Salem prepares Oregon State Hospital site for development

The demolition of five buildings, made famous by the movie One Flew Over the Cuckoo’s Nest, is expected to be complete by the end of June.


The legislature approved $8.3 million in funding for the demolition in 2015. Four other buildings, located on the hospital's North Campus, were demolished earlier this year.

Although Salem is optimistic about potential development on the property, not everyone is pleased with the outcome.

Over the past several years, developers and community members have pushed for preserving the buildings on the 47-acre site.  

For example, Alex Rhoten, Principal Broker with Coldwell Banker Commercial Mountain West Real Estate, represented Chusal, a group of 14 architects, developers, investors and planners who first submitted a proposal in 2016. Rhoten says the process was confusing and the demolition unfortunate.

“The plan to demo the buildings and sell one of the remaining buildings to the city for subsidized housing was already in motion, and we couldn't muster the political will from anyone at the state or city to stop the demo plan,” he says.dome

“I toured a couple of very interested Colleges through the property and discussed classrooms, dorms, etc.,” he says.

“The existing buildings would have been surrounded by housing and supporting retail (restaurants, mini market.) We felt that there was a demand for institutional buildings in the valley and we would be the beneficiary of the explosive growth in Portland.”

Neighbors are also displeased with the decision to demolish the buildings, the Salem Weekly reports. The North East Salem Community Association says DAS didn't seriously consider preservation as an option. 

The state disagrees.

“This being a large redevelopment site in central Salem — a rare opportunity for developers and for the community — we’re doing our best to encourage thoughtful use and quality development which will serve the community for decades to come,” says Darrin Brightman, Real Estate Project manager for the Oregon Department of Administrative Services.

The Department of Administrative Services took control of the property from the Oregon Heath Authority in 2012 after the site was deemed
surplus.

Once OHA vacated the site, DAS began the lengthy selling process. First, neighbors proposed a list of nine recommended values for site development, including a designated park, green building and opportunities for non-profits to locate on site.

A Request for Qualifications based on this list yielded one response, but DAS declined to proceed and moved on to a Request for Proposal in 2013.

One group responded, but Brightman says the group didn’t have access to  capital.

A second RFP was released in 2016, which turned up more offers. One wanted the site clean, Brightman says; the other “bid at a very low offer price that wouldn’t even meet when we spent on the study.”

He adds the proposal included plans “not appropriate” for a national historic district.

The North Campus, constructed largely in the 1950s, was placed on the National Historic Register in 2008.salem dev map

The “low offer” bid from Chusal is a little more complex. Chusal made a total of three offers to purchase the site as-is. Their offers were denied each time, including the third as recently as Jan. 25, 2017.

Rhoten says the land is still in a good location and believes other community opportunities will come forward. “So all is not lost.”

Looking forward, Brightman says he’s excited about the site's economic potential.

Brightman says they are looking for a developer whose vision includes retail, housing and open space.

“One of the things that Salem doesn’t have a lot of outside the immediate downtown core is a walkable neighborhood,” he says. “This large of a site is well-connected to transit and so close to everything.”

And with a 2% vacancy rate, any additional multi-family housing helps.

The city is also optimistic, says Kenny Larson, Salem’s communications manager.

“We hope the market responds favorably to this unique development opportunity and bring with it uses that are compatible with, and an enhancement to, the surrounding neighborhood as well as our City Center,” Larson says.

A third RFP for the cleared site will be sent out in the next two weeks, with proposals due in August.

Brightman dismissed the idea that people were still unhappy with the direction of the development. “Pretty much everyone’s on board with what we've got here,” he says.

The state decided to keep two of the campus buildings intact. Yaquina Hall will be redeveloped into 50 apartments by the housing authority. The Dome Building currently serves as the Department of Corrections headquarters.

Katy Sword

Katy Sword is the digital news editor of Oregon Business.

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1 comment

  • Susann Kaltwasser
    Susann Kaltwasser Thursday, 20 April 2017 18:17 Comment Link

    WOW! On board! Who's he been talking too. Only thing that neighbors have is resentment, foreboding as to what they will get and a better understanding that the State is not a team player. Salem lost a great opportunity for something much needed for jobs in the area. A school with housing would have been perfect.

    Sadly, DAS wasted over $8 million of taxpayers funds just to create something the neighbors did not want....just like they did with the Blind School. Our politicians sold us down the river once again too!

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