N&O: Dix deal emerging, Council of State to consider on Tuesday

Posted by Bob Geary on Fri, Nov 30, 2012 at 2:32 PM

The News & Observer is reporting that the deal for Dorothea Dix is a 75-year lease by the state to Raleigh for $500,000 a year, with a 1.5 percent a year inflation factor.

The Council of State will take up the lease Tuesday at 9 a.m.

Background is here

Someone who's better at calculating the time value of money than I can you what the city's offer is "worth" versus, say, an up-front payment of X amount. $500,000 a year times 75 equals $37.5 million, which is pretty close to the $35 million that city officials think the land appraises for. (State appraisals were higher.)

The 1.5 percent inflation factor is some protection against inflation (that is, deflation in the value of the lease), but not much.

The N&O says the lease is for $68 million, but that doesn't mean the same as if the "price" were $68 million. Think of it this way: If the price of a mansion is $68 million, that's what seller wants for it right now, and if you don't have it in cash, you have to borrow it. Paying it out over 75 years — that's a bargain.

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An unanswered question is whether any of this money is earmarked for mental health programs. Although, to be honest, any earmark would be subject to the same shenanigans as the lottery — that is, we earmark extra money over here, and cut the basic appropriation for mental health over there.

Assuring that mental health programs are properly funded is a job that will fall, in the first instance, to Governor-elect Pat McCrory — as I've noted elsewhere.

This deal is getting some pushback from mental health advocates. For example, here's a letter written to Council of State members by Bonnie Schell of Asheville (h/t, Martha Brock):

To the Council of State:

I am opposed to the sale or lease of the 300 acres left out of 1,000 acres that was Dorothea Dix Hospital. Politicians and state officials sometimes serve in a guardian role of targeted assets and that is the case with this property dedicated from its inception to the welfare of those with psychiatric disabilities. The Mental Health Trust Fund has been depleted, and not for mental health services. NC dogs have more options for park exercise and relieving themselves than the minimally served youth and adults with mental health disorders have choices in where to live in their communities.

Raleigh wants to offer you 50 million less than the best appraisal because now is not the time to sell real estate. The land comes with certain liabilities: old buildings with asbestos, a landfill, black and white patient cemeteries that would have to be moved, a main building listed on the National Historical Registry. The assets of the Dix property to the state and Division of MH/DD/SA, however, are many. Well-built two bedroom cottages (where staff used to live) scatter the landscape and could serve as housing for trainings, transitional housing for homeless and mentally ill persons, sites for new or bare-bones-budgeted nonprofits such as NCMHCO which is there at the present time.

With a caterer, small conferences such as the Recovery Conference held two weeks ago in Winston Salem at Benton Convention Center could use the gym, auditoriums, offices, wards, and the free parking and safe night strolling. The rooms in the oldest buildings at Pinehurst are equally small and not lavishly decorated. I suppose a golf course is easier to envision as a training destination than a former asylum, but at one time Dix provided some of the finest nurse’s training in the country.

I don’t think you can rest comfortably in your minds to improve the modernity of facilities for 1200 to 1800 Division staff while NC rates in the lowest group of states on money spent per adult mental health patient. I don’t think we should modernize office facilities until we bring our mental health programs forward 15-20years to catch up with evidenced best practices that include peer support, supported housing and employment, respite care instead of revolving emergency room doors, recovery and wellness centers, clubhouse experiences, a life in the community that goes far beyond a prescription and with it the reduced life expectancy of 25 years compared to that of general population.

It would be hard to explain to constituents why you would decide to build new buildings on land you have to bid on when you own the most beautiful land in the state near Raleigh.

I urge you to put off selling or leasing the Dix property or any part of it without honoring the vintage request that all proceeds go into the MH Trust Fund.
I urge you to go back to the parties involved in a proposed collaborative for research, training and program development and see if the issues could be worked out. I implore you to consult with persons who have mental illnesses and those who provide services to them on what the highest or best use of this property might be.

I invite you to have happy holidays knowing that you did the right thing by doing nothing until you can convene more information, look at more possibilities, bring more creativity and integrity to this issue.

Respectfully,
Bonnie Schell, MA,
Mental patient, taxpayer and voter, retired Director of Consumer Affairs for an LME

Comments (3)

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I think at this point the most important element in the proposal is who is responsible for any environmental hazards on the site. Will that be the lessor, the State of NC, or the lessee, the City of Raleigh? I am encouraged that a lease is proposed rather than a sale. Hopefully, the lease is specific in saying it can only be leased to Raleigh if a park is the use of the land--not development.

According to Mike Pedneau, former Director of Dix Hospital, there is not just one, but three, former City of Raleigh waste dumps on the Dix property. He has shared this info with State Auditor, Beth Wood.

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Posted by mbrock49 on 12/03/2012 at 7:01 PM

Thanks for writing about this, and thanks to Bonnie Schell for her well-articulated argument for keeping the land, and using it for the purposes it was intended for -- to provide humane care for persons with mental illness. We should definitely modernize the way we do that, and the recovery education and housing options on the Dix campus are heartening ideas.

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Posted by Bebe Smith on 12/01/2012 at 10:38 AM

I'm torn on the issue myself, but by any reasonable calculation that deal is for far, far less than the $35 million that even the city thinks it's worth. It's all about the discount rate, which is in turn all about the state's cost of capital. The 12-month average interest rate on state 20-year general obligation bonds is 3.87%. If you used that as the discount rate, the deal is worth $17.3 million, or just half of the appraised value.

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Posted by mlk on 11/30/2012 at 5:46 PM
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