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Developer will assume much of the risk associated with building new courthouse at Red Soils campus.

Clackamas County commissioners have approved moving forward with a courthouse project that uses a public-private partnership model.

The board voted 4-1 on Tuesday, May 5 — with Commissioner Paul Savas dissenting — to pursue a development process that will see developers and their team of contractors bidding to partner with the county in building a new courthouse at its Red Soils campus in Oregon City. In this model, the developer would assume much of the risk associated with the project and would also be responsible for the operation and maintenance of the building through the 30-year life of the contract.

The board has discussed whether to pursue this option over the traditional public bidding process for more than a year. The current courthouse in downtown Oregon City was built in 1936 and is, by all accounts, deficient for the county's needs moving forward.

According to Gary Barth, the county's project manager, the new courthouse will be approximately two-and-a-half times as large as the current building at 215,000 square feet including 16 courtrooms, 20 judicial chambers and space for the district attorney's office.

The development of a new courthouse is a topic the county has vetted since it completed the master plan for its Red Soils campus up the hill from downtown Oregon City in 1998. Clackamas County will look to capitalize on approximately $94.5 million in matching funds set aside by the Oregon Legislature for the project, of which $31.5 million is earmarked for design and engineering efforts that were delayed due to both COVID-19 and the 2020 wildfires.FILE PHOTO - The Clackamas County Courthouse in Oregon City has become increasingly deficient in terms of capacity and safety, prompting commissioners to approve a plan for its replacement. The county initially expected the total cost of the project to come in around $189 million, but new funding models show it could end up between $200-300 million.

A public-private partnership approach would see private developers competing by assembling teams to bid on the design, financing, operation and maintenance of the new courthouse over the life of a 30-year contract with the county. The county wouldn't begin making payments on the new building until it's completed in 2025, giving itself time to lay the foundation for how it will finance those payments moving forward. It could also absolve the county of much of the financial risk associated with the development, but the total cost of the project could potentially be higher — a sticking point for Savas whose math alleges that the county could be liable for an extra $101.4 million under this model.

According to Barth, that $101.4 million is the premium assigned to the developer for retaining the financial risk associated with the project. Barth said this figure is assessed so that the county can do an "apples to apples" comparison in its financial projections.

"If you compared just the municipal rate to a weighted average private-sector rate, you would never do a public-private partnership," Barth said.

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