GlobeSt.com UPDATE: Barry Menashe, PDC Agree on Price for HQ Hotel Parcel

PORTLAND, OR-It appears local investor Barry Menashe was right about the value of his property after all. The Portland Development Commission approved Wednesday a negotiated settlement with Menashe to acquire his 18,000-sf parcel across from the Oregon Convention Center for $4.25 million. The price is very close to what Menashe hoped to get for the property and about $2 million more than the city hoped to pay him. Along with an adjoining hotel property the city already owns, the parcel is the city’s preferred site for a convention headquarters hotel, the proposals for which are currently being evaluated by the PDC. Hoping to avoid formal condemnation proceedings, the PDC and Menashe began informal negotiations in the fall of 2003. In January 2004, as a precaution, the PDC authorized condemnation if necessary. At that time, 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. By October 2004, Menashe reportedly lowered his price to $4.7 million and the city reportedly raised its offer as well but the two could not get close enough, so the PDC filed its condemnation suit in Multnomah County Circuit Court. In January 2005, PDC official Michael McElwee told GlobeSt.com that the two sides still had not agreed on a purchase price but the city had obtained possession order from the court and would be taking control of it over the weekend under a stipulated agreement. The agreement required the city essentially to lease the building for nine months at a cost of $22,500 per month, which is approximately what Menashe had been generating in rental revenue from the single-story office building on the property since he acquired it in 1998 for $1.2 million.By finally negotiating an out-of-court settlement, both sides avoid significant attorney fees that would have come from a trial. Moreover, the city avoided the risk of having a jury decide on a price higher than the city had offered, thereby making it liable for Menashe’s attorney fees as well as its own. Funds for the acquisition will come from tax increment proceeds from the Oregon Convention Center Urban Renewal Area. When asked about the fact that the negotiated price appears to be much closer to what Menashe wanted than what the city wanted, city attorney Matt Baines tells GlobeSt.com that the city negotiated a settlement based on the appraisals from both sides and an analysis of the risk of going to trial. “We determined this was reasonable,” he says.Menashe was humble in his seeming victory. “I don’t think of it s a win or a loss,” he says. “The city needed the property and there was no reason to go to court.”This is not the first time a public entity has agreed to sell a property to avoid a condemnation trial. In mid 2002, shortly after Menashe picked up a 10.3-acre, 100,000-sf development at Southeast 82nd and Division for $4.4 million, Portland Community College came knocking, dangling its eminent domain power and visualizing a new campus on the site. Forced to deal or end up in court, Menashe says he sold it to PCC for $5.7 million “plus other consideration.”