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County outbid on Blue Heron site

Company wants both mill and lagoon sites for mixed-use development

A new face has been added into the mix of those interested in the former Blue Heron paper mill in Oregon City and its associated property in West Linn.

Humboldt Bay Energy, a renewable energy and real estate development company based out of Eureka, Calif., made a move on both properties. The company recently submitted a letter of intent for the Oregon City property and outbid Clackamas County for the West Linn parcel.

The county's Water Environment Services made a $1.75 million bid for the 39 acres located in West Linn back in November and signed the purchase of sale in January. However, there was a 45-day period where another agency could bid on the property, which is what happened. The property sits on Volpp Street in the Willamette neighborhood.

Metro had expressed interest in the paper mill site and filed a letter of interest in December.

Humboldt Bay Energy chief executive and founder Garison Russo said his company is a year old, but he has a rich background in commercial and real estate development along with five years of work experience in renewable energy.

Though Russo declined to share explicit plans for the sites, he said they would most likely be mixed-use with "soft commercial" and some retail. He said the development could create 1,000 to 2,000 new jobs.

'I want to make it beautiful,' Russo said. 'The Willamette River falls are very, very special.'

It sounds like plans were still open for the West Linn site, but Russo mentioned it could have some equestrian use. He expanded on that idea, saying the West Linn property would not be a cookie-cutter housing development.

'We're looking for that 'wow' factor,' Russo said.

He added that he plans to open the riverfront on both properties for public access.

'We could bring in millions of tourism dollars that are not there now,' said Russo of his proposed developments. 'We'll try to project as much business into downtown West Linn as possible.'

Russo said cleanup of both sites would cost in the millions and the mill would ultimately be demolished. He said cleaning the lagoon would cost upwards of $3 million.

Russo is currently putting together a project development team that already includes Hoffman Construction and Stoel Rives and has spoken with Oregon City officials.

He noted a desire to work with both communities and said he plans on relocating to West Linn.

But Humboldt Bay Energy won't secure the properties without a fight from WES.

The lagoon property is scheduled for auction March 30 through U.S. Bankruptcy Court. There, the interested parties will rebid.

According to WES spokeswoman Amy Kyle, WES is still interested in the property and is currently in the middle of its 60-day due diligence period.

'We are exploring our options,' said Kyle.

WES has some wiggle room in its bidding as Clackamas County commissioners approved a larger but undisclosed budget to obtain the West Linn property.

WES is working on behalf of the Tri-City Service District and Clackamas County Service District No. 1.

WES wants the property to address coming changes in regulation and continuing growth within existing boundaries. The site includes valuable outfall permits, which allow WES to release treated wastewater into the Willamette River.

Of the 39 acres in West Linn, WES only needs a small portion, up to five acres, to pump and discharge cleaned wastewater from the Tri-City plant in Oregon City. That would leave the remainder of the property up for another use.

The Blue Heron paper mill closed in late February 2011 after filing for bankruptcy.