INC NEWS - City Council wary of $2M Duke deal (Herald-Sun, N&O)

[John Schelp]

City Council wary of $2M Duke deal
By Ray Gronberg, Herald-Sun, 20 October 2006

City Council members are voicing qualms about a
proposed deal with Duke University that promises the
city $2 million, saying it looks like a quid pro quo
that could set a bad precedent for future dealings
with the school.

The complaints came during a Thursday work session
from members Thomas Stith and Diane Catotti, who said
they're worried about how the promised donation -- and
what the city might do in return -- will be perceived
by Durham residents.

Stith was bothered by the fact that Duke would hand
over only $500,000 of the money up front, with the
rest coming after city officials approve the
university's plans for reconfiguring a stretch of
Anderson Street so it looks and performs more like an
on-campus road.

He and Catotti also said there's a timing problem
because the donation -- the prospective capper of the
financing package for a proposed $44 million downtown
performing arts center -- is being offered while Duke
is trying to secure a rezoning of its 128-acre Central
Campus tract.

"With all due respect, maybe it passed the legal smell
test, but the common-sense smell test says we're
heavily leveraged with this other million and a half,"
Stith said.

Catotti also made it clear that she's skeptical of
Mayor Bill Bell's claims that the county government
will backstop the performing arts center's financing
if the city has to turn down the Anderson Street plan.
She warned that if things go badly, the council may
have to break promises made to voters by using
property tax revenue to pay for the 2,800-seat
theater.

"If we didn't work it out, and the county a year and
half from now is floating a bond for schools or
something, wouldn't we have to go somewhere else, for
the equivalent of a penny on the tax rate, and didn't
we promise the taxpayers that we wouldn't put
general-fund revenue in?" she said "That was a line in
the sand. Right now, I don't think the money is
there."

Bell, however, stood by the deal he and senior city
administrators hammered out with Duke President
Richard Brodhead and his staff.

"This is what we're elected for, tough decisions in
tough environments," he said. "You have to vote your
conscience on this, in terms of where we are and what
we're trying to accomplish. I've said to Brodhead [and
other Duke officials], 'These are separate issues and
nobody can guarantee anything.' What they've laid out
in terms of Anderson Street seems to me reasonable --
independent of anything else."

Bell and City Attorney Henry Blinder also indicated
that the proposed agreement is a compromise.

Blinder said that early on in the talks, he warned
Duke officials that "the council and the city cannot
be contracting away consideration of issues like
zoning or street configuration," and that in response
Duke suggested changes to the deal to make that clear.

"We're OK with the legal defensibility of this
arrangement," Blinder added, using the collective
pronoun to refer to the attorneys in his office.
"Having said that, it's certainly a policy issue for
the council, whether the council is comfortable
accepting the donation."

Bell, meanwhile, said an early draft of the deal would
have required city officials to give back part of
Duke's money if they couldn't agree to the school's
proposal for the road.

Thursday's discussion set the stage for a series of
Nov. 6 council votes that would finally green-light
the theater. The financing is the major remaining
obstacle, as state regulators want assurances that the
city can pay for the project before they approve the
necessary borrowing,

Stith and Catotti laid out their qualms even as the
proposed deal was beginning to draw criticism on some
of the many e-mail lists that focus on city politics.

"This arrangement smells fishy," John Schelp, an
activist in the Old West Durham Neighborhood
Association who's been the group's point man on the
Central Campus rezoning, said in one such posting.
"Taxpayers deserve a full explanation."

Schelp added that he believes city lawyers are "not
very pleased" with the deal.

Another critic, Chris Sevick, said that if citizens
want the theater, the county will eventually step up
and help fund it.

"I find it quite interesting that the council would
vote to restrain its total objectivity on any issue,"
he said. "Even if the council members maintain that
they will be objective in the future, this sure looks
like a bribe. It would be best for the council not to
create an appearance of impropriety, and reject this
deal."

But the proposal does have defenders.

"Partnerships are almost always a two-way street,"
said Reyn Bowman, president of the Durham Convention
and Visitors Bureau. "Duke has played a mayor role in
making nearly every major adaptive reuse project
feasible -- Erwin Mills/Ninth Street, Brightleaf,
American Tobacco [and] West Village to name only a
few. We shouldn't ever take that for granted."

Bell offered a firm defense of the swap, saying it's
been clear for a while that Duke would like to control
the configuration and maintenance of the portion of
Anderson Street that cuts through its property. The
university is taking a risk of its own by putting
$500,000 into the pot without strings, he added.

Duke officials have also made it clear that "they
could care less" where the city spends the money, and
understand that subsequent negotiations with city
administrators and the council over Anderson Street
might not work out, he said.

Bell also voiced confidence that the County
Commissioners would step in if necessary, though
"given the other things they have on their plate,
that's going to be a far stretch." 

****

Durham asks for money, but Duke has terms
Michael Biesecker, News & Observer, 20 October 2006

To close a financing gap for Durham's new performing
arts center by a mid-November deadline, the city needs
$2 million pronto.

Duke University, long the Bull City's rich uncle, has
that kind of cash to spare. But when the city asked
for the money, the private institution made clear it
has something it wants, too.

Duke needs the City Council's approval for a proposal
to improve five blocks of Anderson Street. The public
roadway is key to the university's ambitious plans to
redevelop the area between its East and West Campuses
for residence towers, retail shops, restaurants and
other amenities.

As a gesture of its good will, Duke is proposing to
give the city a $500,000 "donation" upon the signing
of a binding agreement that pledges "timely"
consideration of the university's plan for Anderson.

The remaining $1.5 million "donation," however, will
only be granted upon the city's approval of Duke's
plan for improvements and "any other necessary
approvals required by the city for Duke to undertake
the improvements."

It is illegal under state law for a local government
to accept money in exchange for granting regulatory
approval. Such a quid pro quo -- a Latin phrase
defined as "something for something" -- would be
considered tantamount to bribery.

City Attorney Henry Blinder advised council members
Thursday they could accept Duke's timely and needed
gift as long as it is clear to all involved that the
$2 million is in no way to influence their decision
whether to approve the university's plan.

"There's been extensive back and forth on this,"
Blinder said. "We're OK with the legal defensibility
of the arrangement."

Still, the deal is giving some on the council pause.

About the same time the board will be considering the
Anderson Street plan, the council also is likely to
take up Duke's controversial rezoning request for the
200-acre Central Campus project.

Some neighborhood leaders have expressed concern that
the massive development will hurt small businesses on
nearby Ninth Street and allow Duke's students to
insulate themselves even more from the community that
surrounds their campus.

"It smells like a quid pro quo," said council member
Thomas Stith. "It puts us in a very bad position, not
only on Anderson Street but on the future implications
for Central Campus."

Council member Diane Catotti, whose husband works at
Duke, also urged the board to look elsewhere for the
money.

Still, the measure will be on the council's agenda for
approval Nov. 6.

"People are going to think what they want to think,"
said Mayor Bill Bell, who supports the agreement. "You
have to vote your conscience on this."

****