The weeks-long search for a new home for homeless rest area Right 2 Dream Too that's not in the Pearl District is now focused on an empty warehouse building in Old Town, several sources close to the negotiations have confirmed to the Mercury.

The property in question sits at 320 NW Hoyt. It was on the short list of sites the Mercury previously reported had been turned over to Right 2 Dream Too and city officials by the Pearl consortium led by developers Dike Dame and Homer Williams. It's currently owned by a firm based in Seattle. Besides the warehouse space, the site also has a loading dock. The 1925 site would doubtlessly require improvements like sprinklers and bathrooms.

That a building has surfaced as a realistic alternative to the site Commissioner Amanda Fritz and Mayor Charlie Hales initially proposed for R2DToo—a city-owned parking lot beneath the Broadway Bridge's Lovejoy ramp—could be a sign of a major breakthrough. That parking lot, dubbed Lot 7 and part of the Station Place development, is the subject of a challenge by Dame and Williams, who argue the city would be breaking its own code and abrogating development agreements if it moved R2DToo onto the land.

It's unclear, however, if a final deal is in place and what kind of terms—who will pay for fixes, duration of a lease, etc.—are in play.

"Negotiations took place yesterday," said a source close to the talks, asking for anonymity given the sensitivity of discussions that involve not only R2DToo and Dame and Williams, but also Amanda Fritz and staffers for Hales. "There were still critical conditions that had not been agreed to."

Ibrahim Mubarak, spokesman for R2DToo, did not immediately return a request for comment. Commissioner Amanda Fritz declined to comment during a brief break in this morning's city council meeting. I'll update if I have any more details.

Update 2 PM: Fritz has gone on the record, saying she wasn't aware that a meeting had been planned with mayor's office at the Hoyt site and that she still has "significant concerns" about the terms of what's been discussed. Namely, that a deal for the Hoyt site would be just for one year, including time spent getting it fixed up, work done on the city's dime.

"I was not aware of the meeting," she told me. "I was not aware Right 2 Dream Too had agreed to this site. I have significant concerns about spending investing city money in a building that will only be used for one year."

Separately, sources have confirmed another tricky piece of the negotiations. Williams and Dame have asked to purchase Lot 7 from the city, potentially to give the city money to work on Hoyt. Of course, that also takes away leverage for a deal, since R2DToo has held onto the Pearl site as a fallback—figuring the Pearl group, despite its challenge, would still rather work on a new site than fight out a code battle over the Pearl site.

Interestingly, the lot does not appear in a list of properties for sale by the Portland Development Commission obtained by the Mercury. So any talks would be happening before the public gets a crack at the lot. I've already asked the PDC for its policy on land sales and for its own list of property for sale.