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A costly decision: Clackamas County will lose out on $8M after abandoning transitional housing project

The county must return $8 million it received in grant funds for "Project Turnkey", plus pay the $150,000 it had promised for a down payment for the Quality Inn.

CLACKAMAS COUNTY, Ore. — The Clackamas County Commission's decision to back out of a plan to buy a Quality Inn and use it for transitional housing is going to cost the county.

County leaders will have to return $8 million in grant funds it received for the project to the Oregon Community Foundation (OCF).

Additionally, the county must pay about $150,000 it promised for a down payment for the purchase of the Quality Inn, plus about $20,000 in reimbursements for appraisal, inspection and other on-site costs, according to a county lawyer in a policy meeting Wednesday.

The costs are a consequence of County Chair Tootie Smith's decision to change her vote on the planned transitional housing project.

Smith initially voted to approve the plans on February 16, resulting in a 3-2 approval from commissioners.

On March 22, she reversed her vote, effectively blocking the deal.

Smith backed up her decision to change her vote at Wednesday's policy meeting, saying she was convinced after listening to people's concerns about the plans for a high-barrier transitional housing facility for the county's homeless population.

RELATED: Clackamas County halts purchase of hotel after Chair Tootie Smith reverses her vote for the planned transitional housing facility

“As time continued, more and more people became opposed to this location, they were not convinced it was the right location or this is how we should be handling the homeless population," Smith said Wednesday. "I think it’s our job to figure out what to do going forward."

Clackamas County received about $8 million in grants from the OFC for the "Project Turnkey" development — a state program which provides funding for emergency shelters and transitional housing in order to help homelessness and housing insecurity.

The planned acquisition of the Quality Inn was part of the county's application for that grant money, meaning the funds can't be used elsewhere.

"It's a grant that was awarded to the county and if you're not going to use it for these purposes you will [have to] return it," said Stephen Madkour, Clackamas County counsel.

On Wednesday, commissioners voted to table the motion to pay the $150,000 earnest payment and return the grant funds held in escrow — instead opting to take a few more days to see if they have any remaining leverage over what happens to the Quality Inn hotel property on Southeast Sunnyside Road.

Commissioner Paul Savas, who supported the transitional housing plan, said now there are risks about what comes next.

"Maybe the outcome of us pulling out might be worse than we ever anticipated," Savas said. "If a potential owner doesn’t run it — there are some great organizations out there that can purchase this and run it closer to what we want — but we still wouldn’t have the level of control and assurances to the community that it would be well-run and as protected as it would’ve been [under county control]."

Commissioner Martha Schrader, the other member who voted in favor of the project, said the decision to back out means Clackamas County will still struggle with providing "wraparound services" to people who need them.

"It’s unfortunate that we’ve come to an impasse on this project with the commission," she said. "If it is the county that has control over the property, we have the opportunity to mitigate any negative issues that may arise in that area."

Madkour said the county commission's decision to reverse course could have legal ramifications, as well.

"I apprised the board of some of the possible risks associated with the board’s withdrawing from this transaction yesterday," he said. "Yes, there are legal risks that are presented by these actions, absolutely."

Savas said he wants some time to "pause" and hopefully "influence" who will buy the Quality Inn — hoping that it will be run "in a similar way" to the county's plans.

It's unclear how Clackamas County commissioners plan to exert this influence by delaying the payment of earnest money to the Quality Inn seller and delaying the return of grant money to OCF.

Commissioners plan to revisit the topic at a meeting on Tuesday, April 4.


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