Deadline looms for Wapato buyer to commit

Local developer Marty Kehoe still doing the math as county hopes to finally unload jail

Multnomah County's tentative $10.8 million deal to sell the never-opened Wapato jail is scheduled to hit a key deadline this week.

But while the prospective buyer was supposed to complete his review of the building, developer Marty Kehoe says he hasn't determined for sure whether his plans for a medical supply warehouse and distribution center pencil out. That's important because he must immediately commit $500,000 to the county if he plans to proceed, and it's not refundable.

Meanwhile, developers and others continue to wait in the wings, still holding out hope that Kehoe's plans flounder, and the facility could yet be converted to transitional housing and services to address Portland's homeless crisis.

The ongoing question mark over Wapato's future comes as county officials hope they can finally unload the political albatross that cost the taxpayers nearly $60 million to build more than a decade ago. Two earlier efforts to sell the facility in recent years fizzled.

Kehoe, who was awarded a purchase agreement by the county board on Nov. 8, on Sunday told the Portland Tribune that he is still pursuing his original focus of turning the facility into distribution center.

However, he says it's taken longer than expected to resolve the "real puzzle" of whether the costs of repurposing the facility would pencil out. He is waiting on a new set of construction and engineering estimates to help resolve the question.

"That building is a behemoth," he said. "It is a really big building, and it's got a lot of idiosyncrasies."

Kehoe likened it to the 3-D game of the '80s that requires repeated realignment of pieces to win, saying "It's a Rubik's cube, because every time we think we can do something one way we find that we can't do it that way. ... It's not an easy one."

He rejected the idea that he'd use the obstacles to haggle for a better price, saying if it can't be done he will walk away.

Some hope he'll do exactly that, such as developer Homer Williams, who says Wapato could help the region in tackling a homeless crisis.

"I hope he makes the right decision because I think it would be a lost opportunity in helping to manage the crisis we have," Williams said of Kehoe's deal for Wapato. He added that he expects the crisis to soon get significantly worse in Portland and across the nation as baby boomers retire, adding "it's like a frog in a pot of water. He doesn't know he's in trouble."

Costly history

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

In 1996, voters approved a bond to fund the jail's construction. 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.

Multnomah Chair Deborah 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.

County not banking on Kehoe

Kafoury has stayed the course while rejecting calls to use the property for the homeless.

She says it is unsuitable for a homeless shelter, noting its distance from services and Portland's downtown core. Not only that, but its zoning would have to be changed.

After the November board vote approving the sale to Kehoe, the board approved a plan to use the proceeds to help the homeless.

At the time, Kafoury acknowledged that the deal could still fall through, but said that one way or another, Wapato would be sold to end the financial drain that has "plagued" the county since the jail was approved.