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NW Natural's headquarters at 220 NW 2nd Avenue in Portland

((Courtesy Menlo Equities) )

Northwest Natural Gas Co. is on the hunt for a new headquarters, prompting consternation and bewilderment from the landlord of its existing home in Portland's Old Town/Chinatown neighborhood.

Now that landlord, Palo Alto, California-based Menlo Equities, is taking a proactive and somewhat novel approach in the realm of tenant relations: trying to shame the utility company into staying put by appealing to its regulators, customers and shareholders.

They even hired a local lobbying firm, which launched a finger-wagging Facebook page and a website that is generating petition signatures for the Oregon Public Utility Commission.

Here's the pitch: "Instead of using our money wisely, NW Natural is planning to blow millions on a ritzy new office building in a 'better neighborhood.' And then stick ratepayers with the bill with a hefty rate hike. Shame on them."

The utility says that's nonsense, but wouldn't comment on the lease price it's negotiating. Melissa Moore, a spokeswoman for the utility, said a real estate committee has been evaluating the company's options for two years against a variety of criteria, including cost, seismic readiness and location. The existing building at 220 NW 2nd Avenue houses some 600 employees, and the lease expires at the end of 2020. Northwest Natural recently settled on two finalists, neither of which include its current location.

"We understand that Menlo is disappointed that they're not among the two finalists," Moore said, adding that there is still an option to renew at the current location if something goes wrong with the other two options. "We're being very diligent and deliberate. We wouldn't take something like this lightly."

But Richard Holstrom, vice chairman at Menlo Equities, says the company has bent over backward to accommodate Northwest Natural, offering to spruce up the lobby, give the company flexibility to expand or contract its space, and undertake a seismic retrofit that would leave the office building meeting the same "critical facilities" standard as a hospital.

The last upgrade is a make or break proposition, as Northwest Natural's existing headquarters - indeed the entire neighborhood - is in a zone with a high likelihood of soil liquefaction in a Cascadia subduction earthquake. Holstrom said Menlo hired the best engineers locally and worked with Northwest Natural's consultants to develop a retrofit proposal that would meet the company's needs.

Meanwhile, Menlo's market analyses and understanding of the buildings it believes NW Natural is considering indicates that the utility could save anywhere from $25 to $50 million over 15 years by staying put.

"It's a big number," Holstrom said. "We've made what we think is a very competitive proposal. We're disappointed in both the process and the decision they've come to. It's incumbent on us to point that out."

Northwest Natural's Moore says she has no idea how Menlo is coming up with those figures, as it isn't privy to its negotiations with the finalists.

"There's a lot of conjecture going on," she said. "They're being very speculative."

Eventually, the utility will have to demonstrate to regulators that its move is a prudent use of ratepayers' money in order to include the cost in natural gas rates. If it can't, it runs the risk of having those costs disallowed, which would force shareholders to absorb them.

"At some point we'll get involved, said Michael Dougherty, chief operating officer at the commission. "We don't micro-manage their business, but like with anything else, for anything to go into rates they'll have to demonstrate it's a good decision for customers."

- Ted Sickinger

tsickinger@oregonian.com

503-221-8505; @tedsickinger