County board approves $28 million sale of Central Courthouse to NBP Capital

September 20, 2018

Multnomah County's Central Courthouse in downtown Portland
Multnomah County’s Board of Commissioners approved the $28 million sale and leaseback of the Central Courthouse to Portland-based NBP Capital in a 5-0 vote today. The lease allows the County to continue to operate the Courthouse for 24 months after the deal closes for zero rent. The agreement allows courthouse operations to continue in the century-old building until the new Central Courthouse opens in 2020.

“There’s a little sadness in my heart today,” said County Chair Deborah Kafoury. She noted that her late mother served as a County Commissioner in the old courthouse. “We did look at re-using the building, but decided in the end that it was in the public’s interest to sell it.”

Bob Leek, interim director of the Department of County Assets, said that the building’s per square foot sale price was strong for a historic building in Portland, reflecting the healthy local real estate market.

The county is constructing a new Central Courthouse at SW 1st Avenue and SW Madison Street. In April 2018 the County Board declared the old Courthouse to be surplus property and directed county staff to market the property for disposition and hold a 60-day public comment period.

Real estate firm CBRE, Inc. marketed the property over two months to more than 6,000 prospects. 177 parties signed agreements of interest. Nine offers were received. NBP Capital’s offer had the highest net proceeds for the county.

Portland-based NBP Capital, LLC is a privately-held commercial real estate fund that has renovated other historic buildings in downtown Portland. The company plans to preserve and renovate the historic courthouse for commercial use.

The purchase and sale agreement includes:

  • A 30-day due diligence period for the buyer to investigate the property.
  • An initial earnest money down payment of $1 million cash; of which $100,000 has already become non-refundable; the remainder becomes non-refundable upon buyer’s satisfaction with the results of due diligence
  • An additional $1 million in earnest money upon buyer’s satisfaction with the results of due diligence
  • Closing within 30 days after notice of buyer’s satisfaction with due diligence

Key terms of the lease include:

  • Zero base rent for 24 months from closing date: two 2-month extension options, $50,000 and $100,000 base rent per month, respectively.
  • County to pay all insurance, taxes, maintenance and operations expenses during lease.

The Central Courthouse was built between 1909 - 1914. The neo-classical structure has 39 courtrooms on eight floors. The building has a gross building area of 292,717 square feet and is on the National Register of Historic Places.

“This is a good deal,” said Commissioner Jessica Vega Pederson before the board voted. “I’m glad we have two years free rent before we move into our new courthouse.”

Commissioner Lori Stegmann asked what impact the building’s historic status will have on its reuse. Bob Leek said the City of Portland will review any proposed changes that impact the building’s historic features.

Twenty-one public comments were received during the 60-day comment period, ranging from requests to preserve the structure to taking it down, and using the site for affordable housing, commercial/office and other uses. Three people commented before the board vote: two applauded the high sale price and one said a longer marketing period might have resulted in a higher price.

Director of County Assets Bob Leek and attorney Jed Tomkins present courthouse sale to board.