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GlobeSt.com UPDATE: City Takes Possession of Menashe Property

PORTLAND-A mutually acceptable price for the would-be convention center hotel site still has not been negotiated and a court date is tentatively scheduled for June, but under a stipulated agreement the city took possession over the weekend, a city official tells GlobeSt.com.

By Brian K. Miller | Updated on January 17, 2005

PORTLAND-Using its right of eminent domain, the city took possession of local investor Barry Menashe’s property across from the Oregon Convention Center over the weekend. Along with adjoining property the city already owns, the half-block parcel is part of the city’s preferred site for an 800-room convention headquarters hotel for which it is currently evaluating proposals from four development teams (To read about the hotel proposals, click here ).Hoping to avoid formal condemnation proceedings, the city and Menashe began informal negotiations in the fall of 2003. One year later, with no agreement on the value of the property, the city’s urban renewal agency the Portland Development Commission filed suit in Multnomah County Circuit Court.Last Thursday, PDC official Michael McElwee told GlobeSt.com that the two sides still have not agreed on a purchase price but the city would be taking control of it over the weekend under a stipulated agreement. “We have a possession order,” said McElwee. “The value of the property is still to be determined; we’re still negotiating, but there is a tentative court date in early June.”Menashe paid $1.2 million for his property in 1988 and until earlier this year has kept it leased up, generating about $250,000 per year in revenue, he says. When informal negotiations began, the city was offering nearly $2.5 million for the property–slightly more than its appraised value–and Menashe was holding out for an amount much closer to the $5.2 million the PDC paid in 2002 for the neighboring property, a run-down former Best Western hotel that is being operated at a loss and would be demolished to make way for the convention headquarters hotel development. In 2004, Menashe reportedly lowered his price and the city reportedly raised its offer as well but the two couldn’t get close enough, prompting the lawsuit (To read the previous condemnation article, click here</a). Because of the suit, Menashe has been precluded from re-leasing or selling the asset to a third party. If the two sides cannot come to agreement and the suit makes it to trial, the value will be determined by the court. If the value determined therein is greater than the amount already offered by the city, the city will be held liable for the Menashe's attorneys' fees on top of the court-approved price.

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