The Medford Urban Renewal Agency demanded on Thursday to know the price a company owned by two Lithia executives is paying for the Red Lion Hotel before the city purchases a portion of the property.
"Their reluctance to disclose the purchase price raises red flags for me," MURA board member Chris Corcoran said.
Corcoran led the charge against finishing the deal, and was supported in a 6-2 vote by the MURA board to send the issue back to the City Council for review.
The MURA board is made up of members of the City Council. Both bodies are involved in the purchase talks because the city would cover the initial costs and then be reimbursed by urban-renewal funds as they become available.
DHD LLC, a company run by Mark and Sid DeBoer, is trying to buy the almost 8-acre Red Lion property, which is on the market for $3.5 million.
The DeBoers want to sell a less-valuable, 3.29-acre portion of the hotel property to the city for $1.6 million as part of the deal. The city would then turn its portion of the property into a parking lot.
The parking lot would help address an identified shortage of parking in the area, but also could be used by the new hotel owners for events.
The City Council has agreed to the deal, but questions about how much the DeBoers are paying for the Red Lion have been raised in recent weeks.
Councilor Dan Bunn, who wasn't present at the MURA meeting Thursday, has previously voted against the deal.
"I'd be uncomfortable voting for this if we didn't know the price," Bunn has said.
Corcoran said city officials owe it to the public to explain the purchase to make sure it's a fair deal and to avoid embarrassment if it's discovered the city is paying more than half the price.
Responding to an audience member who described the deal as crony capitalism, Corcoran said, "I have no doubt in my mind that it is not cronyism."
Councilor Bob Strosser also rejected any suggestion of cronyism.
He said the deal is likely a good one for the city, but the council needs to be responsive to the public's concerns that the city is paying a fair price.
"We need to get rid of the kind of conspiratorial comments that have been made," he said.
The councilors said they thought $11 a square foot was a fair price to pay for the property, compared with other sales in the downtown.
The City Council likely will have an executive session in the next few weeks in hopes of finding out what the DeBoers are paying for the Red Lion. The purchase price might not be revealed publicly, but the council would at least know what share it would be paying.
Mayor Gary Wheeler, a MURA board member, said the deal would be a boost for the city, noting that he understood the DeBoers were planning to invest $2 million to $3 million into improving the Red Lion.
Wheeler said the city is looking for good deals on downtown lots, but he didn't think the city should look into other people's business, referring to the DeBoers' transaction for the Red Lion.
He said MURA's goal is to improve the downtown, not make a profit on land deals.
"Urban renewal was never set up to be businesslike," he said.
Wheeler and Councilor Al Densmore cast the two dissenting votes Thursday. Both Densmore and Wheeler said the property would add needed parking to the downtown, improve Bear Creek and open the door to a possible pedestrian bridge to connect it to Hawthorne Park.
City Attorney John Huttl warned the MURA board about a July 2 deadline to complete the transaction. The council has committed $25,000 in earnest money toward the deal that could be lost, he said.
Huttl said there's a possibility that the DeBoers could insist that the city follow through with the deal based on agreements that have been approved so far.
Strosser said the city should ask to extend the deadline another five to 10 days to allow enough time for the council to meet. He said extensions are not that uncommon in real-estate transactions, particularly if both sides are operating in good faith.
Corcoran said he'd prefer to walk away from the deal if the city can't find out what share of the purchase price it is paying.
"I'd rather lose $25,000 than be embarrassed by paying more than DHD," he said.
In other business, the MURA board approved selling to Lithia Real Estate Inc. a small lot that was formerly the Greyhound bus barn for $117,500, or $15 a square foot. MURA purchased the property for $227,500 in 2007, before plans for The Commons, a downtown redevelopment project, were scaled back. The bus barn that was previously on the site has since been torn down, which MURA members said made the property less valuable.
Reach reporter Damian Mann at 541-776-4476 or firstname.lastname@example.org.