August, 2006

Building on Brownfields
Your Northwest guide to economic and environmental gain through redevelopment

Problem Solver

Astoria lays groundwork to attract developer

By the time developer Art DeMuro of Venerable Properties in Portland stepped up to the table to do business with the city of Astoria, Ore., the main course was nearly finished.

On the city’s plate was a major hurdle: 16 acres of abandoned riverfront property contaminated with toxic chemicals that needed to be cleaned up and redeveloped. The city envisioned the site, a lumber mill since the 1870s, as a mixed-use redevelopment with homes and commercial space.

When DeMuro became involved, the city had gained ownership of the land. A $1.4 million cleanup project was finished. A Prospective Purchaser’s Agreement (PPA), which limited the new owner to the liability of any contamination that occurred after acquiring ownership, was nearly completed. And, after a year of research, the city had a solid vision for the property. The city now was looking for someone with whom it could work to give the property new life.

DeMuro, whose company is known for its work in historical redevelopment, had never worked with contaminated land. But this was riverfront property where the community already had done the groundwork. “So it wasn’t as intimidating,” he says.

DeMuro admits he’s never had a professional relationship quite like what he found in Astoria. “Typically a city is an impediment,” he says of other projects. “You’re trying to find ways around a city’s restrictions.”

If there are lessons to be learned from Mill Pond Village, they are lessons of perseverance and cooperation. Lessons of a city that wasn’t afraid to dig in and get the cleanup process rolling, even before a developer stepped forward.

From the city’s perspective, it was time to start thinking like a developer, says Paul Benoit, Astoria’s city manager. And from a developer’s perspective, this project wasn’t attractive. Here you have a town that hasn’t seen any population growth in nearly 100 years. Why put up more housing? And on a brownfield, at that?

That’s why the city had to step up and make this project appealing, says Benoit, formerly Astoria’s community development director and the man who spearheaded this effort.

“We were dogged and perseverant, and flipped over every stone,” Benoit says.

Mill Pond Village sits along the Columbia River off of Highway 30, at the east entrance into Astoria. The city, where the Pacific Ocean and the Columbia River meet, has a history rich in logging and fishing. The development, modeled after a fishing village, is on the site where the Clatsop Mill Company operated from 1870 to 1955. In 1955, the Astoria Plywood Cooperative took over, going out of business in 1989.

That year, a visit by the Small Business Administration (SBA) alerted Benoit that the co-op had defaulted on a $3 million SBA loan. Soon after he learned the co-op was more than $5 million in debt. “It was real clear to me the mess that was going to be left behind,” he says looking back.

And what a mess it was. The SBA, not wanting to sell a piece of contaminated land, stripped the mill of anything useful, like metal, roofing materials, etc., leaving behind a dilapidated building. The property stood out among the new development around it. “It looked like the town dump,” Benoit says.

Benoit began working with the property’s lien holders, asking if they would assign their liens to the city. Weyerhaeuser, PacifiCorp and Liberty Northwest Insurance handed over their liens; however, it took a year to work out deals with the other two lien holders: the SBA and Clatsop County.

While working out the liens, the city started remediation in 1993, partnering with the Oregon Department of Environmental Quality (DEQ). The city and state split the cost of the $1.4 million cleanup.

For the state, $700,000 was used out of its orphan site account, a special state fund approved by the Legislature to pay for the clean up of contaminated property where no known, willing or able party can pay for it. In this case, there was no owner the EPA or DEQ could go to, says Alan Kiphut, Land Quality administrator for DEQ. In these situations, the sites must be high priorities. Since the orphan account was formed in the early 1990s, DEQ has used money on about 50 sites, Kiphut says.

For its share, the city approached ShoreBank Enterprise Pacific, a regional conservation development fund that facilitates environmental and economic development in rural communities. ShoreBank authorized a $750,000 loan that was secured by the property.

During this time, the city also was collecting public opinion at community forums. Many people spoke of attracting industry and family wage jobs to replace what was lost. However, after a year of talking about where the city was headed, the community arrived at a consensus that a mixed-use site was in the city’s best interest, Benoit says.

With its vision of a development that would celebrate the city’s history, the city put together a full-color brochure and advertised from Seattle to Portland for a private developer. Only two responded, including DeMuro’s Venerable Properties.

Venerable Properties bought the site for $700,000. The sale was assisted with the PPA, one of the first PPAs in the state and a major incentive for the developer, Kiphut says.

The city was able to orient him to the project, educating him about the PPA process and making concessions along the way to get the project started, DeMuro says. DeMuro also spent about $300,000 on brownfields-related costs. Remediation included restoring the south bank of a small pond that’s on the property, including a weir where the pond flows into the Columbia River. A 2-foot soil cap was needed in some hot spots. And groundwater monitoring was to take place for 10 years; however, after one test DEQ determined the water had returned to non-hazardous levels.

DeMuro, Benoit and Kiphut all agree this project, which won a 2001 Phoenix Award for EPA Region 10, was successful because of the level of cooperation between the city, state and developer. Benoit learned that building relationships is critical in brownfields redevelopment. Establishing that redevelopment vision also was important. It took a year to gain the community’s consensus. For a private developer, that time translates into money lost, he says.

Cities should also be willing to view the project through the developer’s eyes. That may be hard for government agencies because they’re often in regulatory mode, Benoit says.

Today, Mill Pond Village has 200 residential lots and four commercial or mixed-use lots. At the time of the interview, only 13 lots--12 residential and one commercial--were still for sale. However, DeMuro expected all contracts on those lots to be completed by the end of the year.

While Mill Pond Village has given the city a significant boost in its tax rolls, more importantly, it’s given the people there a sense of community pride. “It has had as much an impact on the psychology of the town as the financial impact,” Benoit says.

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