The Wapato Jail has officially become the property of Portland developer Marty Kehoe.

Kehoe Northwest Properties has closed on the $5 million sale, with the transaction recorded and money transferred, Multnomah County officials said Thursday.

For now, the site will be leased as a warehouse, Kehoe said. However, he plans to eventually demolish the jail. The property encompasses 18.24 acres of land zoned for industrial use.

“The location was really good for a warehouse development, and getting 18 acres together at one time was a real opportunity,” he said.

The sale ends an embarrassing and wasteful chapter for the county, which built the jail. It was completed in 2004, with proceeds from a voter-approved bond backed by the sheriff at the time, Dan Noelle. The jail never opened as the county fell short of operating dollars and crime declined.

“The long saga of Wapato is over,” Deborah Kafoury, chairwoman of the county’s board of commissioners, stated in a news release. “We didn’t need it as a jail. We couldn’t afford to convert it. We couldn’t reach back into the past and recapture the money spent. But we could work with professional real estate managers to sell Wapato and get that property back on the tax rolls to bring vital revenue to serve those in our community who need us most.”

The proceeds from the sale will go toward permanent housing, county officials said.

Kehoe’s purchase proceeded even though some people advocated using the site as a homeless shelter. Developer Homer Williams’ Oregon Harbor of Hope nonprofit submitted a $7 million offer with several contingencies.

But county officials said they had studied using the jail as a homeless shelter, and it simply wouldn’t work. The site was too expensive and too far from social services and transit. Furthermore, Oregon’s land-use board denied a previous attempt to operate a mass shelter in an industrial zone.

The county’s board of commissioners on April 12 voted 4-1 to approve the sale, with Commissioner Loretta Smith dissenting. Taxpayers were getting poor value for the property, she said.

Kehoe used a limited liability company, N. Bybee Lake Court, to complete the transaction.

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Wapato Jail soon will no longer be Multnomah County‘s problem.

On Thursday, county commissioners voted to sell the 18.24-acre property to Kehoe Northwest Properties for $5 million.

The jail, completed in 2004, was never used after voters passed tax restrictions and the county fell short of money to operate it. Crime declined, and the closest the jail came to use as intended was as a set for several film and TV productions.

Developer Marty Kehoe indicated he would at first seek tenants to occupy existing space.

“We are going to lease the property out for the foreseeable future and then make long-term plans for a distribution warehouse facility,” he said. “We don’t have any tenants yet. We will use some of the warehouse for our own business purposes.”

Kehoe said he saw the transaction as a land deal, and looked to comparable land sales to arrive at his final $5 million offer.

“I told (the county) I couldn’t buy it at $10.8 million because we couldn’t repurpose the building,” he said. “Comparable land sales dictated the property was worth about $5 million.”

The jail, a 155,400-square-foot building, will eventually be demolished, Kehoe said.

“It might be three, four, five years out,” he said. “At some point to maximize the property to its full potential, the jail will have to come down.”

Kehoe has until 5 p.m. on April 20 to close the deal. He said Thursday he would “definitely close” on or before the final day.

If completed, the sale will remove an albatross from Multnomah County’s books. For years, the county has struggled to find a use for the facility. Some advocates have pushed for the jail to be used as a homeless shelter with associated services.

But some county officials, and even some advocates for the homeless, said the jail is a poor fit for a shelter. Not only would the jail be difficult to repurpose, but its location is far from social services and offers limited transportation access.

Last week, Portland developer Homer Williams and his nonprofit group, Oregon Harbor of Hope, submitted a late offer on the property for $7 million, contingent on a feasibility study. County officials gave little indication they seriously entertained Williams’ offer.

Commissioner Jessica Vega Pederson said it was time to turn the page on the jail rather than continue to entertain other offers and proposals.

“Building Wapato was a mistake,” she said. “But holding onto it any longer would also be a mistake, and that’s why I’m voting yes today.”

The county marketed the property last year via CBRE after paying off more than $100 million in local bonds. The paltry offers illustrated the property’s limited value, Pederson said.

“It’s plain and simple – this building is a jail,” she said. “There’s not much you can do to change that. The value of the property is in the land; it’s not in the jail. It’s actually worth more without the jail on it.”

Commissioner Loretta Smith strenuously objected to the sale, which she described as a “short sale,” and cast the sole vote against it.

“It is such a horrible return on investment,” she said. “The taxpayers deserve a better return.”

Smith said obstacles to use of the jail as a homeless shelter could be overcome, and she urged fellow commissioners to take another look at Williams’ offer. They were not persuaded.

“Wapato was built at a time when our community was scared and angry and thought the solution to the drug problem was a massive jail that is closer to Vancouver than it is to Portland,” Chairwoman Deborah Kafoury said.

The money from the sale, Kafoury said, will be used to support affordable housing and measures to fight homelessness.

“We didn’t have the money to run Wapato then,” she said. “We don’t have it now. And we know other approaches work better.”

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Wapato Jail, a lingering embarrassment for Multnomah County, could finally come off the books if the Board of Commissioners agrees to sell the property to a developer.

Commissioners are set to vote on a revised deal with developer Marty Kehoe during a meeting that will begin at 9:30 a.m. Thursday.

The county and Kehoe Northwest Properties in October entered into a letter of intent to sell the property to the company for $10.8 million. After a due-diligence period, the two sides are working on a revised deal at $5 million. If the county opts not to sell for that price, Kehoe is releasing the property back to the county, according to a letter from his attorneys to the county.

Kehoe has said he wants to turn the never-used jail into a distribution facility for medical devices. It’s not clear if that’s still the plan.

“Our representatives are still talking with the county and we’re trying to find a way to make this transaction work for all parties,” Kehoe said.

Adding intrigue is an 11^th-hour offer from Oregon Harbor of Hope, a nonprofit organization founded by developer Homer Williams. Harbor of Hope has offered $7 million to turn the property into a homeless shelter.

Williams’ offer is not up for official consideration on Thursday.

Don Mazziotti, who is working with Williams and Harbor of Hope, declined to comment on the offer. “I’m not going to go into any details of the offer,” he said. “I don’t want to prejudice the decision in the press – it’s too important.”

County Chair Deborah Kafoury has expressed skepticism that the property could be used as a homeless shelter or a hub for social services. The property is zoned for heavy industrial use, and Oregon courts have rejected shelters in industrial zones.

Wapato Jail is also far from social services used by the homeless and is difficult to get to. The nearest bus stop is more than a mile away.

The Street Roots newspaper published an editorial against using the facility as a shelter, saying “rather than segregate our homeless neighbors to a jail on the edge of town, we should continue efforts with shelters that allow people to remain in their community.”

The county has struggled to find a use for the empty jail. It was built after voters approved a $46 million bond measure in 1996. The facility was dedicated in 2004, but never opened as the county found itself short of operating funds. At the same time, crime declined.

The county had to wait until Oct. 1, 2016, when the bonds were paid off, to sell the property. CBRE marketed the listing.

Multnomah County has been eager to get rid of the property. It costs $300,000 a year to maintain the facility, according to the county.

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A local developer has sold a Northwest Portland apartment complex to a San Diego investment firm for $25.5 million.

The 123-unit Tess O’Brien Apartments at 1953 N.W. Overton St. were sold to SENTRE by Kehoe Northwest Properties.

The purchase is SENTRE’s first in Portland, said CBRE broker Graham Taylor, who represented the seller.

The sale equates to $631 per square foot. Effective rents at the property exceeded $3.50 per square foot, according to CBRE. The all-studio development brought a price of $207,000 per unit.

Developer Marty Kehoe, who named the project after his youngest daughter, completed the six-story pair of buildings in December 2016. The buyer plans to improve unit interiors and common-area spaces, according to CBRE.

In November, Kehoe agreed to purchase the Wapato jail facility from Multnomah County. Kehoe said at the time a client was interested in using the property for distribution of medical devices.

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Multnomah County has agreed to sell the Wapato Jail to Portland developer Marty Kehoe.

Terms of the transaction, which has not been finalized, weren’t disclosed. County Chairwoman Deborah Kafoury signed a letter of intent to sell the 18.24-acre property to Kehoe.

A medical-device distributor is interested in taking most of the 155,400-square-foot building, Kehoe said.

“My company has an interest in a medical device company, so we are considering using the majority of the warehouse for that business,” said Kehoe, founder of multifamily and commercial development firm Kehoe Northwest Properties.

The property has distinct advantages, Kehoe said.

“It’s a good location, being so close to Interstate 5,” he said. “It’s a very sizable building that has many uses allowed under the current zoning.”

The jail, at 14355 N. Bybee Lake Court in Rivergate Industrial Park, was built as a minimum-security detention center in 2004. The 525-bed jail was never used, aside from as a set for film and television productions. The money to build the jail came from a $46 million bond voters approved in 1996.

“Wapato has dogged every board and cost every taxpayer since it was completed,” Kafoury stated in a news release. “It is past time to end this debacle and get this property back on the tax rolls.”

The county received six bids for the property after it was marketed by CBRE. The purchase now enters a due-diligence period.

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