The Medford City Council on Thursday approved a $1.7 million deal to purchase a portion of the Red Lion Hotel property but expressed concern about the price and a parking easement.
In particular, the council wants to find out how much the company, DHD LLC of Ashland, is paying for the entire property, which is listed at $3.5 million. Two of the partners in DHD are Lithia Motors executives Mark and Sid DeBoer.
"I'd be uncomfortable voting for this if we didn't know the price," Councilor Dan Bunn said.
Bunn said he wouldn't want the city to be in the position of paying half or more of the cost of the property when it is not getting half the value. The city will pay $1.6 million but has set aside another $100,000 for closing costs.
The council approval sets in motion a 30-day escrow period during which the issues surrounding cost and an easement should be resolved.
DHD is negotiating a deal for the almost 8-acre Red Lion property while simultaneously negotiating a side deal with the city for the purchase of the less valuable buildings and parking area on the south side of the property. The DeBoers haven't disclosed their plans for the Red Lion property.
The property sits directly across Riverside Avenue from The Commons downtown redevelopment site, which features Lithia Motors' headquarters and two city park blocks. The Commons project, if fully developed, would overwhelm available parking in the area, according to a consultant's report prepared for the city last year. The city initially would use its portion of the site for parking.
In addition to concerns about the price, councilors questioned deed restrictions that would allow the new owners of the Red Lion a perpetual easement for parking on the property the city would buy.
Bunn said he also would like more information on potential underground storage tanks that may have contaminated soil on the property. Several areas on the Red Lion property already have been identified by the Department of Environmental Quality as having had problems in the past.
"If there's something really, really bad there, I'd like to know before we buy it," Bunn said.
Councilors unanimously thought the purchase of the 3.29 acres for a parking lot was a good deal for the city, but stumbled over attaching a value to the land.
Bill Hoke, deputy city manager, said the city will be paying a little more than $11 a square foot for its property, which he said is on the low side compared to other sales in the area.
"I consider it a fair price," he said.
Hoke said he didn't know how much DHD was paying for the full Red Lion property.
Councilor Al Densmore said the land deal is a unique opportunity for the city, and he noted the Red Lion is badly in need of renovation.
Densmore said the DeBoers are not in the hotel business, so he's not sure what their long-range plans are for the property.
He said the purchase of the property also offers an opportunity for improving Bear Creek.
Councilor Chris Corcoran said he supported the purchase but questioned the price, noting the city is getting less than half the acreage and also the less valuable portion of the hotel site.
Reach reporter Damian Mann at 541-776-4476 or email firstname.lastname@example.org.