By Jeff Manning and Anna Marum

Multnomah County on Tuesday signed a letter of intent to sell Wapato Jail to a developer for use as a distribution center.

Portland real estate developer Marty Kehoe said he plans to convert the 155,400-square-foot facility into a distribution and storage space for a medical equipment distribution company.

"With its position as close to I-5 and its zoning, it's a very good distribution location," he said. "That is what got me interested."

The letter is the first step toward the county recouping a fraction of the money it has sunk into the North Portland property over the last 20 years.

The county spent $58 million to construct the jail in 2004 and another $300,000 a year to maintain it. While film companies have rented it out for movie productions, the jail was never used as it was originally intended.

"Wapato has dogged every Board and cost every taxpayer since it was completed,'' said County Chair Deborah Kafoury in a statement. "It is past time to end this debacle and get this property back on the tax rolls."

The county last year studied the feasibility of converting the vacant jail into a temporary homeless facility. Commissioners Loretta Smith and Diane McKeel pressed the county to at least consider housing some of the estimated 2,000 people now living on the streets in Portland.

But a majority of county commissioners opposed the move citing the high up-front costs -- nearly $1 million -- of converting the facility.

According to the county, Kehoe's bid was one of six that came in after the county hired commercial real estate firm CBRE to market the property in late August. The county declined to confirm the purchase price.

Other prominent developers who threw their hats into the ring included Jordan Schnitzer and Barry Menashe. Menashe wanted to convert the jail to a supersized homeless center, said Tom Brenneke, another real estate developer who worked with Menashe.

Brenneke said the county blew a prime opportunity to do something significant about the homeless problem. The building is in pristine shape, it boasts an enormous commercial kitchen. "Take away the razor wire and it looks nothing like a jail," Brenneke said.

Schnitzer said he withdrew his bid after deciding he had other higher priorities.

Wapato Jail sits on 18.24 acres of industrial land in Portland's Rivergate Industrial Park. The building was appraised for industrial use for $8.5 million in 2014.

The county's decision comes after a previous unsolicited $10 million cash offer for the jail by Santa Monica-based Pacific Development Partners fell through on Oct. 10, when the company's rights expired.

-- Anna Marum

amarum@oregonian.com

503-294-5911

@annamarum