To Fix a Dishonorable Deal | Eastern North Carolina Now

   Publisher's note: The article below appeared in John Hood's daily column in his publication, the Carolina Journal, which, because of Author / Publisher Hood, is inextricably linked to the John Locke Foundation.

    RALEIGH Imagine that the first-term governor of your state declined to seek reelection. In the interim between the election of his successor and his leaving office, this lame-duck governor sought to use the power of his office to make a last-minute real estate deal.

    Specifically, the governor identified a large parcel of state-owned land along the coast that currently housed state research stations and agency offices. He then negotiated a sweetheart deal to lease the land to a resort-development company. In nominal terms, the lease payments over 75 years would total 20 percent less than the recently appraised value of the land in its current, undeveloped state. If discounted to present value, and compared against a likely sale price in open bidding, the lease would yield the state only a small fraction of the likely value of the land, and a pitifully low rent-to-value ratio. Furthermore, the state would be responsible for finding and financing new offices for the public employees currently on the site.

    Although legislative leaders expressed their dismay at the poor financial terms at the time, and promised to revisit them in the next legislative session, the lame-duck governor inked the deal, anyway.

    So, if three months later the legislature then followed through on its promise to revisit the financial arrangement - by exercising its rights under the terms of the lease - how would you react? Would you think the General Assembly was engaged in a dishonorable repudiation of a duly executed contract? Or would you think legislators were walking back the previous governor's misuse of power?

    Be honest now. You probably wouldn't question the honor or integrity of the state legislators involved. You'd question the honor and integrity of those who made the sweetheart deal in the first place, and you'd credit legislators for intervening to rectify the situation before the ink was dry.

    What's the difference between my hypothetical scenario and the furor over former Gov. Bev Perdue's controversial lease of the Dorothea Dix campus? As far as I can tell, the only difference is the intended use of the land. Many people would consider creating a "destination park" to be a loftier purpose than building a resort community (although nearby property owners and taxpayers, not just the developers, would likely benefit from the latter). But that's not a distinction relevant to the histrionics of the past week. Keep in mind that Republican leaders of the North Carolina legislature aren't questioning the virtues of developing most of the Dix acreage into a park. They simply believe taxpayers are not being adequately compensated for the value of the land, particularly given the costs associated with moving existing state offices.

    And those who oppose the legislature's action on the Dix lease are (loudly) making a very specific charge. They are accusing the General Assembly of dishonorable conduct - of repudiating a legal contract, thus weakening the credibility of state government in future negotiations over land or other assets.

    The argument from honor only works if you consider the previous administration to have entered into the contract in good faith. That's hard to assert with a straight face. Rather than vigorously representing the interests of state taxpayers - and North Carolinians requiring mental-health services, which the proceeds of a Dix lease or sale would finance - Gov. Perdue obviously gave the city of Raleigh an extremely generous deal, either because the park is backed by key friends and political allies of hers or because she thought it would be good for Raleigh and Wake County.

    Neither justification reflects well on her. The Dorothea Dix property may be in Raleigh but it does not belong to Raleigh. It belongs to North Carolinians as a whole - to people in Winston-Salem and Wingate and Waynesville and Wilmington who will never set foot in the new Dix park. If Perdue had given Raleigh a lease or sale at a reasonable price, and those proceeds had been earmarked for health and human services, their interests would have been satisfied and Raleigh would have gotten its long-desired park, albeit by paying for it properly.

    Instead, there was a rotten deal. Maybe I'm missing something, but it seems to me that the honorable thing to do is fix it.