Neighbors push back against Gresham-Barlow School District’s ‘fire sale’ of Salquist property

Published 5:00 am Thursday, March 20, 2025

Community members in Gresham’s Kelly Creek Neighborhood are outraged over a series of what they describe as “baffling” decisions being made by the Gresham-Barlow School District, which is poised to sell a large plot of land some say should be held for a future school site.

The 12.4-acre Salquist Property, 5600 S.E. Salquist Road, is situated within Spence Acres, a subdivision of Kelly Creek out in East Gresham. The district wants to sell the parcel to fund construction of a new administrative building. Using an asset gathering dust makes sense since bonds are notoriously tricky to pass in East County, especially if the ask doesn’t directly uplift students.

So the district set out on a plan that has been brewing for nearly half a decade. It hired KMO Real Estate to handle the property, found a buyer in the Troutdale-based HEX Investments LLC, and secured a sale agreement of $4.4 million for the land, where it intends to build 143 townhouse lots, a stormwater tract and three open space tracts.

“We looked at all the property owned by the school district, and this was one that they said wouldn’t work for a school,” said Sue O’Halloran, KMO Realty. “This is an appealing site for developers because the land is flat, the utilities are all in place, and it remains close to the city center.”

Despite the land being shovel ready, the process was anything but smooth.

A series of complicated procedural hiccups slowed the sale and spurred strong pushback from Friends of Kelly Creek, a group of neighbors who want the district to reconsider selling what many see as an invaluable asset.

“We want the school district to invest in our schools and students and take care of them, not fund administrative offices,” said one neighbor during a community meeting.

Selling Salquist

Back in August 2021 the Gresham-Barlow School District evaluated its properties for future use/potential sale to fund future needs.

One of the desires was for a dedicated location to house district leadership and administration.

Currently the Gresham-Barlow School District leases space from the city of Gresham in a building that also contains council chambers. The district said due to the city mulling “significant changes to the property,” which could include a complete demolition, a new space was needed.

KMO Real Estate was brought on to facilitate the sale of two district properties: vacant spaces on Salquist Road and Chase Road, both in East Gresham.

The Chase property is far less appealing. It is about 2 acres and abuts Kelly Creek Elementary School. Access to the lot is tenuous — the only way right now is via a long private driveway wedged between other homes. Inquiries have been made about a second access point, but it would require an easement that would remove some of the school’s recreation field.

Salquist, in contrast, leaves developers drooling, which sped up the process of finding an interested buyer.

In January 2023 KMO submitted a pre-application for 80 single-family residences on the Salquist lot (before new edicts from government that pushed middle housing).

In June 2023 a neighbor asked Jordan Ely, then-finance officer for the district, about the property, and whether it would be sold. They were told there were no plans for that to happen in the immediate future. Ely left the district in December 2023 and was replaced by Dennis Clague. That same month an offer was submitted by Developer David Grey, of HEX Investments, to buy the Salquist property based on a price set by KMO.

The property was never listed on the Regional Multiple Listing Service (RMLS), and no sale signs were posted. KMO explained that it’s common not to use RMLS for large parcels, as the website is typically used for smaller properties.

“Developers knew this Salquist sale was coming, so those who were interested were calling and asking when it would be available,” O’Halloran said.

When asked, KMO told neighbors that six local developers were contacted directly about Salquist (two of those names are connected to HEX). Friends of Kelly Creek contacted the other four — three of whom allegedly denied being told about the property.

If there had been a lack of interest, further steps would have been taken, said KMO. But HEX leapt at the chance, and the school district greenlit all the decisions — agreeing to work with the developer and finalizing a sale price.

In May 2024, HEX submitted its own proposal for the land, featuring the townhomes. That drew further ire from neighbors, who believed it would be fewer single-family homes. During an early neighborhood notification meeting in late summer of 2024, HEX explained the single-family home route would have required a price tag of $2 million to turn a profit, which is why they went with townhomes — neighbors say that statement was “walked back” during that same meeting.

Many feel the district could ask a higher price for the property. There are concerns about how it was placed on the market, and how streamlined it felt for HEX to gain access to the property.

On Monday, March 10, a land-use application sign appeared at the Salquist property, which means the city of Gresham planning division has received a formal land-use permit request.

“We knew this land would be developed, but this feels like a back alley deal,” said a neighbor.

“This is a prime piece of land,” another added.

A question of ‘Surplus’

One of the concerns neighbors have raised is how the decision to sell was handled, saying the district bylaws require any sale of assets, like property, to have a “surplus vote” from the school board.

That has not happened with the Salquist property.

Instead the district pointed to ORS 332.155 as the mechanism to go forward with its plans. That law allows a school board to lease, sell and convey all property of the district if deemed to not be required for school purposes.

Neighbors feel the property would be perfect for a new school. The district disagrees, saying it is too small — policy is for a new elementary school to have 10 acres plus 1 acre for every 100 students. There are two other schools in the Gresham-Barlow footprint that are on land smaller than the Salquist property.

The vote to sell Salquist took place in March 2024, with a unanimous vote by the board — Director David Ligatich was not present at the meeting, and one of the “ayes” came from Cathy Keathley, who has since vacated the role following a successful campaign to join Gresham City Council.

But relying on that vote doesn’t follow documents, meetings, discussions, and actions that led up to this point, all of which repeat the need to “surplus” the land.

The district continued to attempt to place a surplus decision before the board. During a meeting last November, a resolution appeared on the schedule to allow the board to officially declare the property “not required for school purposes and, therefore, surplus and subject to sale.” That vote never occurred despite it being an agenda item.

A few months prior, during a meeting in September, the board retroactively declared Chase as surplus. The same was not done for Salquist. A few weeks later KMO sent a letter attempting to terminate the sale agreement with HEX, largely citing the surplus elephant in the room.

“We were directed to send a termination letter, at which point I told (the district) they would need legal advice and have attorneys meet to figure it all out,” O’Halloran said.

A response came in the form of a letter via law firm Schwabe Williamson and Wyatt, on behalf of HEX, threatening the district with a $12 million lawsuit to recover lost profits and costs incurred during due diligence. In that letter the law firm wrote: “The (KMO letter) states the district must terminate the agreement with HEX because the property has not yet been declared ‘surplus,’ which the district contends is necessary for it to sell its assets.”

In January the district agreed to honor the sale agreement, which did not change during that legal speedbump. Because of the delays, an extension was granted, with a closing date pushed to March 16, 2026, for the property.

“We feel like the district folded under pressure from that lawsuit,” Friends of Kelly Creek said.

While a lot of this boils down to technical procedures, Friends of Kelly Creek say they simply want the school district to follow its own guidelines. They want the school board to officially vote to surplus the property before it is sold.

“They should be crossing their ‘Ts’ and dotting their ‘Is,’” said a neighbor. “We understand the district can do what it wants as long as they follow procedure.”

Advocating for students

On a sunny Saturday afternoon, March 8, many of the members of Friends of Kelly Creek found themselves enjoying each other’s company — they sipped coffee, chatted about life, shared exciting upcoming vacations, and mulled nearby Barlow boys basketball’s chances at a state trophy (they got it done two weeks later with a joyous outpouring of support).

Eventually the conversations shifted to the looming development of the Salquist property.

Losing the land will be a tough pill to swallow. The vacant space has become a haven for wildlife and popular location for dog walkers. It’s not uncommon to bump into a friend while going on a stroll through the area that blends into the adjacent Southeast Community Park, one of the six undeveloped parks owned by the city of Gresham.

And while many would love to see that location, which abuts quite a few homes, reserved as a green space, there is a dose of reality most have come to terms with — development is coming. The hope is the outcome will uplift kids.

For the district that is with a new admin building.

KMO has been working with the district for a new administrative building. The site with the most promise was the soon-to-be former Gresham Library, in Downtown, which will be vacated once the new East County Library is completed.

Though the district coveted that 20,000-square-foot building, they lost out. The city of Gresham, which also had been circling, snapped up the prime real estate. It is unknown what the city plans for that building. There is a potential avenue of the district leasing space from the city — though that places them in the same situation they currently are yearning to be free of.

The district says regardless of whether a new location is available for the office space, there is no real pressure on waiting to sell the property. The plan is any funds received will be invested in a local government investment pool to accrue interest until needed.

The neighbors have other ideas.

They are no strangers to development — the sound of hammers and heavy equipment has been ringing out for the last half decade during an explosion of growth.

Right now 750 homes are already being built nearby, which doesn’t include the proposal from HEX. There are serious livability concerns in the neighborhood. The rural roads weren’t designed to handle this kind of population, with narrow roadways and few sidewalks. There is a dearth of walkable amenities and businesses, putting a further strain on those roads, and parking issues within many of the neighborhoods.

And neighbors are worried about overcrowding at the schools. Estimates place Barlow High at about 1700 students, and the community have heard the capacity for the school is 2000.

The district said new schools are not needed, citing declining birthrates nationwide that are leading to lower enrollment.

“We just want what is best for our kids,” Friends of Kelly Creek wrote.