N.C. Governor Roy Cooper has gotten slack this year for stopping the sale of some of the state’s prime properties.
Our previous governor, Pat McCrory, began an ‘efficiency in government’ program during his tenure where he hired CBRE to look at prime development sites that could be returned to the tax roles. In announcing the sale of properties in Charlotte and Raleigh, McCrory talked about using state property more efficiently and ensuring taxpayer assets were put to the highest and best use. Nearly $75 million of underutilized land and buildings were identified that could produce tax revenues in excess of $1 million per year.
Cooper, however, has been slowing down the sales process for the state’s public assets, saying the projects have been “paused while the Department of Administration does a larger review of state property to make sure decisions are made in the best interests of taxpayers and the state.”
I say, hey, forget about this talk of efficiency and productivity. What these sales are all about – or should be – is economic development.
This offers a great way to take assets and generate some type of capitalist goal, such as increased tax revenues. Charlotte has done a good example of this, such as the sale of the former Charlotte Coliseum, a deal that I brokered, which generated $24 million to reduce the debt associated with the new uptown arena. Another great example is the sale of the excess land next to the NASCAR Hall of Fame, which has resulted in the awesome Stonewall Station project by Crescent and an exciting new Whole Foods grocery store, along with three apartment deals. Another plus is how the state is currently selling the former Charlotte Correctional Facility on Billy Graham Parkway (rumored to be a future apartment site).
But back to the government halls in Raleigh. Two properties that got a lot of attention during the McCrory era were the 16-acre former Rex Hospital site and 26 acres at the intersection of Blue Ridge and Reedy Creek roads. These properties are stuck in government-induced limbo. That’s about $60 million worth of real estate that was taken off the market. Once developed, these properties could generate tens of millions of dollars in annual tax revenue.
I suspect two reasons behind the “pause.”
The first is the money generated by the sales goes to the state’s general fund and not back to the agency selling the property. So there’s little incentive for the state’s Transportation Secretary to sell excess land next to an interchange, for example. I can point to a number of examples where valuable state-owned land is used for storing old text books and parking garbage trucks.
The second reason is the bureaucratic mindset that is common in state government. Decisions like selling public assets require political courage – there’s always a risk someone within state government may end up losing a job as a result of this push toward improved efficiency.
Keep in mind there’s some danger here.
The Raleigh market is hot and will remain so for at least another three years. But state government moves slowly and development is always cyclical. There’s some risk that by time the property gets on the market, the market will be cool.
I’d like to see the real estate back on the market. The Rex Hospital site is a beautiful infill property with rolling hills and in an excellent location near downtown Raleigh and N.C.S.U. The land on Blue Ridge Road is smack in the middle of a fast-growing area. Putting these properties back on the tax rolls will generate tens of million of dollars in new tax revenue, which can be used to pay teachers more money, to widen roads, or be invested in projects to improve government efficiency, if that’s what people really want.
I predict Gov. Cooper will return these properties to the market one day soon. If you are curious what other state owned properties may be coming available, let me know.