Dec. 31, 2002 - RALEIGH, N.C.-- By design, N.C. State University's Centennial Campus is supposed to be a sort of right-brain central, perched high above the messy realities of budget crunches, academic infighting and political controversy. 

But this brick-and-glass monument to the world's best engineers, computer programmers and graphic designers has hit a bump: Fierce opposition to the campus's proposed centerpiece, a $71 million hotel, conference center and Arnold Palmer-designed golf course complex. 

N.C. State leaders say the research park needs a hotel to attract big brains and corporate bucks, thereby spurring economic development and helping students land jobs after graduation. 

The state's hotel and golf course developers contend the university shouldn't compete with private enterprise, and they predict failure. 

Gov. Mike Easley and the Council of State are scheduled to consider the plan Jan. 7, but a few state leaders already are suggesting university officials -- plagued by public relations problems -- need a lesson in political humility in the midst of the state's ongoing budget crisis. 

"I'm just not sure how we get through to them," said Labor Commissioner Cherie Berry, the Council of State's lone Republican. "They are not getting the message." 

The idea to build a hotel and golf course at N.C. State dates back almost 20 years, to the first talk of turning 1,300 acres of kudzu, pine trees and mountain bike trails into a combination college extension and business park. 

Now home to 60 corporate and government offices, Centennial Campus is an effort to unite high-tech giants, start-ups, public agencies and campus researchers unlike anything else in the country. The expansion is located just north of N.C. State's original campus. 

N.C. State leaders want their hotel to be just as unusual as Centennial Campus, bigger and bolder than conference centers at rivals such as Penn State University, the University of Florida and Purdue. 

That's part of the problem. 

Campus planners initially asked a private developer to build and own the hotel. But the company that won the rights decided it couldn't profit enough without hefty subsidies. 

Instead, N.C. State administrators decided to build the center themselves, creating a nonprofit to issue bonds that would be repaid with profits. Campuses can issue such revenue bonds without General Assembly approval. 

The university planned a 250-room hotel, 29,000 square feet of meeting space, a spa and pool complex and a 27-hole golf course. Total price tag: $85 million, or almost $277,000 "per key." 

(Per key cost, essentially the total cost of construction compared to the total number of rooms, is a common measure of expense in the hotel industry. The per key cost does not include N.C. State's planned golf course, which would also serve the school's turf grass and professional golf management programs and its golf teams.) 

When the state's tourism industry -- hotels, motels and golf course owners -- objected, campus leaders agreed to let outside consultants study the project and profit projections. 

The consultants recommended scaling back, so campus planners dropped the spa, an outdoor pool, 5,000 square feet of meeting space and nine holes from the golf course. They also postponed construction of a permanent clubhouse and pushed the opening back a year to 2005. 

The new cost: $71 million or $235,000 per key. Rooms will average $140 a night. 

Hotel developers say the N.C. State hotel still will be the costliest in the state, though that's hard to confirm since few private builders will reveal just how much they spend. 

"This is not the kind of thing professors from other universities will be able to afford," said Gerry Hancock, a Raleigh lawyer representing a coalition of golf courses, visitors' bureaus and hotels, including Asheville's Grove Park Inn and Pinehurst Golf & Country Club. "It's big. It's lavish. This is, at its heart, a high-end commercial resort." 

N.C. State Chancellor Marye Anne Fox throws up her hands at such comments. 

"They say we're going to compete somehow with Pinehurst. Pinehurst!" she said. "There's no way someone is flying across the country to play on the N.C. State golf course. If anything, they'll come here for a conference, then head to Pinehurst for the weekend. So really, we're going to be helping." 

The debate goes beyond whether a Centennial Campus hotel will be bad for private business or good for N.C. State. 

State law bars University of North Carolina system campuses from competing directly with the private sector. At the same time, public colleges enjoy freedom to branch into commercial activities as long as they're part of an institution's "underlying educational mission." 

At the request of a skeptical state legislator, the N.C. Justice Department issued an opinion in late November backing N.C. State's right to build a hotel. Lawyers for the tourism industry suggest they might sue and let the courts decide. 

Previously, public colleges have used their power to use revenue bonds to build parking decks and dormitories. 

But if N.C. State gets its hotel, won't other campuses want their own? What about municipal governments looking to finance new convention centers? 

"People in Greensboro and Wilmington and Charlotte should worry," said Jim Hobbs, head of the N.C. Hotel & Lodging Association. 

There is financial risk for the university. Fox and other N.C. State officials say building the hotel themselves is safer than hiring a private developer. If the hotel fails, their thinking goes, they can simply turn it into something else, say an unusually swank dormitory. 

Even with that safety net, the hotel must make enough money each year to pay off its debt -- actually, 125 percent of payments due each year -- or campus administrators must find the remainder elsewhere. 

They can't use tuition money to repay the bonds, but could take cash from other pots, including vending machine revenues, Centennial Campus rents, the expansion's trust fund and money tacked onto grants and research projects to pay for incidental costs. 

"There's risk in everything. There's risk in this whole Centennial Campus," said Bob Geolas, who recruits businesses and coordinates construction at the Centennial Campus. "But there's less risk this way than in doing it 100 percent with a private developer." 

Opponents, who say they wouldn't object to a privately built hotel, disagree. 

"Just because it's not money coming from tuition, doesn't mean it's not taxpayer money," Hancock said. "There is a big risk here for students and taxpayers." 

It has been a rough few years for the state's biggest and best-known public universities. 

In 2000, the state auditor reported wide misuse of funds within N.C. State's Public Safety Department. Fox's plan to bathe the campus' granite tower in red light wound up costing $112,000, compared to the few thousand dollars originally estimated. 

A few miles down Interstate 40, UNC Chapel Hill Chancellor James Moeser has suffered through his own controversies. His decision to have incoming freshmen read a book about the Quran brought national headlines, a legislative rebuke and a lawsuit. 

He's still explaining his decision this fall to pay departing university lawyer Susan Ehringhaus $376,000 to work elsewhere. Moeser originally said the money was coming from state funds, then corrected himself to say the pay would be from a private foundation. 

"We all support the university system, but the leadership is in question," said Sen. Bob Rucho, R-Mecklenburg. "Is anybody thinking clearly over there?" 

Even Democrats, long the university system's biggest boosters, are wondering whether this is the best time for N.C. State to pursue the hotel. 

The Council of State, an executive branch panel that includes the governor, the lieutenant governor and elected heads of various state agencies, will decide Jan. 7 whether to approve a land lease on the hotel and golf course property. Killing the lease would force N.C. State leaders back to the planning stage. 

Lt. Gov. Beverly Perdue and State Treasurer Richard Moore both declined to comment on the proposal. Attorney General Roy Cooper hasn't decided how he'll vote. 

"I believe in Centennial Campus, and I believe in the university," Cooper said. "But I have questions, a lot of questions." 

-----To see more of The Charlotte Observer, or to subscribe to the newspaper, go to http://www.charlotte.com. 

(c) 2002, The Charlotte Observer, N.C. Distributed by Knight Ridder/Tribune Business News.