on park rates rather than commercial rates. And I say that...I had the benefit, a couple of years ago, of visiting a fellow by the name of Julian Robertson. He's from North Carolina who did quite well. He has an apartment, right-fronting, Grand Central Park in New York City. He's from Salisbury. But, he had this 27th floor apartment, and I was thinking what it would look like a hundred years ago when that part was conceived, and they started putting it together, if-in fact-everything had been appraised for its commercial value based on New York values now. And what it would look like with 80 story skyscrapers on it. And that's the kind of vision that one has to have when he looks at what this park could be to North Carolina, not just Raleigh. I know that Senator Hunt's amendment says that the city can go back and renegotiate based on parkland values and that's a lot better than the 84 Million that Senator Hise is talking about. So it is with mixed emotions that I support his amendment although I think it's shameful that you even have to have the conversation about the city renegotiating a lease it has already successfully negotiated. [SPEAKER CHANGES] Senator Hunt. [SPEAKER CHANGES] Thank you, Senator Blue, I promise you I'm not trying to lessen the hypocrisy. I'm simply trying...I'm simply trying to smooth the process when the lease is..when the...I can see the train going down the tracks, too, but it is simply going to smooth the process when we do go to renegotiate the lease. I mean you're talking about significantly less than the appraisal we've been talking about. I suspect it will be, as Senator Hise alluded to, it might be in the 10 million dollar range. This would significantly smooth the process of renegotiating that lease. [SPEAKER CHANGES] Any more comments on the amendment? Alright. All in favor of the amendment say Aye. [SPEAKER CHANGES] Aye. [SPEAKER CHANGES] All Opposed. No. [SPEAKER CHANGES] No. [SPEAKER CHANGES] I think the No's have it. Ok. Now the bill's back before us. Senator Blue. [SPEAKER CHANGES] Thank you very much, Mr. Chairman. I don't know what the chair's plans are, but since it is a regular bill I would assume that comments could be made by folks that are present. Let me simply say this, based on Senator Hise's and Senator Pate's initial comments. They are absolutely...that Dorothea Dix was created to be a hospital for mental patients when very few folk around the country had the vision to figure out what we ought to do with people that we were simply casting aside. But this state made a decision several years ago when it decided to abandon that campus and to build a new facility out in Creedmoor that it would not be dedicated to mental health purposes. I've been around long enough to know that about 20 years ago, in fact in 84, been more than 20 years, when the decision was made to divide that campus up because they didn't need it for the farm anymore and a significant portion was given to North Carolina State University which is now its Centennial Campus for hundred year build out, at least 75 year build out as Claude McKinney envisioned it, that a lot of folk were saying then you ought not do it even though you were giving it to another governmental entity, a state entity, NC State University, or the same arguments were made about giving a significant amount of it to the Department of Agriculture to build the Farmer's Market for economic development. You know these arguments you make are similar to some of those we heard then and I don't think that anybody would dispute what the Centennial Campus has done for North Carolina State University and consequently has done for North Carolina or what the Farmer's Market has done to set the standards for new farmer's markets. If you just wanted to designate the use of the proceeds, all you got to do is in the budget say that all the funds received for the lease of the Dorothea Dix campus will be used for mental health services. That's all you got to do. Or if you really want to be concerned about the mentally ill we would adequately fund the multitude of programs that we got. Which we aren't doing so I think that when you think that...When you reflect on what this park has done, not just in Wake County but across the state visionaries who can understand what a designation, destination park, like this will mean not only to the City of Raleigh but to North Carolina 50, 75 years from now. Actually the state ought to be developing a destination park...

in part, like that, in its capital city, but since it's not, at the end of this lease, the state will have given to it, a part fully developed by the city, that will then belong to the state of North Carolina. And so, I certainly hope that you'll vote against this bill. That idea goes a long ways toward breaking up broad arrays of people who've shared their vision and seen what this thing could mean for the state. [SPEAKER CHANGES] Senator Apodaca. [SPEAKER CHANGES] Thank you, Mr. Chairman. You know, I pay taxes here in Raleigh, I pay taxes in Henderson County. I don't think we should be giving an advantage to Wake County over a valuable piece of real estate like this. And, going further, I question the word of "legitimate" on how the property was signed over. It kind of strikes me, as I was reading that wonderful editorial today in that NNO paper here, how they go back to the late-night activities of the House dealing with things. I think this is very similar. What happened as the former governor was leaving, and I think it is illegitimate, if anything, and so, I think for the people in North Carolina, and the fairness of taxpayers in North Carolina, we need to pass this bill and move on. [SPEAKER CHANGES] Senator Tucker. [SPEAKER CHANGES] Mr. Chairman, just following up on Senator Blue's comment. Senator Blue, if I understand it correctly, in the lease currently, the lease can be condemned for public use, and that Raleigh waives the rights to any benefit from that lease. That's in the lease that Raleigh signed if I'm not mistaken. I do concur with Senator Apodaca, this was a lame duck deal done by a lame duck governor. I was in a meeting months prior to this taking place in good faith with some ambassadors for the city of Raleigh, and we were going to negotiate, possibly, a price for the lease, and then it just kinda went away, and I assume, since what has happened, they just got the secretary, I mean, the governor, and the council of state to go on and put the deal together, so it was kind of a end run if you will, sir, to the process. Now Raleigh can certainly renegotiate the lease, we're willing to renegotiate the lease with them, to move forward with the park, probably lesser property than they originally did, so I mean, I don't think there's anything underhanded or hypocrisy or any of those terms that are there. We have 1800 employees in that area, and I guess you would not propose for us to go out and lease a building and spend taxpayers' money on that property. It was meant for mental health use. We want to use that, possibly, to put DHHS, a new office complex in there, and to do the things that are necessary to use for that, and during the interim, by the way, I enjoy Pullen Park right diagonally across the road from it, a 65-acre park that's been there since I attended NC State. It's just how the city of Raleigh spent 7 million dollars on renovation.It is a great park. So it's not like we don't have open space in that area for the city of Raleigh. I think we ought to just move forward with this bill, renegotiate the lease in good faith so everybody knows where everybody's going and we can move forward from there. [SPEAKER CHANGES] All right. Any other comments from members? Senator Blue. [SPEAKER CHANGES] Oh, I'm sorry, when you said any other comments, I knew there were a couple other people in the back who wanted to talk. [SPEAKER CHANGES] Any other members? Any comments? Senator Nesbitt? [SPEAKER CHANGES] Mr. Chairman, I just wanted to speak briefly to this. I don't know what the new order is, to declare anything the last governor did as bogus because somebody talked to him and said they'd help him after they're gone. I wanna put you on notice, I would help anybody after my McCory is gone. So anything he does from here on out is just a lame duck bogus deal that we can void and totally ignore. This is insane. The people of this state deserve a little continuity of government, and to be able to rely on government. We're down here taking assets from cities. We're down here voiding contracts because we don't like them. There's lots of things I don't like, but somebody did them, and they did them legitimately, and we've got to respect government. [SPEAKER CHANGES] Mr. Chairman, may I speak to that? [SPEAKER CHANGES] Senator Nesbitt? [SPEAKER CHANGES] Well, I'll finish up.

Let him go and then I'll go again. [SPEAKER CHANGES] Well that's fine. I've-- [SPEAKER CHANGES] Senator Tucker. [SPEAKER CHANGES] Yes, sir. Thank you, Mr. Chairman. I often appreciate your historical lessons that you teach us here, but you're talking about voiding contracts, and you're talk about the general assembly taking property from cities. This is a point of the city taking property from state government, a power grab without question. So your comments they're in line. If you want to look at this question of a city taking property from the state, probably the most valuable real estate effort-- I mean, the most valuable real estate that the state owns now, and we want to give it away and let it be used, and we just want to have some [safe] zone in it. And you were here in 2007 when the master plan was developed, all this does is adhere to the master plan when you were in charge. That's all we're doing here and we'll renegotiate with Raleigh as we move forward. So the bill just needs to pass so we can get a clean look and move forward from there. Thank you, sir. [SPEAKER CHANGES] Senator [crosstalk]. [SPEAKER CHANGES] Mister Chair do I get to respond to that? He had two shots at it. [SPEAKER CHANGES] Just one. [SPEAKER CHANGES] Quickly. [SPEAKER CHANGES] Mister Chair, my complaint is that you're declaring illegitimate anything out here that you want to to have your own way. And this lease was approved by the governor and the counsel estate, which was the appropriate way to do a lease. It's the same way Mcrory will do a lease if he does one. He's gotta go get counsel estate approval. It went through the process, and the fact that it occurred late in a regime, thank goodness we finally got [lot of] gaming at Cherokee late in the governor's tenure. Surely to goodness people won't come and undo that because it was done the last year she was governor. We've just got to recognize when people do things that people rely on that, and the public's entitled to good government and continuous government and to rely on government. And these things where we come in and just summarily take things from people has got to cease. [SPEAKER CHANGES] Let's do this. I know I got Senator Richardson and ?? Dockham, and I think Senator Hanes want to say-- I'm going to let. We had one person sign up to speak. Jim Goodman, I think had signed up. Jim I'm going to let you go ahead and speak at this point. [SPEAKER CHANGES] Thank you very much. You know if you're not down here much, and you come in here and you sit in a meeting like this and you hear people say things, you wonder what happens in this building. Right? There's a lease. There's an existing lease that was negotiated in good faith that both parties rely upon. Now, I'm Jim Goodman, I work at Capital Broadcasting, I'm a member of [Dixie] Visionaries, that's Greg Pool's group that's promoted the park for eight years. We didn't do the lease, but we really encouraged people to negotiate and do it. So we got a lease. Now, that's a part of it. We're on the same team. Same state, same city. I don't know what this anger is between the legislature in cities, but we have a lease and you guys are backing out on the lease. I'm a business person - a lot of people in here are business persons - what lease are we going to not do next? Let's call Metlife and tell them we didn't really mean it about the what we're going to do with them or what. And you're also saying-- how does Raleigh know that you're not going to do this three years from now and say, "Oops." You know the second negotiated one wasn't good and we're going to do it again. Nobody will trust doing business with the state if you take leases. You guys don't like annexation, and condemnation and all that stuff, and you jump right in and condemn your own lease. Which is very valuable to Raleigh. Extremely valuable, and those damages will be decided by jury, right? But the notion that you can come in and take a lease and just say, "Well we're not going to do it." is remarkable. You should hear yourselves saying that! There's no business persons in that state that would agree with you with what you're doing. As it relates to this partnership. Here's the city of Raleigh. Have the mayor heard about this?

I hope she saw it on television, she probably read it in the paper. Your partner in a long term lease and you're saying you want to avoid the lease and nobody from the state, from the legislature said anything to anybody in Raleigh. This is just a- please think about what you're doing and tell me why people are supposed to trust doing business with the state? You can't. It's a lease. Now I'm not going to argue the fair market value and all that, but my experience in the last 10 years has been in economic development. For 3500 people in American tobacco. And they come- businesses come here because of community development. This is the most significant community development project I've ever seen, this park is going to have more of an economic impact on this area than anything I've ever seen here except the park, except the Research Triangle park. This is a huge economic tool. It doesn't- I'm- mental health is very important. The lease income from- the money from this lease is a net in mental health. It doesn't have anything to do with mental health. But you've gotta tell me why I'm supposed to trust- why am I going to do a deal with you? If you just you do a lease and you decide you don't like it, and shall we say- how about we say this: Anything done by the previous Governor within 2 weeks of leaving is void. Right you've got to understand how we feel on the other side of this lease. What I said is perfectly legitimate, and it's a matter of honor. We don't break leases. This can be the best partnership the state has ever had. You've got this land, [SPEAKER CHANGES] Jim, I need you to wrap it up. [SPEAKER CHANGES] Okay, I can, I better. You've got this land, you've got a long term lease on it, and you've got a city that's going to spend 100-125 million dollars developing it. Improving the economy for everybody. Well you need to think about how we feel about what you're doing and how everybody else in the business community is going to feel about what you're doing. This doesn't make sense and it is not honorable. [SPEAKER CHANGES] Okay, we've got about 5 more minutes. Sen. Hise? [SPEAKER CHANGES] Thank you Mr. Chairman. I just want to say up front, I know people want to make this lease about the previous government, governor or other things. I could care less. When the previous governor signed ot or what time period those occurred, I want to stand for a fact that we will not go into leases in the state that violates state law. By the operation of that lease it is clear that steps would be required to be taken under state law to relocate state employees and the state should not bear that cost going forward because we refuse to follow that law in entering this lease. I also want to protect individuals who choose to make a gift to the state to make a purpose, now and in the future. And we will make the statement that the state will honor the intent of that gift moving forward. I don't care who the governor is or who it's moving , that is our obligation as a state. We are to provide mental health benefits from the revenue from this because that was intended when it was given to the state. And we will continue to honor those. It's not about which governor. If this governor takes similar steps I'll stand with you, Sen. Nesbitt, but this lease is not inconsistent with the interest of the state. It provided for the state to remove from the lease and provided the damages required if the state condemned the property or others who have the authority to condemn the lease that is done. So the matter is settled, it was part of the negotiation of the lease, and we are merely taking our rights under the lease to restore what should have been done within this state. [SPEAKER CHANGES] Okay. Any other comments from members. Sen. Apodaca. [SPEAKER CHANGES] ?? [SPEAKER CHANGES] What? Please sit. Tom? Tom. Alright. Any other comments from members? Alright. We have a

The bill before us as amended. All those in favor say aye. Those opposed. I think the ayes have it so we stand adjourned, and we need to roll into a new PCS as amended.