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Old Posted Mar 28, 2011, 4:26 PM
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Blue Heron mill out, development moves in
POSTED: Friday, March 25, 2011 at 03:13 PM PT
BY: Nick Bjork
Daily Journal of Commerce

When officials at the Blue Heron mill announced late last month that it would cease operating immediately, Oregon City lost a tax-generating business and 175 employees lost family-wage jobs.

But when one door closes, another can open.

Local developer Fred Bruning knew Blue Heron Paper Co. had filed for Chapter 11 bankruptcy protection and that the mill’s future was uncertain. He has since offered $20 million for two parcels - a total of 63 acres - owned by the company. Bruning’s development plan would be to transform the swath of land along the Willamette River into the area’s next big destination, with retail, office and urban living spaces.

“I had an idea of what was going to happen so I approached management at the mill recently and gave them an initial offer. I wanted them to know I was interested,” said Bruning, whose development company, CenterCal Properties, has been responsible for such metro-area projects as Bridgeport Village in Tigard, Cascade Station in East Portland and Gresham Station.

Each of the Blue Heron parcels is in a different city: a 23-acre site sits next to Willamette Falls in Oregon City, and a 40-acre site is on the west side of the Willamette River in West Linn. Both sites were used for paper production for more than 100 years, so environmental issues could arise.

Last week, in the initial bankruptcy hearing, U.S. Bankruptcy Court Judge Randall L. Dunn noted that $20 million would cover the $14 million that Blue Heron owes its creditors - and then some. Wells Fargo is the company’s largest creditor.

But Bruning acknowledged that there are many issues that could change the price and the timing of the purchase. One is the possible existence of pollutants requiring environmental cleanup, which often multiplies the cost of development. The mill itself has lead and asbestos, but a formal site assessment hasn’t been conducted. The Environmental Protection Agency already ruled out the possibility of the property becoming a federal superfund site.

Bruning said that if the company and creditors were willing to sign some sort of a letter of intent to purchase, he would be willing to conduct the phase two environmental assessment. The Oregon Department of Environmental Quality will conduct its own analysis of the site in the coming months.

“We don’t really know what’s there, but we also know that this is a unique opportunity,” Bruning said. “We want to sit down with the bank and the company … and work out a fair process to move forward.”

Bruning’s plan calls for turning the West Linn parcel into a residential area surrounded by mixed-use commercial space. He is even more excited about his vision for the Oregon City site.

“I envision it looking something like the Old Mill District in Bend, except less of a focus of retail,” he said.

A hotel and entertainment complex would be surrounded by retail and office buildings. Bruning also expressed desire to create public access to the waterfall’s base, which has not existed for more than a century.

Another one of Bruning’s projects in Oregon City, a 650,000-square-foot mall called the Rivers being built on a former landfill site, drew heated public opposition because urban renewal money was used. However, this possible new project likely wouldn’t cause a similar stir because only a sliver of the property is included in the current URA boundaries, and including it in the URA project list would require a major amendment and trigger a city vote, said David Frasher, the city manager for Oregon City. That is unlikely, he added.

“I had an upbeat conversation with Fred (Bruning) about this the other day and we both had similar ideas about how to maximize the potential for this project,” Frasher said. “Considering a zoning change will be necessary, and a master plan will be required, the city will work closely with whoever the property owner is.”

Bruning added that he is planning to go forward with both projects and that he intends to engage the public early in the development process.

Frasher said that city officials support the plan, and hope it can help accomplish several city goals. He is hopeful for job creation as well as elimination of some of the pollutants in the air and the water.

“For over 100 years we’ve accepted certain levels of pollutants in exchange for the economic benefits of the mill,” he said. “We are going to be interested in seeing a reduction if this goes forward.”

http://djcoregon.com/news/2011/03/25...ment-moves-in/
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