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PORTLAND-United Parcel Service and the U.S. Military are talking about a land swap that would give UPS room to expand its Swan Island sorting facility and give the U.S. Navy & Marine Corps Reserve Center a larger training facility for its so-called weekend warriors.

Under a proposed deal for which the approval of Congress is being sought, United Parcel Service would swap 18 of 51 acres it controls at Southshore Corporate Park for the 13.3 acres adjacent its Swan Island property where the U.S. Navy & Marine Corps Reserve Center is currently located. As part of the deal, according to local sources, UPS has also agreed to provide the buildings for the new Reserve Center, and will pay all moving costs incurred by the Navy.

One of the complexities of the transaction beyond congressional approval is the fact that UPS does not own 52 acres it controls at Catellus Commercial Development Corp.’s Southshore Corporate Center. In January 2000, UPS agreed to pay Catellus $9.8 million or about $4.30 per sf for an extra-long-term ground lease (believed to be 40 years) that includes a limited option to buy.

Catellus’ Director of Development Molly Maybrun tells GlobeSt.com that when UPS committed to the land, her understanding was it was planning to relocate its main sorting facility from Swan Island to Southshore Corporate Park, which is much closer to the airport. More than a year ago, however, UPS apparently changed its mind and decided to try and expand its Swan Island location by gaining control of the Reserve Center. Also last year, UPS had Broker Tony Reser of Cushman & Wakefield looking for a taker for its leasehold at Southshore Corporate Park, but no deal was ever consummated despite what Reser described as “some interest” in the property.

The land exchange was approved by the Navy last year, but the change needed special congressional approval, according to officials at the City of Gresham, which recently approached U.S. Representative Earl Blumenauer seeking support for the trade. The House version of the Fiscal Year 2004 Department of Defense Authorization Bill had already been drafted, but with the help of Senator Gordon Smith, the exchange was added into the Senate version that the Senate approved late last week. The legislation must now be reconciled by a joint House-Senate conference committee, approved by each chamber and signed into law by the President.

As part of the plan, according to local sources, UPS had apparently hoped to turn over a portion of its land lease for Reserve Center or acquire the property and sell the land it wasn’t providing for the Reserve Center back to Catellus, which could then re-market the property. Catellus’ Maybrun tells GlobeSt.com it isn’t interested in acquiring the property, but her understanding is that UPS will indeed exercise its option to purchase the property “within the next year.”

If the complexities are overcome, the relocation of the Reserve Center would bring more than 60 full time personnel to the northwestern edge of the City of Gresham as well as approximately 925 reservists who drill at the facility at least once per month. Since the Reserve Center does not provide housing or dining facilities, Gresham says the reservists will bring economic stimulus to the Gresham area by staying in local hotels/motels, and by eating, shopping, and visiting in the community. “This is especially beneficial because reservists typically train on the weekends, a usually quiet time for our hospitality industry,” says Shelly Parini, City of Gresham Economic Development Manager.

UPS’ regional real estate coordinators in Oakland, CA declined comment, referring GlobeSt.com to the company’s corporate communications department, which did not respond Tuesday to a request for confirmation and clarification of its efforts with regard to the land swap.

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