Multnomah County Real Estate Purchases

_{Report issued August 2026.}

Report pdf, including management and auditor responses

Report highlights

Land acknowledgment

This audit is about real estate purchases including land, so we want to take a moment to recognize the history of this region.

“With gratitude we acknowledge that the land on which we reside, work, and gather is the traditional territory of numerous Indigenous peoples who have stewarded this land for thousands of years. Today, this land is known as Multnomah County, Oregon.

We recognize and honor the original inhabitants of this land, including the Multnomah, Kathlamet, Clackamas, Chinook, Tualatin Kalapuya, and other tribes and bands who call this area home. We pay our respects to their elders, past and present, and extend our gratitude for their ongoing contributions to this community and the world. Their deep connections to the rivers, mountains, forests, and valleys of this region continue to shape the identity and spirit of Multnomah County today.

We acknowledge the historical and ongoing injustices that have been inflicted upon Indigenous people, including forced removals, broken treaties, and systemic erasure of their languages, cultures, and traditions. We understand that this acknowledgment alone is not enough to address these past wrongs, but it is a vital step towards building a more inclusive and equitable future.”

Source: Cheryl Taylor, Multnomah County Ombudsperson

Staff acknowledgment

We thank the Facilities and Property Management Division management and staff for their help and expertise during this audit. Their insights were invaluable. We appreciate their dedication to improving the county's land and building acquisition processes. 

Background

Why we did this audit

The county has made numerous land or building purchases in the last 10 years. We received a complaint to the Good Government Hotline regarding multiple purchases where the county may have paid over market costs and did not have properties appraised when making the purchases. In some cases, costs for improvements have ballooned over what the county forecasted. 

About county real estate purchases

Multnomah County's capital budget was set at $374.4 million for fiscal year 2026. The county’s capital investment portfolio is separated into three capital groups: Facilities and Property Management, Transportation, and Information Technology. The Facilities and Property Management fund group ($288.9 million) is the largest of the capital improvement funds. 

Our audit focused on the real estate purchases in the Facilities and Property Management portfolio. The Facilities and Property Management Division, in the Department of County Assets, manages over 150 buildings in Multnomah County. The division’s responsibilities include working with county partners each year to identify facilities’ needs, update the five-year capital improvement plan, and propose new major projects.

Multnomah County’s Facilities and Property Management Division spent $50.4 million on real estate purchases between 2019 and 2025

Real estate purchases do not occur as often as other financial transactions; however, they involve a large investment of county dollars. Real estate purchases also have long-term financial considerations due to ongoing operational and maintenance needs.

The Multnomah County Facilities and Property Management Division spent $50.4 million in real estate purchases between 2019 and 2025. The division spent the most on land and building purchases, $17,775,000, in 2021. There were no building purchases in 2024. 

The primary purpose for real estate purchases was buying facilities to provide public services

Between 2019 and 2025, the county successfully facilitated real estate purchases on behalf of the Health Department, Homeless Services Department, and Library. The most common uses of new buildings were to provide health care services, provide shelter services, and open and remodel library locations. 

County staff and external real estate brokers facilitate the purchase process

Based on interviews with county staff and external stakeholders, we mapped the steps in the real estate purchase process. The decision-making process for real estate acquisition begins with the Board of County Commissioners allocating funds through the budget process and ends with execution of a real estate deal.

In the budget allocation stage, departments submit their program needs and specific requirements. The Board allocates funding. Facilities staff work alongside a third-party real estate broker who conducts the search. During this phase, the County Attorney is formally notified.

The county’s real estate purchase process 

In the letter of intent negotiation stages, the third-party real estate broker and Facilities staff negotiate with the seller. The letter of intent is a non-binding agreement that outlines the preliminary terms for the deal. Facilities and the County Attorney also actively participate in negotiations of the Purchase and Sale Agreement, the legally binding contract that formalizes the terms of the real estate agreement. Once under contract, the due diligence stage begins. Facilities staff conduct due diligence procedures to assess the physical condition while the County Attorney reviews titles and addresses legal risks. Finally, the process concludes at closing, where Department of County Management staff coordinate with the title company to wire the funds.

The county’s key strengths in real estate purchases include:

• Successfully completing projects during tough times like the COVID-19 pandemic 
• Improving the county’s real estate purchase processes and learning from past projects to enhance future results
• Conducting five-year capital planning and publishing the results  

County needs to develop real estate purchase policies 

Multnomah County's policy currently requires a formal, multi-phase Board approval process only if a capital project includes construction or remodeling

According to Government Finance Officers Association best practices, public sector organizations should have a multi-phase approval process for capital purchases. The county lacks an administrative procedure for real estate purchases. The primary administrative procedure that touches on real estate purchases is FAC-1, which only includes property acquisitions that include immediate renovations or construction.

FAC-1 does not require Board approval for property acquisitions exceeding $1 million unless a construction or renovation component is included. The lack of Board involvement in these major transactions can allow purchases to move forward without adequate oversight. As a result, fiscal transparency and public accountability may decline. Moreover, this limits the Board’s ability to monitor project progress at various stages.

To mitigate this risk, the county should establish a comprehensive administrative policy to mandate Board approval for all real estate acquisitions exceeding $1 million, irrespective of immediate development plans.

The county’s approval process under FAC-1

County management voiced concerns that public Board oversight could force negotiations into the public eye, thereby compromising the county's ability to secure favorable terms. However, ORS 192.660(2)(e), allows government bodies in Oregon to hold closed executive sessions "to conduct deliberations with persons designated by the governing body to negotiate real property transactions.” This protects the county's leverage while maintaining oversight over multi-million-dollar expenditures.

Multnomah County has not established specific roles and responsibilities in the real estate purchase process

Real estate purchases are large financial investments that require coordination between internal and external parties. While Multnomah County Code broadly assigns the Department of County Assets with overseeing the “acquisition, management, and disposition of facilities and lands,” there is currently no county administrative procedure defining specific roles and responsibilities in the real estate purchase process. 

We learned that during past purchase processes Facilities and Property Management Division staff may not have been involved in the purchase process until key decisions had already been made. As a result of Facilities staff’s lack of involvement, there were concerns that the county may have overpaid. Facilities staff have expertise in due diligence in real estate purchase processes and assessing facility conditions. 

In recent years, the county has informally adopted the practice of Facilities staff leading the real estate purchase process. This practice could be strengthened by formalizing Facilities staff’s role in county administrative policies.

County conducts robust planning and stakeholder involvement in some purchases, very little in others

Best practices from the Government Finance Officers Association capital planning and asset management state that organizations should facilitate stakeholder involvement in capital projects during the planning, design, and construction phases of capital projects. 

We found that stakeholder engagement practices vary widely between departments. The Library conducted stakeholder engagement throughout the planning, design, and construction phases for all projects. However, the Health Department and Homeless Services Department projects overall had less stakeholder engagement, particularly in the planning process. Best practices note that gathering stakeholder input early in the planning process helps to support the success of the project. 

The Library’s robust stakeholder engagement practices in the planning phase included:

• Engaging in a multi-year planning process that engaged a diverse array of stakeholders. 
• Mapping service needs to invest in areas of the county that had the most barriers to accessing services.
• Allocating dedicated project staff positions. 

The Library’s practices provide an example of how the county has engaged with stakeholders early to determines users’ needs and expectations, even before the county had identified all project parameters, including completed purchases. Engaging stakeholders early may also prevent project disruptions after the county has purchased a building. For example, the county did not move forward with the East County Homeless Resource Center project as originally planned based on stakeholder feedback about the purchased site. 

By setting a clear standard on project planning and engaging stakeholders across departments, the county can learn from what has worked well, better allocate resources, and position projects for successful outcomes. 

We want to recognize the involvement of Board members in encouraging stakeholder engagement in recent acquisitions. For example, the Health Department’s Sobering Center and Crisis Stabilization Center planning process involved stakeholder engagement, which is described in the “Sobering & Crisis Stabilization Center Plan” report. The planning process helped to inform the criteria for the purchase of the facility. Homeless Services Department staff have also worked with Board members to develop tools for improving stakeholder engagement practices in the later stages of projects. 

The county’s due diligence process shows wide variation among projects

The county currently lacks a formal policy or set of procedures for conducting due diligence on land and building purchases. As a result, the due diligence conducted across projects shows notable variation, and the process may not consistently assess risks and gather necessary information. 

We selected due diligence steps to review based on discussions with county staff and a review of practices from other jurisdictions. The county conducted the American Land Title Association (ALTA) Land Use Survey for all real estate purchases that we reviewed from 2019-2025. The ALTA Land Use Survey is a specialized boundary survey to assess potential legal liabilities. The county also conducted asbestos and lead inspections for more than half of purchases. The remaining due diligence assessments noted above were conducted for less than half of purchases.

Some due diligence steps may not be conducted if a building is planned to undergo demolition, the purchase was for a parking lot, or due to other extenuating reasons. However, the county does not document the reason a due diligence step is not conducted. This has led to unclear standards about what steps should be taken during the due diligence process. 

When due diligence steps are skipped, the county loses an opportunity to learn about potential liabilities and negotiate a fair purchase price. Facilities should develop a consistent policy for due diligence that includes requirements to document when specific steps are not conducted.

Multnomah County relies on broker price opinions instead of formal independent appraisals for real estate purchases, which may have led to possible overpayments of over $1 million

For this audit, we hired a certified appraiser to conduct retrospective appraisals. We wanted to see if the county paid a fair price for four properties bought between 2020 and 2023. 

This selection allowed us to compare transactions during the unique economic conditions of the COVID-19 pandemic and the following market changes. The properties the appraiser reviewed represented purchases by three different departments: Homeless Services Department, Library, and Health Department. The properties are the Days Inn Motel, Oak Street Village, Arbor Lodge Shelter, and East County Library sites.

The county currently relies on broker price opinions to determine the value of real estate purchases rather than independent, certified appraisals. Specifically, the county contracts with two real estate brokers whose compensation is commission based. This reliance on broker price opinions introduces an inherent conflict of interest that undermines the objectivity of the valuation process.

The inherent conflict of interest arises because brokers are compensated via commissions tied to the final sale price, creating a financial incentive that may encourage higher transaction amounts. Additionally, brokers have an incentive to ensure the deal closes to earn their commission, which may involve suggesting a price the seller will easily accept. This risk is worsened by the reliance on broker price opinions, which are less regulated and more subjective than independent, certified appraisals. As a result, the county faces an increased risk of overpaying for property acquisitions due to the absence of an independent valuation process.

The county does not typically get a loan when purchasing real estate, which makes an independent appraisal more critical. In a financed transaction, the bank acts as an independent check against overpayment since they will not lend a buyer more than the property's appraised value to protect their collateral. Paying in cash removes this secondary safeguard, leaving the county to absorb the full risk of overpaying. Therefore, the independent appraisal becomes the primary fiduciary check to ensure taxpayers are not subsidizing an inflated asking price.

This vulnerability was highlighted by the retrospective appraisal of four property acquisitions we did during this audit, which identified potential overpayments totaling $1,180,000. To mitigate this overpayment risk, we recommend that the county develop and adopt a formal real estate acquisition policy that mandates the use of independent, certified appraisals for all property purchases.

The table below shows the main structural and regulatory differences between a broker price opinion and an independent appraisal. 

The appraiser found that the county potentially overpaid for Days Inn Motel and Oak Street Village Sites

* A retrospective appraisal determines an estimate of the property’s value as of a historical date.

The chart above shows the property values for the four sites reviewed in the audit: Days Inn Motel Site, Oak Street Village Site, Arbor Lodge Shelter Site, and East County Library Site. It compares the county's actual payment to the independently appraised fair market value. These values come from independent appraisals that meet the Uniform Standards of Professional Appraisal Practice. 

The chart reveals that the county paid more than the appraised value for two of the four properties. This led to possible overpayments totaling $1,180,000 for these two sites:

• Days Inn Motel Site: The purchase price was $840,000 greater than the appraised value.
• Oak Street Village Site: The purchase price was $340,000 greater than the appraised value.

There could be instances where the county chooses to pay above market rate due to a strategic decision. However, management cannot make an informed decision to pay a premium if they rely on a broker price opinion, rather than a formal appraisal, to establish the true market baseline. 

Recommendations

We recommend that the Chief Operating Officer, no later than March 1, 2027:

1. Establish a countywide policy designating the Facilities and Property Management Division as the lead for all land and building acquisitions.
2. Establish a countywide policy to establish clear standards for the due diligence process, including a checklist for required steps and a written explanation for when tests are not conducted.
3. Establish a countywide policy requiring departments to document the research and planning conducted prior to a real estate purchase. This documentation should demonstrate that the proposed purchase is supported by a clear understanding of service needs, gaps in current service delivery, identification and engagement of relevant stakeholders, and the potential for service expansion.
4. Create a new Facilities and Property Management Administrative Procedure that includes similar Board oversight components as FAC-1, but for all land or building purchases greater than $1 million. 
5. Establish a countywide real estate acquisition policy that mandates independent, certified appraisals for all property purchases. 
    

Objectives, scope, & methodology

The objectives of this audit were to: 

• Assess departmental coordination and oversight during the purchase process.
• Evaluate the reasonableness and fairness of purchases.
• Assess the effectiveness of due diligence procedures in land and building purchases.
• Evaluate the community engagement process and end-user needs.

The scope of this audit was:

During this audit, we reviewed real estate purchases from the calendar years 2019 through 2025. We only examined land and building purchases; we did not review leases or room block agreements.

To accomplish the audit objectives, we:

• Conducted about 30 interviews, including:
  • Department of County Assets leadership 
  • Facilities and Property Management staff 
  • County Attorney staff 
  • Property managers 
  • Multnomah County Library, Homeless Services, and Health Department staff
  • Chief Operating Officer’s staff 
  • County brokers
  • Independent appraisers 
  • County Commissioners
  • Staff from other jurisdictions
• Hired an appraiser to conduct an independent retrospective appraisal, in accordance with the Uniform Standards of Professional Appraisal Practice, of four county buildings. Reviewed documents provided by the Facilities staff, County Attorney, and County Assessor’s Office. 
• Researched best practices and academic literature on real estate purchases. 
• Reviewed audit real estate acquisition and capital project audit reports from another jurisdiction. 

For this audit, we analyzed real estate purchase data from January 1, 2019 through December 31, 2025 from Workday, the county’s enterprise planning resource system, and from Tririga, the county’s system of record for work requests, building assets, leases, and space management.

We assessed the reliability of the data by (1) performing electronic testing for obvious errors in accuracy and completeness, (2) interviewing county officials knowledgeable about the data, (3) reviewing related documentation, and (4) close collaboration with county officials to identify any data problems. Our office has determined that the data were sufficiently reliable for the purposes of this report.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Audit staff

Nicole Dewees, Audit Director

Sura Sumareh, Senior Auditor

Mical Yohannes, Senior Auditor