There is not comparable property in all of Salem. The former “North Campus” of the Oregon State Hospital is a 47-acre parcel between D and State Streets, 23rd Street and Park Avenue. It is flat with no floodplain; it sits in a developed neighborhood within one mile of two full-service grocers and 1 ½ miles of major Salem employers. The land boasts seven historic buildings and is about ½ open ground, covered with numerous trees, many of them 130-150 years old.
Neighbors and community observers view active plans by the state of Oregon to demolish five of seven historic buildings listed on the National Register of Historic Places, and cut 35 healthy trees that stand in the way of demolition, to be a betrayal of trust and a failure of vision.
The State, represented by the Department of Administrative Services (DAS), which has owned the property since 2012 and is charged with selling it, says it has discharged its duty with sensitivity and procedural integrity.
“It appeared to us that the topic of moving forward while keeping existing buildings was given no real consideration by DAS,” says neighbor Teri Lupoli, former Vice-Chair of North East Salem Community Association, (NESCA) the neighborhood association in that area. “The State decided instead to go with a ‘scorched earth’ policy. Their approach is to spend more money to tear everything down.”
Lupoli’s views are echoed by neighbor Maren Wren. “The mature trees and stately buildings are coming down,” she says. “It’s a shameful waste, but the state… has demonstrated it does not care at all about what the 150 or so immediate households surrounding the property want or need. The state’s disrespect has been chilling.”
The Oregon State Hospital began operations as the Oregon State Insane Asylum in 1883, with many buildings erected in subsequent years. The architecturally significant Dome Building was constructed in 1912, and in the 1940s and 1950s, up sprang Yaquina, McKenzie and Brietenbush Halls (in 1948), Santiam Hall (in 1951), and Eola Hall (in 1955).
The buildings the neighbors advocate for are McKenzie, Breitenbush, Santiam and Eola Halls. The Dome and Yaquina are protected; the Dome has been occupied by the State for years, and in October 2016, a conditional agreement was announced between the Salem Housing Authority and DAS to acquire the Yaquina building for affordable housing.
The other four buildings (or five, if Eola is considered two buildings) are the territories now at stake. Asbestos remediation and internal demolitions has already begun inside them to prepare for final razing—and the mature and historic trees that grow too close to them will have to come down when they do.
Because structural deficiencies had been found in the mid-century (1948 – 1955) buildings, in 2007 the Oregon Legislature approved funding for a new hospital facility. It was completed on the south side of State Street and in 2012, all patients and functions were relocated to the South Campus.
Concurrently, DAS assumed responsibility for selling the North Campus, conducting environmental surveys and commissioning a report by real estate strategists, Leland Consulting Group. Leland’s 2013 study, intended to determine the best uses of the site, concluded that most of the old structures were “functionally and economically obsolete” and most should be “delisted” from the Register of Historic Places and demolished. At the time, a DAS administrator estimated the property, as-is with the old buildings standing, was worth about $1.6 million.
That year, DAS posted a Request for Qualified Proposals to test the market for “as is” purchasers. One respondent briefly explored establishing a community land trust, but all parties then amicably stepped back.
In 2015 the Oregon Legislature authorized DAS to spend up to $8.3 million to remove hazardous materials and raze all buildings except for The Dome and Yaquina Hall, to attract buyers who didn’t want to deal with old buildings. Neighbors say they were not informed of this nor given the opportunity to testify.
All appeared on-track for demolition, without neighbors’ involvement, until spring 2016, when DAS received an unsolicited proposal from Chusal, LLC, a group of 14 architects, planners, developers and others, who wanted to buy the whole site—including all existing buildings, which they said they themselves would remediate, remodel and develop around. Chusal’s offer would mean that DAS no longer had to proceed with hazard abatement, building demolition or plans to cut trees.
DAS responded by putting out a new Request for Proposals (RFP) this fall, saying that, depending on the offer, buildings did not have to be demolished.
With a deadline of September 30, 2016, proposals were subject to, among other things, DAS’s consultation with City of Salem staff, according to Darren Brightman, Real Estate Project Manager for DAS. Brightman says city staff included the Directors of Community Development urban development and public works and the planning administrator.
DAS received two responses; one was from Mountain West Investment, which wanted the buildings to be removed. “A degree of developer uncertainty was reflected in the [Mountain West] proposal,” Brightman says, and DAS rejected it.
Chusal applied again, and formally offered $6 million for the site, including the Dome Building and Yaquina – though it provided deductions ($2.5 million and $750,000, respectively) if these buildings were excluded from the sale. Included in Chusal’s group of 14 were financial service provider Morgan Smith and Sortis Capital, developer Lewis Moeller of LMK Real Estate Services, developer and consultant, Larry Glickman and asset manager Tyler Clark of Tyler Clark Real Estate. Interested tenants included McMenamin’s, a robotic surgery trainer school, and the Oregon College of Art and Craft.
Brightman says that when DAS reviewed the Chusal proposal with City of Salem staff, the city “made it clear that the proposal was not viable.” DAS’s Management Administrator, Shannon Ryan, says that once the Dome Building and Yaquina Hall buildings were removed from the deal, Chusal’s “offer was significantly below the total already expended on preparation for hazardous material abatement and demolition.”
On October 14, Chusal’s offer was rejected.
The rejection angered neighbors, who express a high level of frustration with DAS, as the agency allowed abatement expenses to accrue in the months between when Chusal initially approached it and when it put out its RFP. In intervening months, DAS also moved forward on removing healthy trees.
Additionally, observers cite a March 2016 assessment by Powell Valuation which said that the razed property, excluding Dome and Yaquina, when rezoned was worth $8.280 mill, or “as zoned” was worth $8.650 mill—noting that both values are comparable to the $8.3 million the State is spending to demolish.
DAS says that keeping the buildings standing decreases its value; neighbors argue that the historical value of the buildings should be calculated as a monetary benefit. They also say a more serious attempt should have been made to repurpose and restore buildings—or to allow Chusal to repurpose and restore them. They argue that DAS hasn’t focused enough on serious marketing. “How can an agency get only three bids in four years?” Wren asks. “Unless you are really incompetent or really don’t care.”
“We all feel that, if this property was over in a different zip code in Salem, there would be more consideration than we’ve gotten,” says Lupoli. “We’re ‘north Salem,’ so they look at us as a good place for the city to stick low cost housing.”
Neighbors feel their 2014 document that listed nine recommendations for the North Campus has been largely ignored by DAS. Supported by Oregon Representative Brian Clem and Senate leader Peter Courtney, the list included establishing a Three to five acre park, retaining street trees, not widening D and Park Streets, scaling developments from less dense along Park and D to taller and higher density toward Center and 23rd. It did not specify retaining the five buildings slated to be demolished nor preserving historic trees other than those at the perimeter.
DAS says that it costs the State $540,000 – $580,000 to maintain the property in its “moth-balled” state and that it has met all nine of the neighbor’s requests to the extent it can control an unknown future or other governmental entities. “DAS is very focused on a community-based outcome and has been from the beginning,” says Ryan. “Our over-arching goal is to optimally position this 47-acre parcel to become a seamless, contributing asset into the fabric of the community.”
DAS expects the buildings to be leveled and the trees cut by spring 2017. The agency will then put out another RFP on the bare ground. DAS says it has agreed to include a representative of two neighborhood associations, including NESCA, to review the responses it gets.
Lupoli is unimpressed. “It’s a combination of bureaucratic thinking and not really paying attention to their neighbors. They forget that real people live here. For 100 years the property has been open and park like, but they are more interested in – just get the money and get the hell out.”