A proviso deep in the state’s $5.5 billion budget is sending developers and politicians scrambling to get ready for one of the most anticipated and significant land deals in Columbia history.

Gov. Mark Sanford and the General Assembly agreed this week to sell the 178-acre central campus of the State Hospital on Bull Street — property assessed at about $32 million.

The tract is eight times larger than the old Central Corrections Institution property being developed on the Columbia Canal. It is the last and largest tract of urban land available in the capital city.

“We would like a shot at it, and so would our competitors,” said Stewart Mungo, of Mungo Homes, one of the area’s largest residential developers.

Several other prominent local developers didn’t return telephone calls about the property. Insiders say the magnitude of the project and the payoff it represents have the region’s biggest firms playing it quiet.

But Ike McLeese, president and chief executive of the Greater Columbia Chamber of Commerce, says the land is a hot commodity.

“Interest is very high,” he said. “This is about the largest piece of property to come available in the urban area any time in the foreseeable future.”

The race kicked off when Sanford announced he would like to see the huge tract and its roughly 50 buildings sold this year, with the proceeds going to help the state’s ailing treasury. But the campus will not be an easy turn.

The oldest building on the campus, the Mills Building, is not up for sale, but its classic style should set the tone for the redevelopment, preservationists say.

Restoration of the historic Babcock Building, with its distinctive red cupola, is estimated at $20 million alone. Other, newer buildings are filled with asbestos, which means developers would face an expensive removal process if they want to reuse the buildings.

“The problem with this property is it’s not residential or commercial, it’s both,” Mungo said. “Very few people do both things well.”

The cost — not only of the land, but also of demolition of newer buildings and the restoration of historic ones — would be prohibitive, which could limit the number of firms that could tackle redevelopment, he said.

Another question to be resolved is the demand for the property, he said.

“It’s a lot of money, that’s the biggest thing,” he said. “And how deep is the market?”

The proviso also has city leaders ramping up to build zoning grids, historic overlays and design guidelines in advance of the sale. They want to ensure whatever is built, renovated or razed fits with the historic in-town neighborhoods of Cottontown, Waverly and the Mills District.

“It’s the most significant (development in decades) because of its size and the timing,” said City Council member Anne Sinclair, who once lived in the historic Mills Building as a caregiver.

“The economy is on the upswing,” she said. “There’s a lot of interest in downtown Columbia, and people are paying attention to us as a community. The timing is right. We want to be ready.”

But the size of the tract and the challenges involved have some developers worried.

Mungo advocated breaking the property up into smaller parcels to sell. “Otherwise you’ll just end up with some national company, a Wal-Mart of developers, and the money won’t stay in the community.”

McLeese said some local firms, such as Edens & Avant, Lake Carolina developer Don Tomlin, and Mungo, would have the resources and expertise to handle the entire tract.

Other, smaller firms could band together to take on the project, he said. “In today’s times, a lot of people find ways to do things together.”

Efforts to reach Tomlin, Edens & Avant’s John Lumpkin, and Arnold Properties’ Ben Arnold were unsuccessful.

Another option, McLeese said, would be for the city to buy the property, and then re-sell it as it did with the CCI site.

“But if that happened, they should immediately turn it over to developers” to avoid the delays experienced at CanalSide, he said.

Developers had been slow to embrace the CCI site because of tight city design and zoning requirements, and delays dealing with the Prison Industries Building, which the city tried to market for re-use as a hotel. It since has been demolished.

Mayor Bob Coble said the city won’t purchase the property.

“The private sector is red hot, and it will develop that property,” he said. “In the past, if the city didn’t step in, nothing happened. But all we’ve done in the last 10 years has led to a market where the private sector is able to develop properties like that.

“But we want to make sure it’s done in a manner that’s consistent with the surrounding neighborhoods.”

PUSHING FOR SALE THIS YEAR

When the property will be sold is still being hashed out.

The General Assembly this week passed the proviso state budget giving the State Budget and Control Board authority to sell off numerous properties around the state deemed surplus.

The State Hospital property was at the top of the list.

The proviso doesn’t direct the five-member board to sell the property, but gives it the option along with the option of selling other properties.

However, Sanford, the chairman of the board, wants the property sold this year to put the estimated $32 million in proceeds against the budget deficit.

Several factors could delay the sale: the size and price of the property; the challenges presented by existing buildings; and, the willingness of other board members to sell it quickly.

Because of those complications, “I think it’s highly unlikely it can be sold this year,” Sinclair said.

But Sanford says it’s doable.

“The governor has been in the real estate business, his chief of staff is a real estate lawyer and they both are confident they can get this done and done quickly,” spokesman Will Folks said.

The governor is just one vote on the board, which includes state Treasurer Grady Patterson; Comptroller General Richard Eckstrom; House Ways and Means Committee chairman Bobby Harrell, R-Charleston; and Senate Finance Committee chairman Hugh Leatherman, R-Florence.

Spokesman Michael Sponhour said the board has yet to discuss the property. “But the sooner we get the process rolling, the better.”

The proviso doesn’t become law until July 1, and the board could not take up the matter or even schedule a meeting until after that date.

Sponhour said it’s too early to decide whether the land will be sold as one tract or broken up into smaller parcels.

“Obviously our staff will bring forth a recommendation,” he said.

MIXED USE, GREEN SPACE, MIXED INCOMES

Though the state owns the Bull Street property, the city sets the zoning, historic protection and design rules for anything within its limits.

On May 12, the council chose a committee of city staffers to examine the qualifications of 24 consultants who want to study and make recommendations for the property.

That committee is supposed to make a report to City Council on July 1.

Sinclair said it’s too early to determine what the mix of commercial and residential zoning will be or what buildings might be protected.

“That’s what the consultant is for,” she said. “But I envision mixed use — a live-and-work kind of environment.

“We are not trying to hamstring anyone. But we want it compatible with the surrounding neighborhoods.”

Cottontown, just across Bull Street, will be the most heavily affected neighborhood.

Already, Elmwood Avenue, which ends at the State Hospital’s front gate, is one of the busiest streets in South Carolina. Residents fear a 178-acre development across the street could make traffic unmanageable.

“My preference would be for a mixed-use development with plenty of green space, friendly to pedestrians and bicycles as well as vehicles,” said Cottontown Neighborhood Association board member Carol Hall.

“And, please, mixed incomes. Columbia is too segregated by income.”

Reach Wilkinson at (803) 771-8495 or jwilkinson@thestate.com