This guy is average at best (his career averages, 4.52 ERA 1.46 WHIP are pretty much middle of the road benchmarks). I'd be surprised if you couldn't come up with something better.
A lot of times you can score really solid veteran (ie: old) pitchers for much less than that on one year deals late in free agency. I'd go that route before tying up dollars on a multi-year deal with a mediocre pitcher like that.
Alternately, if you really need him in that slot and don't see viable options right now, sign him for the one year arb deal and see if his performance holds up.