Skip to main contentSeveral people familiar with the value of metro-area industrial land say a property deal state Sen. Betsy Johnson brokered last September represented an extraordinary bargain for the buyer.
In the transaction, records show Stanley Wagner, now 80, sold 232 acres on West Lane Road in Scappoose to developer Ed Freeman for $2.385 million.
Johnson, a Scappoose Democrat whom political insiders call a top contender for her party's 2010 gubernatorial nomination, says she earned no money in the deal but merely acted as a go-between. Johnson explains she's a longtime friend of Stanley Wagner and his wife, Florence.
"We [Johnson and her husband, John Helm] were the bridge between a willing seller, who was an old, sick man who trusted me, and a willing buyer," Johnson said.
In this case, the willing buyer was Ed Freeman, a developer whose various Scappoose projects Johnson has championed since at least 2002.
Johnson says she first met Freeman through a mutual Scappoose acquaintance. She says she never invested or had any kind of business or personal relationship with him other than a real estate transaction WW and The Oregonian previously reported.
In that deal, Johnson bought 36.24 acres of property from Wagner in October 2004 and sold it to Freeman four months later, earning a gross profit of $119,000. (Johnson says she incurred costs that cut her profit to about $50,000; the Oregon Government Standards and Practices Commission announced last week it will investigate why Johnson didn't disclose the purchase from Wagner until 30 months after the transaction.)
In the more recent deal involving 232 acres next to the smaller Wagner parcel, Johnson says she made no profit but merely brought seller and buyer together.
"Sierra [Pacific, Freeman's company] came back a second time when the Wagners were interested in selling, and we were the bridge between Sierra and the Wagners," Johnson says.
For their part, the Wagners aren't complaining. Their attorney, Marsha Murray-Lusby, says they are "completely satisfied" with the transaction.
Yet several neighboring property owners along West Lane Road say the 232-acre parcel, which includes 90 acres that is now inside the Scappoose city limits and the urban growth boundary, is worth far more than the Wagners received.
"That's a hell of a deal for the buyer," says Bowlus Chauncey, who operates a company called Beaver Bark on 30 acres about a mile from the Wagner property.
Chauncey and Dave Molony, who separately owns 34 acres of industrial land along West Lane Road, say industrial property inside Scappoose's city limits and urban growth boundary is worth about 10 times the per-acre price of about $10,300 Freeman paid Wagner.
Those familiar with industrial land agree that it is a valuable commodity.
Port of St. Helens operations manager Kim Shade says the Port has only 40 acres of industrial land for sale. That land is more fully developed but five miles farther from Portland—which lessens its value—than the property Freeman bought in Scappoose.
The Port's asking price is $4 per square foot, or about $175,000 per acre—17 times what Freeman paid Wagner. "There's just not a lot of industrial land for sale," Shade says. "We're getting a lot of inquiries for our property."
Shade says the Port based its price on a November 2006 appraisal that evaluated recent property sales in cities such as Canby, McMinnville, St. Helens and Ridgefield, Wash.
Andy Kangas, an industrial-property broker at CB Richard Ellis in Portland, recently closed the sale of 14.23 acres of land in Gresham for $204,000 an acre. He echoes Shade's assessment.
"There's basically no industrial land left in the metro area," Kangas says.
Freeman acknowledges that the 232 acres he bought from Wagner last year is worth far more today. "Certainly, the value has increased since purchasing it as agricultural land," Freeman says.
After buying the land, Freeman got 90 of the 232 acres annexed to the city of Scappoose and rezoned industrial.
He says he'll spend another $2 million to ready the land for resale, making his gross acquisition cost $22,000 per acre—about a quarter of what Freeman says the land will be worth.
So did Wagner sell too cheaply? Getting the land annexed, which automatically brought a zone change to "industrial," is a process Scappoose city manager Jon Hanken says is "not difficult at all."
Annexation is something the Wagners' trustee, Murray-Lusby—or a higher-paying buyer—could have accomplished. Murray-Lusby declined to answer questions about why she didn't have the land annexed or whether she sought an appraisal or other buyers before OK'ing the sale to Freeman.
Johnson says her role was simply to bring together a willing seller and a capable buyer, and that she played no role in setting the purchase price.
What is undeniable, however, is Johnson's role in using her legislative prowess to increase the development potential—and therefore the value—of Freeman's land. Two bills she introduced—Senate Bill 680, which passed in 2005, and SB 807, still pending—encourage airport-related development. SB 680 created a program for three rural airports—Scappoose is one—that would promote development and ease runway access for adjacent property owners such as Freeman. SB 807 would create taxing districts to funnel property taxes back into airport-related projects for 25 years.
Greg Leo is a lobbyist for the City of Wilsonville, which fears a taxing district around the nearby Aurora airport would siphon away property taxes now going to other jurisdictions. Leo says Johnson's bills are "a big real estate play that funnels public money to private developers with little oversight."
Johnson insists, however, her only interest has been to promote economic development, particularly in her Northwest Oregon district. She says that the Wagner transactions are part of her 30-year effort to make the Scappoose airport an economic engine, and focusing on any single deal misses the larger context.
But Tom Heckman, a West Lane Road property owner who says he's known Stan Wagner for more than 50 years, disagrees.
"Stan got screwed on the deal," says Heckman. "When I was over at their house helping them pack up, I told Mrs. Wagner, 'You got robbed.' She said, '[$2.385 million,] that's enough for me and Stan.'"
WWeek 2015