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Multnomah County receives last-minute counter-offer from developer who had offered $10.8 million for the never-used facility in North Portland.

PORTLAND TRIBUNE: JONATHAN HOUSE - The never-opened Wapato Jail in North Portland.The controversial sale of Multnomah County's never-used Wapato Jail is up in the air again.

Mere hours before the March 26 deadline for Portland developer Marty Kehoe to confirm or walk away from his $10.8 million offer for the property in North Portland, the county issued a statement saying he had made a counter-offer that would be discussed by the Multnomah County Commissioner during an executive session on April 3.

"Should the Commissioners decide to consider the counter offer, they will do so at a regularly scheduled public Board meeting. Until the Board has a chance to deliberate at the executive session, the County will take no further action on Wapato, nor entertain any new offers," the statement said.

The statement said Kehoe's attorneys submitted the counter-offer on March 23. Contacted by the Portland Tribune as he was leaving for vacation on Monday, Kehoe denied rumors circulating within the development community that he had counter-offered $5 million for the jail and 18 acres that it sits on. But Kehoe declined to discuss the negotiations further, saying he had signed a non-disclosure agreement.

"I intend to buy it, but details still need to be worked out," Kehoe said.

Kehoe has said he hopes to use the jail for a medical equipment distribution facility. The deal had previously been scheduled to close on Feb. 7. But the county gave him a last-minute 45-day saying extension, saying the due diligence required for the complex property required extra time.

"We just need more time to work with our engineers and architects to figure out the economics of developing the porperty for our uses," Kehoe told the Portland Tribune then.

The commission authorized County Chair Deborah Kafoury to complete the transaction in last November if it is in "substantial compliance" with the sales agreement, which includes the $10.8 million sales price and a series of refundable and non-refundable payments Kehoe must make

The county says Kehoe has only made a refundable $200,000 deposit so far.

The commission approved the sale on a 4-to-1 vote with Commissioner Loretta Smith objecting. She has consistently called for the country to open Wapato as a homeless service center. Smith, who is running for the City Council, repeated her support for the idea during a Black Voices Candidates Forum on Saturday in Northeast Portland.

Smith called for the sale to be cancelled after the announcement on Monday, saying, "The Board has already given the Chair full authority to negotiate this sale and another Commission meeting is not required. It is nonsensical for the county to continue negotiations and effectively give away this critical asset. It is unconscionable that we would continue to waste time on this charade when so many of our vulnerable neighbors continue to die on our streets."

Wapato has been costly white elephant for the county for many years.

The 155,400-square-foot mothballed jail sits on 18.24 acres of industrial land in the Rivergate Industrial Park.

Voters approved a bond to fund the jail's construction in 1996. But county officials say that years later, the statewide passage of caps on property taxes meant that the county never had the funds to operate it.

Completed in 2004, it cost $58 million to build, and the county says it costs about $300,000 yearly to maintain.

An analysis by the Portland Tribune last year showed the total cost to date is more than $90 million, including interest and maintenance payments, and could exceed $105 million by the time all the bonds are finally paid off in 2030.

Kafoury has made selling the facility a priority, commissioning an appraisal that valued the site at $8.5 million.

But already two such efforts have imploded.

In 2016, Kafoury issued a $9 million letter of intent to sell the jail to Garison "Gary" Russo, a self-described developer who claimed he would use the site to grow organic foods and pioneer cutting-edge technology using funds from a "team" of major investors. However, a Portland Tribune investigation showed he was a former flower shop delivery driver who'd been accused of forgery and theft in the past along with failure to pay child support and taxes, with no public history of major deals. He pulled out of the Wapato deal in late October of that year.

In late 2017, another offer for $10 million from a California developer who'd hoped to turn the jail into a data center fell through.

After that, the commission approved the county's first-ever formal policy for selling surplus property and contracted with the private brokerage firm that submitted Kehoe's offer.

Kafoury has stayed the course while rejecting calls to use the property for the homeless. She says it is too far from existing services and faces numerous zoning challenges.

You can read a previous Portland Tribune story on the issue at portlandtribune.com/pt/9-news/385961-275179-deadline-looms-for-wapato-buyer-to-commit.

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