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$1 MILLION SURPRISE FOR COURTHOUSE DEAL
MYRICK SLIPS SWEETENER INTO BUDGET TO SMOOTH NEW FEDERAL FACILITY
The Charlotte Observer
Friday, January 9, 2004
Section: Main
Edition: One-Three
Page: 1A
Richard Rubin, Staff Writer
Memo: Graphic "Federal Courthouse: New and Old" not in database; please see microfilm.
Charlotte has no coastline, no marine fisheries and no federal weather office. But tacked onto the proposed 2004 budget for the federal weather and oceanographic agency is a $1 million check to the city, with no mention of how it's to be used.
What Charlotte does have is a stalemated real estate deal and a need for cash.
The money, which awaits Senate passage, would help plug a hole in plans for a new federal courthouse and give Charlotte what it needs to finish building the new arena.
The U.S. House approved the $1 million last fall as a long-planned three-way land swap unraveled into a he-said, she-said battle between private investors and city attorneys. U.S. Rep. Sue Myrick, R-N.C., of Charlotte delivered the money, placing it in the $328 billion catch-all spending bill.
"It wasn't something we applied for," said City Manager Pam Syfert. "It wasn't something that we thought we would even get. But our congressional delegation has been working really hard to make sure this courthouse project moves along."
The $1 million manna from Washington helps the city, but it might not straighten out the previously unreported problems with the land deal, which is still on hold because of a dispute over how the historic old courthouse can be used.
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A convoluted tale
The trail of events bringing ocean money to this inland city demonstrates how a local contract dispute can escalate into an unexpected gift from federal taxpayers.
For any given agency, $1 million is small, but hundreds of similar projects are scattered throughout the U.S. budget, aided by members of Congress eager to send money back home.
Charlotte might not even want this $1 million if it hadn't arranged a real-estate deal that started collapsing the day after it was approved.
The details are complex.
The saga started in 2001, when the Charlotte City Council tried to help make a long-discussed new federal courthouse a reality.
The city spent $10.7 million to buy a block bounded by Trade, Caldwell, Fifth and Davidson streets, which is the federal government's preferred site for the building. That meant Congress needed to find cash for design and construction, but not land.
Over the following year, the city, the federal government and private investors developed a three-way deal.
In the end, the federal government would get land for the new courthouse. Charlotte would get the old courthouse, then sell it to the investors for $10.8 million. The city would then use the money as part of the $200 million arena construction plan.
The investors were represented by the local real estate firm Freeman, McClintock and Wells.
Staff members for all three sides negotiated the contracts, and the City Council unanimously approved the deals Sept. 23, 2002.
The trouble started Sept. 24.
When Assistant City Attorney Susanne Todd and FMW official Jim Zanoni talked by telephone that day, they realized they had a problem.
The city's contract with the federal government restricted renovations on the historic old courthouse. The government says it must approve any future changes, limiting a private owner's flexibility. But the contract that FMW proposed to the city didn't include that provision.
On Sept. 24, Jim Zanoni called it a deal-breaker. Suddenly, Syfert had no contract that she could sign.
Then, the dispute moved to the city's back burner for about a year. Why?
Because the city and FMW spent their time working together on another project: the arena. Walker Wells, a partner in FMW, began working on the city's behalf, assembling the land for the new arena and collecting $500,000 in commissions.
In October 2003, Zanoni sent a letter to Todd.
Although Zanoni acknowledged that he had not read the historic preservation document or realized its importance before the council approved the contract, he said city staffers knew the company could not accept that restriction.
The city's response noted that FMW had received the document several times.
City Attorney Mac McCarley said his staff didn't make any mistakes and would not have brought a contract to the City Council that could not be signed.
"They're very sophisticated land dealers," he said of FMW. "They can read all those documents. We know they can. They told us every other thing about the documents that they wanted to discuss."
McCarley and Wells both said they hoped the city and FMW could still reach an agreement.
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City is short $10 million
Until they do agree, the city will remain short more than $10 million, money it needs for the arena. When the historic preservation issue surfaced, Syfert said, she became concerned that the city wouldn't get back all of the $10.7 million it spent on East Trade Street.
"We put our cash up and we've been holding," she said.
She and Mayor Pat McCrory both talked to Myrick, a Republican and former Charlotte mayor.
Normally, the City Council sets Charlotte's legislative priorities and asks a lobbying firm it employs to push them through. That didn't happen in this case.
Syfert said she spoke directly with Myrick because the courthouse is not a city project. McCrory said Myrick asked him and Syfert for advice on how to designate the $1 million.
"It was kind of a shared conclusion among us both that it was really initially to be used for (the courthouse) and that should remain," he said.
Three City Council members said they weren't aware of any problems with the courthouse deal or of the pending $1 million from Congress.
Although council member Nancy Carter said she was delighted to get more federal money for an important project, she said the council should get more regular information about the city's efforts in Washington.
"We need to know more about what's going on," she said.
On Nov. 25, Myrick and Democratic counterpart Mel Watt announced $8.5 million in funding for designing the new federal courthouse. If approved by the Senate and President Bush, that would start the long-delayed project and trigger the land swap.
But they didn't announce - and still haven't trumpeted - the other $1 million, added onto the House-approved budget for the National Oceanographic and Atmospheric Administration.
Myrick spokesman Andy Polk said she added the money to help secure the courthouse project, which she has been working on for years.
Charlotte might still sell the old courthouse for $10.8 million, Syfert said. If that happens, an extra $1 million could be waiting for a purpose.
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Richard Rubin: (704) 358-5832
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