Due diligence

The Red Lion deal appears to be good for the city, but get questions answered

There is nothing obviously wrong, and much that is right, about a deal under which the city of Medford would buy part of the Red Lion Hotel property. But if key questions remain unanswered, the transaction could leave the impression that it's a sweetheart deal for the DeBoer family.

DHD LLC, a corporation whose principals include Sid and Mark DeBoer, chairman of the board and vice president of real estate, respectively, of Lithia Motors, is in the process of purchasing the Red Lion Hotel for an undisclosed amount.

The Medford City Council has given initial approval to buy 3.9 acres at the southern end of the Red Lion property for $1.6 million. The deal would give the city additional space for parking adjacent to The Commons.

Eventually, the city would demolish the three buildings on the property and create a parking lot, a walking area along Bear Creek and potentially a pedestrian bridge connecting to Hawthorne Park. Those are all valuable additions to the downtown redevelopment project that includes Lithia's headquarters building and two city park blocks. The bridge to Hawthorne Park is especially attractive.

Parking has been identified as a future problem as the area around The Commons develops further. A consultant told city officials the area could be short 1,000 parking spaces in just a few years. This deal would help address that.

The DeBoers have not divulged their plans for the hotel property, but likely would upgrade the now-dated hotel rooms and could continue to use the hotel's existing conference center. Part of the deal with the city would involve an easement allowing DHD to use the city-purchased property for overflow convention center parking in perpetuity.

The DeBoers are entitled to buy property and to use it as they wish; that's not the city's business. It is, however, the business of city leaders to make sure the city is not paying more than it should or encumbering the property with a perpetual easement that might impinge on future uses.

The DeBoers and Lithia Motors have contributed a great deal to this community, not least through their decision to build the new headquarters building downtown. Lithia could have constructed the building on its property near the airport at substantially lower cost, but corporate officials wanted to invest in the future of downtown Medford.

Being good corporate citizens, however, should not entitle them to special treatment. The city should make sure any deal benefits downtown Medford, and that the price is no higher than absolutely necessary.

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