Mysterious buyer bids $9 million for Wapato

Portland has issued and renewed a number of conditional use permits for Wapato to operate as a corrections facility

A sign outside Wapato Jail seen on September 7, 2016. (KOIN)

PORTLAND, Ore. (PORTLAND TRIBUNE) — A self-described real estate developer and renewable energy company owner named Garison Russo has offered to buy the Wapato Jail for $9 million.

Russo is purporting to be backed by a group of unidentifed investors. The offer has been discussed by members of the Multnomah County Commission at two executive sessions, one as recently as Tuesday afternoon, according to two people familiar with the discussions. The purpose has not been publicly disclosed.

Russo tells the Portland Tribune he is not yet prepared to discuss his offer, saying, “It is not a done deal.”

Online information about Russo and his businesses is scarce. Previous news stories identify him as the founder of Humbolt Bay Energy, a renewable company registered in Nevada but operating out of Eureka, Calif. The company’s website provides no information about its structure, operations or projects. Nevada revoked its business license in 2013 for failing to provide a list of officers.

Russo has tried to become involved in two other government redevelopment plans in the region in the past without success.

In 2011, Russo bid to covert Centennial Mills in Portland into a showroom for his company. At the time, Russo said he was interested in moving the “global corporate headquarters” of his Eureka, Calif.-based company to Portland. He was not the successful bidder.

The next year, Russo said he wanted to redevelop the former Blue Heron paper mill in Oregon City for commercial and retail uses. Back then, Russo told the Clackamas Review that although the company was only a year old, he had extensive commercial real estate development experience. He was disqualified from bidding on the project because he did not post the required $200,000 deposit, the paper reported.

County Chair Deborah Kafoury has signed a non-binding letter of intent to purchase the process with Russo, which she describes as a first step in determining whether his offer is legitimate. A majority of the commission must approve the sale for it to go through.

Commissioner Loretta Smith is upset the proposal did not through a formal Request for Proposal process that publicly declared the property for sale and solicited bids and concepts. She argues that would have produced more interest and potentially higher bids. County officials say there are several ways to sell surplus properties, including accepting unsolicited bids.

The Multnomah County Wapato Facility is a 155,400 square foot medium security jail situated on 18.24 acres of industrial-zoned land in the Rivergate Industrial District. Built to house 525 inmates, it was completed in 2004 but never opened because of declining crime rates and a lack of operating funds. It is commonly called the Wapato Jail or just Wapato.

Using Wapato for anything but a jail is complicated by deed restrictions on the property. Multnomah County bought the property from the Port of Portland in 2001 for $4.645 million. The sale included a special warranty deed with covenant restrictions which say the property will be used “as a corrections facility for the incarceration of prisoners and treatment of persons within a secure, locked environment” that complies with the district’s industrial development standards.

Even if the restriction is lifted, uses for the property are limited by its Heavy Industrial zoning. Those permitted outright include vehicle repair, self-storage, manufacturing and production, warehouse and freight movement, wholesale sales, and industrial service. Uses that may be permitted upon approval of a Conditional Use Permit include household living, offices, retail sales and service and community service uses (which include mass shelters and short-term housing). The deed also says the county will not allow any residential or retail uses without the approval of the port.

Group living, which includes programs that provide care and training or treatment for psychiatric, alcohol or drug problems, is not allowed under the IH zone. However, the City Council has declared a housing state of emergency that allows it to lift zoning restrictions from homeless shelters and affordable housing projects, however. One example is another piece of industrial property, Terminal 1 in Northwest Portland, where the council has approved a temporary homeless shelter. The council recently extended the state of emergency until October 2017.

Wapato cost $58.4 million to building, including the cost of the land. Construction was financed by bonds issued by the county and the State of Oregon. The county has paid over $27 million in interest on the bonds so far, and is scheduled to pay approximately $9 million more by the time they mature in 15 years. Maintenance has averaged $400,000 a year for a total of $4.4 million.

The Portland Tribune is a KOIN 6 Media partner.

Since it was completed, Portland has issued and renewed a number of conditional use permits for Wapato to operate as a corrections facility. The most recent one was issued in 2014.

The county had Wapato appraised earlier this year by Joe Sledzieski, a commercial property appraiser. He produced an appraisal with a history of Wapato and alternatives uses dated June 29, 2016. It says the facility is worth approximately $20 million as a detention center and 8.5 million as an industrial building. The appraisal says demolishing Wapato would cost between $2 million and $2.8 million.

According to the appraisal, over the past eight years, Wapato has been rented 33 times for the filming of movies, commercials and TV shows. Interest in buying the property has come primarily from industrial manufacturers and, to a less extent, film and television producers. At least two large manufacturers have toured the facility.

Before he retired in August under a cloud of mismanagement allegations, former Multnomah County Sheriff Dan Staton had pursued opening Wapato as a regional pre-release center for inmates nearing the end of their sentences in county jails and being returned to their home counties after completing their sentences in state prisons. Staton had appointed a work group including health care professionals, members of his office, and a fiscal analyst to help determine the feasibility and cost of such a facility. The idea apparently evaporated when he retired, however.