New $10 million offer for Wapato could signal a data center
A California development company has offered Multnomah County $10 million for the vacant, unused Wapato jail, potentially for reuse as a data center.
But county officials have asked for more information.
The broker for the firm, Philip Zimmermann, said he is puzzled by the county's response. "What we're trying to do is work through the deal quickly," he told the Portland Tribune.
The 525-bed facility was built in 2003 for $58 million. The County pays $300,000 or more each year to maintain the jail. It was never opened because the jail population began declining after its construction, and the county did not have readily available operating funds for it.
The offer, from Pacific Development Partners LLC of Santa Monica, was first reported by the Portland Business Journal. The real estate company's website says that since its founding in 1985 it has developed, redeveloped or owned more than $1 billion in retail, office and industrial projects, such as a regional office for 24 Hour Fitness in Carlsbad, California.
While county officials have long sought to find a taker for the costly building, they are being cautious. They have responded to the developer seeking more information about how it would be developed. "There's simply not enough detail if you can not say what the use is going to be," said county spokeswoman Julie Sullivan.
Zimmermann admitted that a data center is one possibility the firm is considering. He said the company specializes in buying properties, then leasing them. He said the firm is prepared to agree as part of the deal that the property will not be used as a private prison or a marijuana-growing facility.
"We're not going to be doing any low-level atomic testing, either," said Zimmermann, who said he previously worked as a detective for the New York Police Department. "We're serious developers."
As for other possibilities, he said the property could be used for light industrial or research and development. He also noted that the kitchen can feed hundreds.
"It's real time capsule," Zimmermann said. "It's a very interesting property."
He questioned the county's response, which he characterized as a request for the developer to provide more information and submit another offer. He said the normal process would be for the county to submit a counter-offer.
A recent appraisal said Wapato's value as an industrial building is $8.5 million.
The bonds used to build it will be paid off in 2030. At that point, with interest, the total costs of the facility could exceed $105 million, including interest and maintenance, according to a Portland Tribune analysis.
Current county officials, who inherited the never-used jail property from past county officials, have been eager to sell it. But they have resisted the idea that it be turned into a homeless shelter, noting that it has poor access and is far from needed social services.
The new bidder may have a hard time being more colorful than the last, which may be a factor in the county's caution.
Last September, county Chair Deborah Kafoury signed a letter of intent to sell the jail for $9 million to self-described developer Garison "Gary" Russo, who unveiled plans to build an organic food production facility that would employ advanced technology. After he provided an inaccurate birthdate to the Portland Tribune, the paper researched his past and found he was a former flower shop delivery driver with no evidence of ever successfully pulling off a major real estate development deal. Documents obtained by the Tribune showed he was accused of theft and forgery in 2011, though charges were not filed. Russo declined to discuss the police report and said his past record was inconsequential.
"How many times did it take Thomas Edison to 'get it right' when he was trying to create the light bulb?" he wrote in an email. "How many times did it take Bill Gates to get Microsoft up and running? Or Google? Or Apple?"
In October, blaming media scrutiny, Russo withdrew his offer on the day he was required to provide proof of funds. Former colleagues said they doubted his credibility and acquaintances and former associates questioned his claims about investors, as well as his plans. "He said the Pope and Oprah Winfrey and NASA were going to endorse his products, and Brad Pitt had agreed to allow his image to be put on the packaging," said Mike Hashem, owner of Bella Organic Farm on Sauvie Island, in October.
Multnomah County officials recently put out to bid a contract for outside real estate expertise to assist in selling unused or surplus properties, including Wapato.
According to a recent study reported by The Oregonian, Oregon is among the most generous suppliers of tax breaks to data centers in the country. The tax breaks have been criticized because even large data centers create few jobs.
While the county has paid to maintain the unused property, Zimmermann said there's another aspect to the county's inability to sell the property so far.
"That thing has not paid a penny in property taxes in 14 years," he said.