Developer considers Blue Heron site big box a 'cardinal sin'

California’s Eclipse Development Group has bid $4.1 million for the 23-acre Blue Heron paper mill site, according to documents filed in bankruptcy court last week.

by: PHOTO COURTESY: CITY OF OREGON CITY - This overhead shot of the former Blue Heron Paper Co. property below Willamette Falls shows the 23-acre area where Eclipse placed a bid of $4.1 million.Eclipse President Doug Gray noted that it was too early in the process to determine a precise plan for development of the brownfield left by the shuttered Blue Heron Paper Co., which closed in late 2011. With the caveat of having “a lot of homework to do on the excising facilities,” Gray described a mix of office, residential and commercial spaces without the big-box Home Depot and Walmart stores he’s worked with in the past.

“Buildings will definitely be multiple stories, and hopefully some of those will have all three uses,” he said. “What really got us interested in this unique site is that it has the natural amenities of the river and the falls that can be such an attraction to the public.”

Bankruptcy Court Judge Randall L. Dunn in 2011 appointed trustee Peter McKittrick to try using Blue Heron’s assets to prevent insolvency. Since its founding in 2002, Eclipse has redeveloped several brownfields in California, Connecticut and Hawaii.

“Understanding and working on brownfield sites is complicated and requires thinking outside the box,” Gray said. “You’ve got serious catacombs that are underneath those Blue Heron buildings, and my hope is that they can withstand larger structures.”

If it is a successful bidder, Eclipse could renegotiate an agreement with Oregon City’s Community Development Director Tony Konkol in the coming months to draw up a proposal to rezone the industrial site to allow for a mix of uses. For city planning costs, Konkol said Oregon City asked for $400,000 through the construction excise tax from Metro, which is expected to be recommended by a committee in the next couple weeks.

With much of the site underwater or too steep, Gray estimates the number of usable acres in the “mid-teens.”

“Part of a developer’s job is to maximize the use of a site, and to me dropping a big box on that site would be a cardinal sin,” Gray said. “It’s got to be really inviting and encourage pedestrians by extending Main Street into the site and including a bunch of restaurants that would take advantage of the views.”

He defines big boxes as larger than 60,000 square feet — more conservatively than the industry standard.

“Retail has changed dramatically over the past five years with the economy, and we want to get people to spend a lot of time at the development by visiting multiple shops,” Gray said.

In 2011, CenterCal tentatively offered $20 million for the site before abandoning its bid with a proposed shopping-mall development on the other side of downtown. Eclipse hopes to make money on its smaller-scale project, but it can’t guarantee a profit at this point because there are too many unknowns.

“It’s honestly a back-of-napkin calculation on my part, and we’re just putting our finger up to the wind and hoping it works out,” he said.

On July 12, the court will consider proposed bidding procedures and approval of the $250,000 “break up fee.” Approval of the sale to Eclipse or a competing bidder of more than $4.35 million would be determined after a notice period for objections expected in late August or early September.

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