Senate Bill 334 would put the brakes on current plans for the 325-acre campus and would uphold the property's tradition of serving the mentally ill.
The bill's authors, senators Ralph Hise, Louis Pate and Tommy Tucker, said they introduced the proposal to "correct problems resulting from the poorly-planned lease of the property" and said money from a new deal would be used to fund mental health programs across the state.
In December, then-governor Bev Perdue signed documents leasing the state-owned Dorothea Dix Hospital campus to the City of Raleigh.
The 75-year lease agreement followed an approval by the City Council that allowed the City to convert the land into an urban park.
Dorothea Dix hasn't been used as a mental hospital since August, but the new proposal would force the deal to be revamped. Senators said the city would have to pay "fair market value."
Under the terms of Perdue's agreement, Raleigh is set to pay $500,000 a year to lease the property, plus a 1.5 percent annual increase compounded over the length of the agreement, adding up to $68 million. City leaders would then have the option to renew the 75 year lease for another 24 years.
Before Republican Governor Pat McCrory took office, he had asked the Democratic-controlled Council of State to delay the decision until his administration takes power the following month, but Raleigh leaders said they were pleased with the deal offered by Perdue.
At the time, Senate leaders also voiced concerns about leasing to the city at a rate, they considered, below fair market value and that the agreement ignored a state law which required an analysis of needs before the transfer of the property could occur.
A facility in Butner, N.C. currently serves as the state's primary mental hospital. Butner is about 30 miles north of Raleigh.