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County poised to sell courthouse, McCoy building downtown
Having sold its Wapato jail this spring, Multnomah County is now entertaining offers for more of its aging flagship properties, including two in the heart of downtown.
The county's hired real estate firm, CBRE, is entertaining offers on the Central Courthouse, at 1021 S.W. Fourth Ave. and the Gladys McCoy building, at 426 S.W. Stark St., until next month.
The impending sales, along with another one underway of a probation office at 421 S.E. 10th Ave., are one reason why county officials are entering a bit of uncharted territory: having money to spend on the county's future construction needs and desires.
The potential expenditures considered for the future range from seismic upgrades at the Multnomah County Justice Center downtown, to replacing the county's antiquated animal shelter — and potentially even investing in a municipal high-speed internet system, officials say.
"We're at a place where we've got a couple of big things tackled. Now we can look to the future," said county Chief Financial Officer Mark Campbell.
But first, there's the task of selling the courthouse and the McCoy building. The county board is expected to hear about recommended offers from CBRE as early as next month.
Ideas include homeless, the arts
The comment period recently ended for what the public hopes the properties could be sold for. Ideas for how the properties could be reused included office space, a homeless shelter, affordable housing or a performance center, said county spokesman Mike Pullen.
Of course, the county won't have much say in how the property is eventually used, a lesson taught by the $5 million Wapato sale in April. Shortly after selling the never-used jail to developer Marty Kehoe for purported use as a medical supply distribution center — at about half its appraised value — the county learned that the property had already been resold by Kehoe and could be used for purposes the county board had earlier rejected — as a homeless shelter or even as a jail. No final decision has been made.
But for the county's downtown properties, the market likely will be the final decider, and the main options are condos, office space or a hotel, observers say.
The county and CBRE have been hosting tours by potential buyers, usually of both buildings together. At a time of low vacancy rates downtown, there's a lot of interest, especially in the courthouse building.
While the building is in need of substantial seismic upgrades, its desirable location and historic facade suggests it could easily fetch more than its assessed value of about $41 million, and immediately be turned into revenue-generating office space for the buyer.
"I think downtown Portland is very desirable property," Pullen said.
The McCoy building is considered less desirable, but is expected to draw offers of more than $5 million.
The county adopted a fairly conservative construction philosophy after the dot-com bubble burst more than a decade ago and put the county at risk of being downgraded by Moody's as a credit risk. The board approved a policy that no more than 5 percent of its general fund revenue could be used for debt service, or about $25 million.
The county is now spending about $21 million or $22 million a year on debt service, Campbell said. But a lot of that debt is going to be paid off soon, creating options for the county that are expected to go before the board later this summer.
The 5 percent policy has "kept us from getting too far out over our skis," Campbell said. "We've spent a lot of time over the last decade and a half building our reserves back up and getting to a place where we can meet ongoing obligations with ongoing revenues."
When the McCoy building is sold, proceeds will be used to help pay for its replacement building in Old Town/Chinatown. Construction of that facility began last year.
Proceeds from selling the courthouse have not been allocated, meaning it will be up to the board to decide how they will be spent. If asked, Campbell will recommend it be used to pay down debt, freeing up general fund dollars to be used in other ways.
"It's kind of like you got a bonus at the end of the year and you decide to pay down your mortgage," he said. "It's that simple."
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