The state agency trying to find new space for the Corvallis Driver and Motor Vehicle Services Division office turned down a chance to keep the doors open for two more months to improve its bargaining position.

"DAS is in the process of negotiating with the owners of other properties," said Lonn Hoklin, a spokesman for the Department of Administrative Services. "And it's not a good negotiating tactic to continue to pay above-market rates while trying to find other quarters."

The state Department of Administrative Services broke off negotiations with the owner of the building, Kelsay, Dayton and Kelsay LLC, after the two sides failed to reach agreement on a new lease for the property at 3550 S.W. Deschutes Ave.

Local real estate broker Bill MacHugh stepped in, entering a contract to buy the property and offering to let DMV stay through Nov. 30 for $6,000 a month plus taxes, about $3,400 a month below the current lease rate. MacHugh said he would try to negotiate a new lease but that the state would be free to pursue other options.

DMV closed the building as scheduled on Friday and began moving out equipment and furnishings, leaving Corvallis without a DMV office for the first time in decades.

On Monday, the Department of Administrative Services rejected MacHugh's proposal of a temporary, no-strings lease extension.

The agency explained its decision in a letter to MacHugh signed by DAS leasing agent Lisa Zolla and facilities division administrator Robin Harpster.

"You have offered to continue renting to DMV from the period of October 1, 2009 until November 30, 2009 at the rate of $6,000 plus $800 per month in taxes while a new lease is being negotiated. You also indicated that this reduction in rent was a sign of good faith, but that you could not guarantee that rate on a permanent basis. Based on the information you have provided, DMV declines your offer and wishes to cease further negotiations for this location since the offer is not competitive with other offers we have received on other available space in Corvallis."

So far, the Department of Administrative Services has not concluded a lease for a new Corvallis location. As a matter of policy, the agency will not discuss ongoing real estate negotiations.

DMV spokesman David House said last week it would be at least four to six months after a lease was signed before the DMV could open a new local office. For now, some Corvallis personnel will be reassigned to other nearby offices to ease the increased workload. The agency will also make an employee available one day every other week at the Oregon State University student union.

Hoklin defended his agency's decision to turn down MacHugh's offer of a reduced-rate lease extension, saying it was in the best long-term interests of Oregonians.

"We're going to save some money for the taxpayers by closing that facility," he said. "That's a business decision that was taken by DAS and DMV in the interests of the taxpayers."

But MacHugh, a commercial broker with Investment Realty, has expressed doubts that the state can find adequate space in Corvallis for much less than the DMV was paying on its old digs.

And, despite the latest rejection, he's still not through with his one-man crusade to keep the doors open a little longer on the DMV's current location.

"I just now sent them a letter offering them free rent for 30 days," MacHugh said on Tuesday. "Let's see what they say to free rent."

Bennett Hall can be reached at 758-9529 or


Special Projects Editor, Corvallis Gazette-Times and Albany Democrat-Herald

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