Late in the evening of Feb. 7, 2024, Andy Dey, at that time superintendent of the Eugene school district, was jubilant. The school board had just approved his plan to buy the empty former Wells Fargo building in downtown Eugene and remodel it into the district’s administrative offices.

At Dey’s direction, the district the next day sent buoyant announcements to media, staff and parents. Dey gave upbeat interviews.

But the purchase involved a secret that the district has never disclosed to the public and of which school board members appear to have been unaware: To buy the building, the district had to hand a quick profit that may have approached $600,000 to four Portland commercial real estate brokers who the previous year had obtained control over, but not ownership of, the building.

The deal worked like this, records and interviews show: The Portland executives in early 2023 secured from the vacant building’s owner, banking giant Wells Fargo, an option to buy the property. That was just before Dey began zeroing in on it for district administrative space. Once the school board finally voted on Feb. 7, 2024, to buy it, the Portland executives’ company, NMDM LLC, quickly exercised its option and bought the building from Wells Fargo for $2,225,000 and “other good and valuable consideration,” according to the deed. The nature of that extra “consideration” is unclear.

Then, seven days later, NMDM flipped the building to the district for $2,894,000, according to the deed. The deal gave NMDM a potential markup of up to $669,000, or 30 percent — although NMDM likely incurred significant costs in the deal, such as paying Wells Fargo for the option. How much profit the group made is not publicly known.

Board reversal

Did the district get a good deal anyway? No one can be sure.

But the district has been trying to sell the place for nearly a year, with no luck. Just four months after buying it, the board soured on the idea of spending $10 million-plus for the remodel. So, it put the building up for sale, asking $3.2 million.

“I’m hoping that we can sell it, and ideally we can sell it for at least what we purchased it for,” says Jenny Jonak, current chairperson of the Eugene school board. Jonak had opposed the purchase. But at the February 2024 board meeting she was outvoted 5-2. Jonak says she didn’t know the purchase entailed an option and a flip until Eugene Weekly recently explained it to her. “Had I been aware of it [at the Feb. 7 meeting], I would have asked a lot of questions about it,” she tells the Weekly. “I would have wanted to know if we could get a better price.”

Just three months after the February 2024 vote, the board didn’t renew Dey’s employment contract, for reasons unrelated to the Wells Fargo building. Then, the board unanimously voted to list the building for sale.

The property is a clunky 60-year-old downtown landmark, 50,000 square feet of office space on four stories, featuring a large, non-functioning escalator.

Few replies

The Wells Fargo flip saga appears to be a case of sharp-witted Portland real estate executives beating school district leaders to the punch by getting the purchase option even as the district was engaged in a very public scramble to find sizable office space in Eugene. And, crucially, the executives lucked out as the district became fixated on buying the Wells Fargo building.

The option and flip sequence is also a saga that school district leaders — other than Jonak — won’t talk about, and have never explained to the public. Dey appears to have kept the details hidden from a KLCC reporter.

Of the seven school board members who voted on the purchase — all are still in office — only Jonak would speak with Eugene Weekly. Five other board members, who all voted for the purchase, did not reply to repeated emails asking about the flip. One other board member, Rick Hamilton, who voted against the purchase, declined to comment.

Dey declined to be interviewed about it. Three of the four members of NMDM did not reply to emails and phone messages. The fourth member denied being involved in the transaction. Wells Fargo declined comment.

Options aren’t uncommon in real estate. They typically give a party the right to buy a property at a set price for a fixed period while they mull a purchase. Terms of NMDM’s option are unknown.

Longtime Eugene commercial real estate broker John Brown says that in March or April 2023, Dey asked him to help find office space for the district. Brown says when he looked into the Wells Fargo building, Portland real estate broker Nathan Sasaki — a member of NMDM — had already locked it up with the option. The district’s only avenue was to negotiate with NMDM, Brown says. That dragged on about 10 months as the district calculated remodeling costs. The district “did all their due diligence,” he says.

Few records available

During 2023, Dey met with the school board at least twice in closed executive sessions to discuss the planned purchase. It’s unclear what he told the board. In response to Eugene Weekly’s public records requests, the district has produced few relevant records; the district refuses to disclose some documents on the deal that it considers confidential and that it gave to board members.

In October 2023, the district signed an agreement to buy the building from NMDM for $2,894,000, subject to board approval.

At the Feb. 7, 2024, open-to-the-public board meeting to approve the purchase, nobody mentioned the building price, the option, who owned the building or who the district would buy it from.

Jonak, who had joined the board in July 2023, says the board was focused on the overall cost of buying and remodeling. The board never voted on a specific purchase price, she says.

At the February 2024 meeting, “what was before us was to approve an all-in amount, basically an up-to level, that the district could spend, and … that was supposed to include the purchase price and the amount of contemplated remodeling,” Jonak says. The total was about $13.5 million.

“It never occurred to me that there was some sort of flip happening,” Jonak says, adding she would be “surprised” if any other board members had known about the flip.

What’s the building worth? That hinges on finding a buyer who wants that space, she says. “My objections to the building were not because it lacked fair market value,” she adds. She just didn’t think buying office space was a district priority.

Futile EWEB effort

But buying office space had been a much-publicized district priority in early 2023, following the district’s ill-fated effort to buy the former Eugene Water & Electric Board headquarters.

Soon after the school board picked Dey for superintendent in the summer of 2022, he quickly took the lead in seeking an office building for the district’s 200-plus administrative staff, long headquartered in a former school building on North Monroe Street in the Whiteaker neighborhood. A new office would free that old building for teaching space, so the argument went.

When EWEB put its riverfront building in Eugene for sale in late 2022, Dey jumped at the chance and announced the district would make a bid. But the city abruptly pushed the district aside and bought the building for a new city hall. Fuming district officials were back to square one in their very public quest.

Also in late 2022, the Wells Fargo building came into play. Wells Fargo vacated the property and recruited the Colliers real estate brokerage in Portland to list it. “The bank wanted it sold quickly,” a source at Colliers tells EW. Wells Fargo didn’t set an asking price. Instead, it told inquiring brokers that the bank hoped to get $2.5 million to $3 million, says the source.

The NMDM members took a shine to the place. All four are experienced Portland commercial real estate brokers. Three are executive managing directors at Cushman & Wakefield’s Portland office: Doug Duerwaarder, Matt Johnson and Mark Carnese; Sasaki is the owner of the APEX Real Estate Partners brokerage in Portland. The four formally registered NMDM LLC in June 2023 with the Oregon Secretary of State’s Office.

Johnson says, “I was not involved in that [Wells Fargo] project. I would help you if I could.”

Dey sought to keep NMDM’s role in the deal hidden from the public. The day after the Feb. 7, 2024, vote, a reporter from the KLCC radio station asked Dey who the district was buying the building from. At that time, the building was still owned by Wells Fargo, which would, within a week, sell it to NMDM LLC, which would then flip it to the district. Dey “declined to name the current owner of the building,” KLCC reported.

Bricks $ Mortar is a column anchored by Christian Wihtol, who worked as an editor and writer at The Register-Guard in Eugene 1990-2018, much of the time focused on real estate, economic development and business. Reach him at Christian@EugeneWeekly.com.