Fourteen years ago, Multnomah County and Oregon taxpayers paid $58 million to build a jail the county didn’t need and lacked the tax revenue to operate.
On Thursday, after years of failed efforts to repurpose it, the county pushed forward with a plan to sell Wapato Jail and the 18 acres of industrial land it sits on.
The sale price: $5 million.
After a contentious debate, the board of commissioners voted 4-1 to continue to pursue a sale to Portland real estate developer Marty Kehoe.
Commissioner Loretta Smith cast the sole vote against moving forward with the deal. Smith, who is running for a seat on Portland City Council, has long called for the jail to be used as a homeless shelter.
“This residential facility would allow us to get some of our most vulnerable under a roof with a warm, dry bed,” Smith said.
Kehoe initially offered the county $10.8 million. After conducting due diligence and repeatedly asking the county for more time, he cut his offer in half last month.
That price is less than the appraised value of the building, $8.5 million, and roughly the same value as the industrial land it sits on.
The deal is set to close April 20.
Smith questioned whether Kehoe will close the deal as promised, and also predicted that if he does close the deal, he’ll quickly move to unload the property.
“He’s going to flip it, and we’re going to look stupid,” she said.
Casting their votes, the other four commissioners said that Kehoe’s offer represented the county’s best shot at recovering some value from the property.
They noted that the money the county receives from the sale will be dedicated to affordable housing.
“Trying to change what was built as a jail was cost prohibitive,” said Commissioner Jessica Vega Pederson. “It’s plain and simple. The building was a jail. There’s not that much we can do to change that.”
Over the past decade, Wapato has cost the county millions to maintain. It has been rented out 33 times as a backdrop for films and TV shows, but has been otherwise empty.
After Kehoe reduced his offer, a nonprofit led by Pearl District Developer Homer Williams, Harbor of Hope, sent the county a letter stating it was interested in buying the property for $7 million and opening a “restoration center” with a shelter and transitional housing.
In testimony during the hearing, Williams said he hoped to raise funds from business leaders and foundations, and not the county, to operate a shelter at the site.
The commissioners who supported the deal with Kehoe noted that they do not believe it is feasible to repurpose the jail as a homeless shelter, or that to do so would be in the best interest of poor and disadvantaged people.
“The solution is not to move people further away from services and community because a jail exists,” said Commissioner Lori Stegmann.
Commissioner Sharon Meieran warned that trying to open Wapato as a shelter would run the county into the same problem that kept it from ever functioning as a jail: a lack of tax dollars available to pay for the annual operation costs.
“If we did that within our current system, we would have to close most of our shelters we have in existence to consolidate them into Wapato,” she said.
Multnomah County Chair Deborah Kafoury has been trying to sell the property since 2015.
In 2016, appraisers hired by the county concluded the property was worth about $20 million if it could be used as a jail, and about $8.5 million as a warehouse or industrial building.
The county said the Oregon Department of Corrections and other counties weren’t interested in buying or renting Wapato for jail use. State laws prohibit the operation of a private prison.
The appraisers' valuation of the property at $8.5 million for warehouse use may have been overly optimistic. At the time, the appraisers assumed it would be possible to alter the building for use as a warehouse, but they did not evaluate whether that was feasible from an engineering standpoint.
Kehoe attended the board of commissioners meeting, but didn’t speak. In a brief call after the meeting, he said he isn’t planning to demolish Wapato or resell the property, at least in the short term.
“We will probably lease the property out for the foreseeable future. And then consider the warehouse potential,” he said.
Kehoe noted that he is putting up $200,000 in non-refundable earnest money to move forward with the sale and said he fully intends to close the deal April 20.
“I think that the county commission, led by Chair Kafoury, has taken a big step in cleaning up the mess left to them by their predecessors,” he said. “I applaud their courage.”