Main Street Courthouse RFEI - Combined.pdf

RFEI – Clackamas County Main Street Courthouse Disposition Page | 1

Clackamas County Main Street Courthouse

Property Disposition

REQUEST FOR EXPRESSIONS OF INTEREST

for

Real Estate Acquisition for Development Concepts

January 22, 2025

Responses received prior to January 22, 2025 will be included for initial consideration

RFEI – Clackamas County Main Street Courthouse Disposition Page | 2

Table of Contents

1. Introduction & Overview 3

2. Offering Overview 7

3. Selection Criteria & Process 9

4. Submission Format & Content 10

5. General Conditions 11

6. Exhibits: Background Documents 13

County Contact

For all questions related to this Request for Expressions of Interest (RFEI), please email: amayernik@clackamas.us with subject: Main Street Courthouse RFEI. No other forms of communication will be accepted.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 3

1. Introduction & Overview

Introduction

Clackamas County is constructing a courthouse on the Red Soils Campus in Oregon City, which will be completed in May 2025, to replace the 87-year-old courthouse in downtown Oregon City. The County expects that the current courthouse, hereafter referred to as the Main Street Courthouse, will be vacated by August 2025. The County is issuing this request for Expressions of Interest (RFEI) to seek development concepts for the Main Street Courthouse from creative, experienced development teams.

Clackamas County & Oregon City Overview

Clackamas County is both a rural and urban county located on the southeastern edge of the Portland, Oregon Metropolitan Area. Its boundaries extend from the City of Portland to the Mt. Hood National Forest. It is bounded by Multnomah County to the north, Wasco County and Hood River counties to the east, Marion County, home of the State Capitol, to the south, and Yamhill and Washington counties to the west. Clackamas County is Oregon's third-most populous county with a population of approximately 425,000 people. The County spans nearly 1,900 square miles and is roughly equivalent to the size of the state of Delaware.

The eastern half of the County is primarily rural with its main industries in the forest products, agricultural, and tourism sectors.

The western side of the County is within the regional urban growth boundary (UGB) and is largely urban, with industrial and commercial commerce corridors.

Oregon City, the County seat, established by the Hudson’s Bay Company in 1829, was incorporated in 1844 as the first city in the United States west of the Rocky Mountains. Oregon City serves as a regional center in the Portland Metro area, with the City’s core having a vibrant mix of small-scale shops, restaurants, and culture amenities. As of the 2020 census, Oregon City has a population of 37,572.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 4

Main Street Courthouse Overview

The Main Street Courthouse, located at 807 Main Street, comprises a 0.94-acre parcel (Site) zoned Mixed-Use Downtown (MUD). The Site encompasses over 2/3 of a city block and is a high-profile location in the core of downtown Oregon City. The current building was constructed in 1935-1937 to replace an 1884 courthouse that was razed after being deemed unsafe.

Designed by F. Marion Stokes, the building was constructed as part of the Works Progress Administration program under contractor Glen Hord.

Three stories tall with a full basement that serves as a ground floor, the building is situated at the corner of 8th Street and Main Street in Oregon City, with McLoughlin Boulevard on the northwestern side. An ADA-accessible entrance serves the southeastern side of the building, with additional entrances on 8th Street and from the parking lot off 9th Street.

The Main Street Courthouse is an Art Deco style building with Egyptian Revival overtones, constructed of reinforced concrete with a masonry façade, decorative elements, and double-hung windows covering all four major faces of the structure, and is considered historically significant by the State Historic Preservation Office (SHPO). In addition to interior renovations as occupancy of the building has changed, an addition constructed in 2012 maintains architectural consistency with the original building, allowing for differences due to the current use of the addition as a receiving and secure custody area for inmates awaiting trial and additional trial court space on the third floor. Submittals should contemplate the requirement under Oregon law to preserve the historical significance of the Main Street Courthouse building in consultation with SHPO.

A portion of the Site, known as Liberty Plaza, was consolidated into the current parcel in 2012 after the demolition of the Liberty Theater and construction of the plaza in 2004. Submittals should contemplate preserving the existing open space on the Site known as Liberty Plaza, either as part of the final project, or through a lot line adjustment to separate the two portions, but the County will consider alternative proposals. Final disposition of the Liberty Plaza space is expected to be a discussion item in any negotiations. Lot line adjustments would be subject to the final approval of the City of Oregon City. Additionally, there is a reciprocal access easement on a portion of the property in the northeastern corner that serves as ingress and egress for an adjoining tax lot on the same block.

Adjoining and other Relevant Properties

Clackamas County owns the Ralph M. Holman Law Center, or the Holman Building, on the eastern corner of the block, at 821 Main Street, which currently hosts the county’s Law Library, jury lounge, and other County services. The Law Library and jury lounge will be relocated when the Red Soils Courthouse opens in May 2025, and it is expected that other County functions will move into this building. A privately-owned commercial building, currently operating as a McMenamins restaurant with indoor and outdoor seating, occupies the northern corner of the block at 102 9th Street. An existing reciprocal access easement serves this commercial building, the Main Street Courthouse, and the Holman Building.

McLoughlin Boulevard, also known as Oregon Highway 99E, serves as the northern boundary of the block. The Willamette River sits immediately north of McLoughlin Boulevard and no significant property interests exist at this point in the river. On the 5 adjoining city blocks there are a number of privately-owned commercial spaces offering a wide variety of services, including a behavioral health center, commercial office spaces, retail storefronts, and a mix of dining establishments.

Solicitation Overview

The County envisions private or public sector redevelopment to accomplish the goal of disposing of the Main Street Courthouse to a proposer that would contribute to the economic vitality of the downtown Oregon City area. This RFEI is intended to be flexible and invites concept renderings and sufficient detail to demonstrate a compelling vision for the Site from parties that demonstrate the capacity and experience to deliver that vision. It is not expected that submitters will provide final engineering drawings or designs.

The County is open to a broad range of proposals, and notes that the MUD zoning provides a wide range of possible uses, including mixed-use development, multi-family housing, retail and commercial spaces, temporary lodgings such as a hotel, or an event center. Submittals may contemplate reuse of the existing building, renovation of the existing building, demolition and construction of a new building, or any combination thereof.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 5

The County will consider submittals that contemplate a standard purchase and sale to a public or private entity, including conditions of sale to be negotiated, as well as other alternative disposition proposals. Any disposal of County real property will be in compliance with applicable law including, but not limited to, ORS Chapter 271. In addition, the property will be conveyed as-is, with no representations or warranties, express or implied, made by County regarding the condition of the property or its fitness for any particular use, and will be conveyed via a quit claim deed. Proposers will be solely responsible for performing any and all due diligence and inspections associated with the property including, but not limited to, tests, borings, surveys, studies, inspections, investigations, tests for soils, geologic hazards, utility lines and systems and environmental hazards.

Depending on the selected proposal the County may require additional restrictions on use of the property including, but not limited to, deed restrictions or restrictive covenants to ensure eligible use following disposition.

Without offering an assurance of direct investment, the County is prepared to assist the selected development team with securing funding to implement their proposal, which may include assistance with pre-development work. Additionally, the County is prepared to contemplate assistance with community engagement and necessary land use processes to implement the proposal.

Ultimately, the County seeks a qualified, professional development team demonstrating capacity in staffing, knowledge, and experience to deliver a project best fulfilling the County’s goals as expressed in the selection criteria below. This RFEI sets forth the County’s intentions for this project, including the selection criteria, selection process, and other information and requirements. Once it has selected a preferred team, the County intends to enter into exclusive negotiations with that team with the intent to initiate Site development as early as Summer 2025.

Creative & Innovative Concepts Encouraged

The County has proposed a structure for the acquisition of the property identified in this solicitation but is open to alternatively structured acquisitions insofar as the structure aligns with the County’s goals. Respondents can propose alternative structures and are encouraged to pursue creative and innovative concepts that incorporate other sources of funding. Should the proposer suggest alternative acquisition programs or structures, a preference will be placed on the ability to secure such financing quickly. The ability to close the transaction in a timely fashion is a critical component of the selection.

In October 2024, the Board of County Commissioners convened an advisory group to evaluate the current condition of the Main Street Courthouse and make a recommendation to the Board on the disposition of the current courthouse following the May 2025 completion of the Replacement County Courthouse under construction on the Red Soils Campus.

That advisory group recommended that the Board of County Commissioners sell or transfer the courthouse to an entity that would fully contribute to the economic vitality of the downtown Oregon City area. In addition, the advisory group outlined three considerations for the Board in determining how to proceed with disposition:

Evaluate opportunities for continued public engagement and communication with stakeholders.

Consider including criteria in the selection process that reflects the committee’s desire to preserve and enhance the long-term economic vitality of the downtown Oregon City area.

Encourage, where economically feasible, preservation or reuse of the facility’s unique architectural features and assets.

Intentional Simplicity & Flexibility

This RFEI is intended to be simple and to provide flexibility for the County and respondents to work through key details as part of exclusive negotiations. This solicitation does not require a complex or expensive response on the part of prospective respondents. The County is looking for creative responses that detail the respondent’s ability to successfully acquire the property and implement a proposal that fully contributes to the economic vitality of the downtown Oregon City area.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 6

Submittal and Review Process Overview

The County has identified criteria it will consider when evaluating responses to this RFEI. Those criteria include each proposal’s responsiveness to the objectives set forth in Section 3.

The deadline for submittals is March 24, 2025 at 7:00 AM (PST). The County will enter into exclusive negotiations with successful respondents following the deadline.

Address RFEI responses and questions to: amayernik@clackamas.us with subject: Main Street Courthouse RFEI.

The County reserves the right to cancel or postpone this RFEI at any time and for any reason.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 7

2. Offering Overview

Zoning

The parcel is zoned as Mixed-Use Downtown by the City of Oregon City. Complete details can be found in the Oregon City Municipal Code Chapter 17.34. The zoning contemplates “…high-volume establishments constructed at the human scale such as retail, service, office, multi-family residential, lodging or similar as defined by the community development director. A mix of high-density residential, office and retail uses are encouraged in this district, with retail and service uses on the ground floor and office and residential uses on the upper floors. The emphasis is on those uses that encourage pedestrian and transit use.

This district includes a downtown design district overlay for the historic downtown area. Retail and service uses on the ground floor and office and residential uses on the upper floors are encouraged in this district. The design standards for this sub-district require a continuous storefront façade featuring streetscape amenities to enhance the active and attractive pedestrian environment.” Oregon City Municipal Code 17.34.010.

Proposers should consult with the City of Oregon City on any zoning or development standards questions, as the County is not the planning jurisdiction for this parcel.

Relevant Plans and Studies

OC2040 Oregon City Comprehensive Plan

The City of Oregon City adopted OC2040 in 2022 as its blueprint for the future, a policy document that will guide growth, development, and public investment over the next 20 years. The Comprehensive Plan serves as the basis for Oregon City’s land use planning process, and submittals should be in alignment with this document and other land use regulations.

Downtown Community Plan

The Downtown Community Plan was adopted in 1999 by the City of Oregon City and serves as a guiding document for efforts to redevelop the downtown core. The Downtown Community Plan addresses the entire Two Rivers Neighborhood Association, which extends along the Willamette River from Willamette Falls to the mouth of the Clackamas River and eastward along the Clackamas River to the I-205 crossing. Findings and recommendations from the Downtown Community Plan are incorporated into the OC2040 Comprehensive Plan.

2021 Housing Needs Analysis

The City of Oregon City completed a Housing Needs Analysis in 2021, which projected a growth of 7,435 new dwelling units over the next 20 years. The Housing Needs Analysis identified a lack of housing, including a mix of single-family detached, single-family attached, duplexes/triplexes/quadplexes, and multifamily units. Findings and recommendations from the Housing Needs Analysis are incorporated into the OC2040 Comprehensive Plan.

2013 Transportation System Plan

The City of Oregon City completed a Transportation System Plan in 2013, which identified the needs of the City’s transportation network, including multimodal transportation improvements. Findings and recommendations from the Transportation System Plan are incorporated into the OC2040 Comprehensive Plan.

Oregon Inventory of Historic Properties

The State Historic Preservation Office has surveyed the Main Street Courthouse twice, once in May 2000 and again in July 2020. The surveys detail the historic significance of the property, including the manner and method of construction and any alterations.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 8

2023 Oregon City Urban Renewal Plan

The Main Street Courthouse lies within the City of Oregon City’s Downtown/North End Urban Renewal Area and has been identified by the Urban Renewal Agency as a “project of interest” for future Urban Renewal dollars. Submitters should consult with the Oregon City Renewal Agency on potential opportunities that this may present.

Vertical Housing Development Zone

The Main Street Courthouse lies within the City of Oregon City’s Vertical Housing Development Zone. The Vertical Housing Development Zone program provides qualified development projects a 10-year property tax exemption on the value of new construction or rehabilitation for 20 percent per residential floor above a commercial ground floor with total exemption limited to no more than 80 percent. Submitters should consult with the City of Oregon City on questions regarding the zone.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 9

3. Selection Criteria & Process

Selection Criteria

The following are the criteria that the County will use in evaluating responses to this RFEI. Note that depending on the nature of any particular proposal, not all of these criteria may apply.

Financial capacity to acquire the property and implement the proposal.

Agency and management experience delivering similar proposals.

The proposal’s contribution to the economic vitality of the downtown Oregon City area.

Preservation of the historical significance of the building and its environs.

Retention of the portion of the site known as Liberty Plaza.

Project timelines and anticipated opening date, with priority given to proposers that will move quickly.

Post-Selection Process

Upon selection, the County will enter into exclusive negotiations with the selected respondent(s) to negotiate the terms of the transaction. During this period, the County will work with the selected respondent(s) on the proposed program, deal structure, financing, and other components may be modified as a more defined proposal is developed. The County may, at any time, and in its sole discretion, cease negotiations with the selected respondent or respondents.

During this post-selection, but pre-sale phase, the County may negotiate a Memorandum of Understanding (MOU), term sheet, or other agreement with the selected respondent(s), setting forth in non-binding terms the financial, programmatic, and other general aspects of the sale. This agreement will also serve as the basis for the negotiation and execution of a subsequent binding document(s), including a purchase and sale agreement. The final, binding document(s) will govern the final disposition of the property, setting forth the terms of the transaction.

The agreement may include provisions reserving to the County the right to terminate negotiations with the selected respondent(s), if the County, in its sole discretion, determines that negotiations during the pre-sale phase are not progressing in a satisfactorily and/or timely manner.

All final binding document(s) are subject to approval by the Clackamas County Board of Commissioners.

Anticipated Schedule

January 22, 2025 Issuance of RFEI

February 23, 2025 Deadline to request clarifications to RFEI

March 6, 2025 County responses to requests for RFEI clarifications posted on website

March 24, 2025 at 7:00 AM (PST) Deadline for RFEI submissions

April 3, 2025 (tentative) County completes preliminary evaluation of submissions; decision regarding next steps (short list interviews, etc.)

April 24, 2025 (tentative) Preliminary selection of respondent(s), pending further negotiations

RFEI – Clackamas County Main Street Courthouse Disposition Page | 10

4. Submission Format & Content

Preferred Format

Responses must not exceed 25 pages including letters of reference, samples, financial information, or other supporting documents. Proposals are to be submitted electronically. Hard copies will not be accepted.

Recommended Content

1. Cover Letter

a. Briefly introduce the organization and describe its interest in the property.

b. Summarize the proposed development, management experience, and acquisition overview.

2. Proposal

a. Concept for ownership and operations of the Site, including the desired financing structure for acquisition.

b. Estimated time frame to carry out the proposed acquisition and redevelopment.

c. Description of how proposal aligns with County goals.

3. Organization and Management Team

a. Identify organization and management members and roles and describe qualifications.

b. Describe the organizations experience in the ownership and management of similar high-quality, successful projects.

4. Financial Capacity

a. Explain the organization’s financial capacity to undertake the acquisition and provide operating funding, including other funding sources available (such as rental agreements), and other financial requirements that may be a condition of the financing.

Note: the County will work with agencies to determine appropriate representations and warranties or any other guarantees for the project.

5. Letters of Reference & Project Examples

a. Respondents may submit up to four letters of reference.

b. Respondents are encouraged to include samples of other project examples.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 11

5. General Conditions

1. The County reserves the right, in its sole discretion, to accept any response or to reject any or all responses to this RFEI.

2. The County reserves the right, in its sole discretion, to modify the selection process or other aspects of this RFEI, including canceling the RFEI at any time. The County will take reasonable steps to ensure that any modification or clarification to the RFEI are distributed in writing to all persons who have requested a copy of the RFEI.

3. The County reserves the right to request additional information following review of the initial RFEI response submission.

In addition, the County may retain one or more consultants to assist in the evaluation of submissions.

4. In the interest of a fair and equitable selection process, the County reserves the right to determine the timing, arrangement, and method of any presentation throughout the selection process. Respondents are cautioned not to undertake any activities or actions to promote or advertise their proposals except during authorized presentations.

However, respondents or their representatives are not permitted to make any direct or indirect (through others) contact with members of the Clackamas County Board of Commissioners, County, or Selection Advisory Committee (if established), concerning their proposals, except in the course of County-sponsored presentations. Violation of these conditions is grounds for disqualification of the respondent(s).

5. All submissions shall become the sole and exclusive property of the County. Respondent(s) shall not copyright, or cause to be copyrighted, any portion of their submission. Any proprietary financial information or other information which respondents identify as such will be maintained as confidential to the extent permitted under public records law.

Submissions or information that respondents would like to remain confidential must be marked confidential.

6. The County makes no representations as to whether or not a project to be developed as a result of this RFEI, or any possible participation therein, is a “public improvement” project and as such is subject to the prevailing wage requirements of the Oregon Bureau of Labor and Industry.

7. Media releases or media contacts by the selected respondents pertaining to its selection will require prior written approval of the County.

8. The County permits the participation of real estate brokers acting on behalf of and with the authorization of respondents, provided that the broker arranges for the payment of its commission or other compensation exclusively by the respondent.

9. The County reserves the right to verify and investigate the qualifications and financial capacity of respondents.

10. Respondent costs of developing a proposal or any subsequent request for information, costs of attendance at an interview (if requested by the County), or any other costs incurred as a result of this RFEI are entirely the responsibility of the respondent, and will not be reimbursed in any manner by the County

11. By submitting a proposal, respondent certifies the following:

i. OREGON TAX LAWS: Respondent certifies that, to the best of the undersigned’s knowledge, respondent is not in violation of any Oregon Tax Laws. For purposes of this certification, “Oregon Tax Laws” means the tax laws of the state or a political subdivision of the state, including ORS 305.620 and ORS chapters 316, 317 and 318.

ii. NON-DISCRIMINATION: Respondent certifies that it has not and will not discriminate in its employment practices with regard to race, creed, age, religious affiliation, sex, disability, sexual orientation, gender identity, national origin, or any other protected class. Nor has respondent or will respondent discriminate against a subcontractor in the awarding of a subcontract because the subcontractor is a disadvantaged business enterprise, a minority-owned business, a woman-owned business, a business that a service-disabled veteran owns or an emerging small business that is certified under ORS 200.055.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 12

iii. CONFLICT OF INTEREST: The undersigned hereby certifies that no elected official, officer, agent or employee of Clackamas County or the County is personally interested, directly or indirectly, in any resulting contract from this RFEI, or the compensation to be paid under such contract, and that no representation, statements (oral or in writing), of the County, the County, their elected officials, officers, agents, or employees had induced respondent to submit a proposal. In addition, the undersigned hereby certifies that any proposal is made without connection with any person, firm, or corporation submitting a proposal for the same material, and is in all respects fair and without collusion or fraud.

RFEI – Clackamas County Main Street Courthouse Disposition Page | 13

6. Exhibits: Background Documents

1. Clackamas County Courthouse CBRE Appraisal Report, December 2022

2. MEP Building Assessment, October 2015

3. Report of Geotechnical Engineering Services, October 2015

4. Seismic Evaluation Report, October 2015

CLACKAMAS COUNTY COURTHOUSE

807 MAIN STREET

OREGON CITY, OREGON 97045

CBRE FILE NO. CB22US130010-1

CLIENT: CLACKAMAS COUNTY

CLIENT REFERENCE NO.: 4790

APPRAISAL

REPORT

CBRE VALUATION & ADVISORY SERVICES

© 2022 CBRE, Inc.

VALUATION & ADVISORY SERVICES

VAS Department 1300 SW Fifth Avenue, Ste. 3500

Portland, OR 97201 www.cbre.com

Date of Report: December 15, 2022

Mr. Stephen L. Madkour Dept. Contract Administrator

CLACKAMAS COUNTY

2051 Kaen Rd Oregon City, Oregon 97045

RE: Appraisal of: Clackamas County Courthouse 807 Main Street Oregon City, Clackamas County, Oregon 97045 CBRE, Inc. File No. CB22US130010-1 Client Reference No.: 4790

Dear Mr. Madkour:

At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Appraisal Report.

The subject of this report includes a special use building comprising the Clackamas County Courthouse located within the Oregon City downtown area, along Highway 99E and overlooking the Willamette River. This is a functional courthouse property improved with 11 courtrooms, office areas, security areas, common areas and areas for inmate detention/transfer. The improvements were constructed in 1937, expanded in 2012, and are situated on a 0.94-acre site. This includes one building with three floors, plus a fully built-out daylight basement, with a total area of 65,527 SF. The building is of concrete/steel construction with a brick facade in an Art Deco building style.

The purpose of this report is to conclude the as-is market value of the subject’s fee simple interest.

The intended use is to estimate value for a potential sale of the property. The highest and best use of the subject is conversion/repurpose to a commercial use, and most likely an office use given the current build-out of the existing improvements.

Based on the analysis contained in the following report, the market value of the subject is concluded as follows.

MARKET VALUE CONCLUSION

Appraisal Premise Interest Appraised Date of Value Value Conclusion

As-Is Market Value Fee Simple Estate November 30, 2022 $6,400,000

Land Fee Simple Estate November 30, 2022 $1,670,000

Compiled by CBRE

December 15, 2022

The subject’s land value was also developed to test the highest and best use of demolition verses conversion of the existing improvements. Based on a lower land value compared to the concluded as-is value for conversion/repurpose, demolition is not the concluded highest and best use of the subject. Furthermore, there are legal influences which may prevent demolition of the existing building. Please reference the Zoning section of this report for details.

The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non-intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof).

It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us.

Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES

Nick Anderson, MAI, RW-AC Vice President State Certified General Real Estate Appraiser Oregon Certification No. C001242 Phone: 503.946.4941 Email: nick.anderson2@cbre.com

Certification i © 2022 CBRE, Inc.

Certification

We certify to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions.

3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment.

4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results.

5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

6. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Oregon.

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

9. As of the date of this report, Nick Anderson, MAI, R/W-AC has completed the continuing education program for Designated Members of the Appraisal Institute.

10. Nick Anderson, MAI, R/W-AC inspected the subject and the Portland MSA comparables. The remaining comparables were not inspected due to their distance from the subject.

11. No one provided significant real property appraisal assistance to the persons signing this report.

12. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc.

Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest.

13. Nick Anderson, MAI, R/W-AC has not provided any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding agreement to perform this assignment.

Nick Anderson, MAI, R/W-AC State Certified General Real Estate Appraiser Oregon Certification No. C001242

Subject Photographs ii

Aerial View iii

Facing southwest along Main St Facing northwest along 9th St

Facing southeast along 8th St Facing southwest along Hwy 99E

Facing east at subject building Facing northwest at subject building iv

Facing west at subj. property from Main St Exterior view of inmate receiving area

View of parking lot View of Liberty Plaza

Ground Floor – Interior 8th Street Employee and Juror Entrance

Ground Floor – Interior view of the District Attorney’s Office Reception Desk v

Ground Floor – Assistant District Attorney Office Spaces

Ground Floor – District Attorney’s Lunch and Breakroom

Ground Floor – Mechanical Spaces Ground Floor – Employee/Public Restroom

1st Floor – State Courts and Sheriff’s Office, Civil Unit, Public Payment Windows

1st Floor – Public Restroom vi

1st Floor – Lady Justice Statue and Public Staircase to the 2nd Floor

1st Floor – Sheriff’s Office, Civil Sheriff Unit, Office and Security Monitoring Area

1st Floor – Secure Elevator from Inmate Receiving Area to Second Floor Detention Area

2nd Floor –Holding Cell Entrance

2nd Floor to 1st Floor – Public Staircase 2nd Floor – Main Public Lobby vii

Typical Juror Deliberation Room Typical 3rd Floor restroom

3rd Floor - Elevator Lobby and Main Public Stairway

Typical Courtroom

Typical Private Office Typical Judge’s Chambers & Office

Executive Summary viii © 2022 CBRE, Inc.

Executive Summary

Property Name

Location

Parcel Number(s)

Client

Client Reference Number

Highest and Best Use

As If Vacant

As Improved

Property Rights Appraised

Date of Report

Date of Inspection

Estimated Exposure Time

Estimated Marketing Time

Primary Land Area 0.94 AC 40,946 SF

Zoning

Improvements

Property Type Office

Number of Buildings 1

Number of Stories 3

Gross Building Area 65,527 SF

Net Rentable Area 65,527 SF

Year Built 1937 / 2012

Effective Age 25 Years

Remaining Economic Life 25 Years

Condition Average

Buyer Profile Developer

Including the basement

Comments

(Single Tenant) or four stories including the fully built-out partial daylight basement

Including the basement

Clackamas County Courthouse

November 30, 2022

Repurpose to a commercial use

Commercial development

807 Main Street

Oregon City, Clackamas County, OR 97045

December 15, 2022

Clackamas County

00572240

Fee Simple Estate

6 - 18 Months

6 - 18 Months

Mixed Use Downtown (MUD)

Addition added in 2012

VALUATION Total Per SF

Land Value $1,670,000 $40.79

Sales Comparison Approach $6,400,000 $97.67

CONCLUDED MARKET VALUE

Appraisal Premise Interest Appraised Value

As-Is Market Value Fee Simple Estate $6,400,000

Land Fee Simple Estate $1,670,000

Compiled by CBRE

November 30, 2022

November 30, 2022

Date of Value ix © 2022 CBRE, Inc.

STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)

Strengths/ Opportunities

• Location in the Oregon City CBD with demand for a wide range of commercial uses, including office, retail and multi-family.

• Good exposure/access based on its location along Highway 99E.

• Good view premium of the Willamette River north of Highway 99E.

• Average to good location with the improvements exhibiting regular maintenance/repairs as needed.

Weaknesses/ Threats

• Limited off-street parking; however, on-street parking is available.

• A 2015 seismic evaluation found the existing courthouse has numerous structural deficiencies.

Soil tests indicate the ground under the building could liquefy during an earthquake. Due to the courthouse’s proximity to the Willamette River, the building cannot be seismically retrofitted or modified to modern standards.

• Commercial real estate market conditions have deteriorated at the macro level. Borrowing costs have increased significantly. The higher cost of capital and the negative impact on transaction activity is impacting price discovery and creating more uncertainty. Rapidly increasing interest rates and subdued economic growth will continue to weigh on commercial real estate fundamentals and investment volumes. This creates a higher degree of uncertainty in general, though the impacts may vary by market and asset class/type.

MARKET VOLATILITY

We draw your attention to the fact that a combination of global inflationary pressures, the rapid increase in the cost of capital, and the recent geopolitical events in Ukraine, in addition to the on-going effects of the global Covid-19 pandemic in some markets, has heightened the potential for greater volatility in property markets over the short-to-medium term. Experience has shown that consumer and investor behavior can quickly change during periods of such heightened volatility and any lending or investment decisions should reflect this heightened level of volatility.

Please note that the conclusions set out in this report are valid as at the valuation date only.

Where appropriate, we recommend that the valuation is closely monitored, as we continue to track how market participants respond to current events.

CURRENT ECONOMIC CONDITIONS

• The Federal Reserve has raised the federal funds rate dramatically through multiple increases in 2022 to combat inflation. CPI figures in early Q4 2022 suggest inflation is slowing. A slight easing in inflation will allow the Fed to reduce the size of additional interest rate increases.

• The 10-year Treasury yield and Secured Overnight Financing Rate (SOFR) have also increased dramatically in 2022. Commercial real estate interest rates typically track at a risk spread over these rates. The cost of capital (higher interest rates and more stringent x © 2022 CBRE, Inc.

underwriting) has increased dramatically in 2022 and is expected to remain at elevated levels into 2023.

• Tighter financial and worsening economic conditions are causing commercial real estate investment volume to decline.

Many expect the U.S. economy will enter a recession in the first half of 2023. As the economy cools and the labor market softens, lower inflation is anticipated. This is anticipated to prompt the

Federal Reserve to moderate and conclude its rate increases in 2023.

The table below summarizes the CBRE “House View” for the Federal Funds Rate, 10-Year

Treasury, and GDP over the next several years. This view is reflective of what market participants are anticipating over the mid-term.

The CBRE “House View” is for the yield on the 10-year Treasury to fall back to 2.7% by year-end

2023, which will aid in the recovery of real estate investment volume. This is consistent with many market participants who anticipate the cost of capital in the future to be lower than current conditions.

While opinions vary on future economic issues, the general market consensus at the time of this appraisal is the anticipation of moderating inflation as higher interest rates cool demand. Tighter financial and weaker macroeconomic conditions will weigh on real estate fundamentals, leading to lower real estate investment volume through the first half of 2023. Amid this uncertain and dynamic environment, investment market performance will be uneven across property types.

EXTRAORDINARY ASSUMPTIONS

An extraordinary assumption is defined as “an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.” 1

• None noted

1 The Appraisal Foundation, USPAP, 2020-2021 (Effective January 1, 2020 through December 31, 2022) xi © 2022 CBRE, Inc.

HYPOTHETICAL CONDITIONS

A hypothetical condition is defined as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purposes of analysis.” 2

• None noted

OWNERSHIP AND PROPERTY HISTORY

OWNERSHIP SUMMARY

Item Current

Current Ownership

Owner: Clackamas County

Sale in Last 3 Years?: No

Pending Sale

Under Contract: No

Current Listing

Currently Listed For Sale: No

CBRE is not aware of any sales, listings or contracts of the subject property in the prior three years.

EXPOSURE/MARKETING TIME

Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration of these factors, we have analyzed the following:

• exposure periods for comparable sales used in this appraisal;

• the opinions of market participants.

The following table presents the information derived from these sources.

2 The Appraisal Foundation, USPAP, 2020-2021 (Effective January 1, 2020 through December 31, 2022) xii © 2022 CBRE, Inc.

EXPOSURE/MARKETING TIME DATA

Exposure/Mktg. (Months)

Investment Type Range Average

Comparable Sales Data (reflects the sale of similar buildings for conversion)

6.0 - 9.0 6.8

Local Market Professionals 6.0 - 18.0

CBRE Exposure Time Estimate

CBRE Marketing Period Estimate

Various Sources Compiled by CBRE

6 - 18 Months

6 - 18 Months

Table of Contents xiii © 2022 CBRE, Inc.

Table of Contents

Certification ....................................................................................................................... i

Subject Photographs ...........................................................................................................ii

Executive Summary ......................................................................................................... viii

Table of Contents ............................................................................................................ xiii

Scope of Work

Area Analysis

Neighborhood Analysis

Site Analysis

Improvements Analysis

Zoning

Tax and Assessment Data

Market Analysis

Highest and Best Use

Land Value

Sales Comparison Approach

Reconciliation of Value

Assumptions and Limiting Conditions

ADDENDA

A Land Sale Data Sheets

B Improved Sale Data Sheets

C Qualifications

Scope of Work

© 2022 CBRE, Inc.

Scope of Work

This Appraisal Report is intended to comply with the real property appraisal development and reporting requirements set forth under Standards Rule 1 and 2 of USPAP. The scope of the assignment relates to the extent and manner in which research is conducted, data is gathered, and analysis is applied.

INTENDED USE OF REPORT

This appraisal is to be used for internal use and no other use is permitted. Reportedly, the owner will use the appraisal to establish value for a potential sale of the subject property.

CLIENT

The client is Clackamas County.

INTENDED USER OF REPORT

This appraisal is to be used by Clackamas County. No other user(s) may rely on our report unless as specifically indicated in this report.

Intended users are those who an appraiser intends will use the appraisal or review report. In other words, appraisers acknowledge at the outset of the assignment that they are developing their expert opinions for the use of the intended users they identify. Although the client provides information about the parties who may be intended users, ultimately it is the appraiser who decides who they are. This is an important point to be clear about: The client does not tell the appraiser who the intended users will be. Rather, the client tells the appraiser who the client needs the report to be speaking to, and given that information, the appraiser identifies the intended user or users. It is important to identify intended users because an appraiser’s primary responsibility regarding the use of the report’s opinions and conclusions is to those users. Intended users are those parties to whom an appraiser is responsible for communicating the findings in a clear and understandable manner.

They are the audience. 3

RELIANCE LANGUAGE

Reliance on any reports produced by CBRE under this Agreement is extended solely to parties and entities expressly acknowledged in a signed writing by CBRE as Intended Users of the respective reports, provided that any conditions to such acknowledgement required by CBRE or hereunder have been satisfied. Parties or entities other than Intended Users who obtain a copy of the report or any portion thereof (including Client if it is not named as an Intended User), whether as a result of its direct dissemination or by any other means, may not rely upon any opinions or conclusions contained in the report or such portions thereof, and CBRE will not be responsible for

3 Appraisal Institute, The Appraisal of Real Estate, 15th ed. (Chicago: Appraisal Institute, 2020), 40.

© 2022 CBRE, Inc.

any unpermitted use of the report, its conclusions or contents or have any liability in connection therewith.

PURPOSE OF THE APPRAISAL

The purpose of this appraisal is to develop an opinion of the As-Is Market Value of the subject’s fee simple interest.

DEFINITION OF VALUE

The current economic definition of market value agreed upon by agencies that regulate federal financial institutions in the U.S. (and used herein) is as follows:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. buyer and seller are typically motivated;

2. both parties are well informed or well advised, and acting in what they consider their own best interests;

3. a reasonable time is allowed for exposure in the open market;

4. payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. 4

INTEREST APPRAISED

The value estimated represents the Fee Simple Estate as defined below:

Fee Simple Estate - Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power and escheat. 5

Leased Fee Interest - The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. 6

Leasehold Estate - The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. 7

4 Interagency Appraisal and Evaluation Guidelines; December 10, 2010, Federal Register, Volume 75 Number 237, Page 77472.

5 Appraisal Institute, The Dictionary of Real Estate Appraisal, 7th ed. (Chicago: Appraisal Institute, 2022), 73.

6 Dictionary of Real Estate Appraisal, 105.

7 Dictionary of Real Estate Appraisal, 105.

© 2022 CBRE, Inc.

Going Concern – An established and operating business having an indefinite future life. 8

Extent to Which the Property is Identified

The property is identified through the following sources:

▪ postal address

▪ assessor’s records

Extent to Which the Property is Inspected

Nick Anderson, MAI, R/W-AC inspected the interior and exterior of the subject, as well as its surrounding environs on the effective date of appraisal. This inspection was considered adequate and is the basis for our findings.

Type and Extent of the Data Researched

CBRE reviewed the following:

▪ applicable tax data

▪ zoning requirements

▪ flood zone status

▪ demographics

▪ comparable data

Type and Extent of Analysis Applied

CBRE, Inc. analyzed the data gathered through the use of appropriate and accepted appraisal methodology to arrive at a probable value indication via each applicable approach to value. The steps required to complete each approach are discussed in the methodology section.

8 Dictionary of Real Estate Appraisal, 83.

© 2022 CBRE, Inc.

Data Resources Utilized in the Analysis

DATA SOURCES

Item: Source(s):

Site Data

Size Clackamas County Assessor

Improved Data

Building Area Client

Parking Spaces Inspection

Year Built/Developed Clackamas County Assessor

Economic Data

Deferred Maintenance: None noted or observed

Other

Zoning Information Oregon City Planning Department

Tax Information Clackamas County Assessor

C…