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Developer backs out of downtown Milwaukie project

Thomas Kemper said he's not interested in developing the Milwaukie Town Center project
by: Matthew Graham, A sign at the downtown Milwaukie municipal parking lot reads that it will be closed for development in summer 2008. That timeline is likely to change now that developer Thomas Kemper said he no longer wants to develop the Milwaukie Town Center project.

Developer Thomas Kemper pulled out of the Milwaukie Town Center project last week, citing concerns over a lack of support from City Council.

The development was to be a four or five story mixed-use development on Main Street across from City Hall with 10,000 square feet of retail space, 6,000 square feet of office space, 76 town homes and 80 parking spaces. The city owns half the site, which currently serves as a parking lot for the city, and Metro owns the other half.

Kemper said the housing market slump made it difficult for him to move forward on the project.

'The housing market has kind of tanked, and it's made doing a difficult project next to impossible,' Kemper said.

But Kemper said that wasn't the only reason he withdrew.

'What kind of surprised us was the lack of support from the City Council,' he said. 'Three of the five members of the City Council raised questions that made us nervous about spending that much money.'

Kemper said Councilors Susan Stone, Joe Loomis and Greg Chaimov raised concerns at the Jan. 15 meeting that made him and his partners in KWG Development nervous. Mayor Jim Bernard said the concerns were over the possible fifth story. The city's Downtown Plan limits building height to four stories, but Kemper had asked for a variance to allow a fifth story. He had previously said the project could be completed without the fifth story, but that the entire development would suffer.

Kemper said that was one of many issues.

Kemper developed the North Main Village site as well, and he said the slow interest in that development was another factor that forced him to reevaluate.

'That certainly influenced us,' he said. 'Part of the problem is creating critical mass and part of the idea was to bolster the seed of North Main by doing this Town Center site. [Downtown development] is starting to happen, but it's slow.'

Bernard said the development was brought up at the meeting to push the date of development back from summer 2008 to summer 2009.

'He wanted to push it back [to 2009], but there were some amendments, and some members of council' were not in full support of those amendments, Bernard said.

Loomis and Stone voiced concern over the inclusion of the fifth story at Tuesday's meeting, but Loomis voted in favor of the memorandum of understanding with Kemper despite those concerns.

'I wish I knew [why Kemper pulled out],' said Chaimov. 'I saw that the council had made clear its commitment to the town center project. We voted 4-1 to enter into a memorandum of understanding that gave him the extra year that I understand he wanted to weather current decline in the housing market and then, like you, the next thing I heard was that he no longer wished [to the project].'

'I thought we'd made a nice commitment to move forward even though some of the councilors had some issue with how it might proceed,' he said.

Councilor Deborah Barnes deferred comment to City Manager Mike Swanson.

'We've been asked not to speak about it,' she said. '[Swanson] said it hasn't been finalized one way or the other.'

Swanson could not be reached for comment Monday.

Bernard said Kemper was under no obligation to go through with the project because they were still in the process of negotiating the agreement.

'We were negotiating the memorandum of understanding,' Bernard said. 'That memorandum hadn't been agreed upon … he was under no obligation to proceed.'

Bernard said the city still has an agreement with Metro to develop the site, and said the city would likely put out another request for proposals for possible developments.

'I'm planning to meet with the city manager tomorrow so he can fill me in with what the next steps are,' Chaimov said. There's still an 'intergovernmental agreement with metro that commits us to build a mixed-use development on that site and my assumption is that we will then issue new requests for proposal and hopefully find someone who will commit to the city.'