4 developers designed unsuccessful plans for the old Sweet Home mill | Local

Political processes are seldom simple. This one was no exception.

Linn County recently announced that it would pursue an auction of the former Weyerhauser/Willamette Industries mill site in the heart of Sweet Home, although it’s not clear if the entire site or just pieces of it will be on the auction block.

Lost in the shuffle is that earlier this year, the county already had put out a call to interested developers to see what they would pay and how they envisioned the property, which has sat unused for decades following environmental concerns and a lengthy tax foreclosure process.

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But what started out as a simple recap of what developers hoped to do with the former mill property devolved into a story about closed-door discussions, bureaucratic inefficiencies and the slowdowns posed by legal challenges. This is that story.

To initially gauge developer interest, county commissioners employed a process known as a request for proposals, or RFP, a call for bids often used in government contracts. This was conducted behind closed doors in executive sessions.

When Mid-Valley Media tried to pull the curtain back on those proposals, it prompted one applicant to get his lawyers involved. County commissioners were in rare disagreement over how to proceed and, in some cases, were confused about what specifically was being proposed by the applicant.

Ultimately, the county dropped the process entirely. But to this day, officials are unsure about how to proceed, whether an auction of the whole property is better or if they should parcel out the more marketable chunks and take what they can get from prospective buyers — who are currently scared off by the money pit’s uncertainties.

Site history

The property has sat vacant for more than a decade, falling on hard times the same way many former lumber mills did all over Oregon. This particular property was built for Santiam Lumber Company in 1934, a company that was acquired by the Willamette Valley Lumber Company in 1950.

These two companies merged with three smaller timber outfits to form Columbia Forest Products in 1967. That company was quickly renamed Willamette Industries, which owned the mills until 1994. When those companies went bust, the land was taken over by the Western States Land Reliance Trust.

Through a series of mismanagement and a pile-up of back taxes, the county was forced to take over the property through foreclosure in 2010. It has sat dormant ever since, and serious environmental concerns have precluded any potential sale and development of the lot ever since.

Specifically, sediment testing around the log ponds in the middle of the property showed high levels of heavy metals and hydrocarbons, for instance, and underground soil contaminants remain a concern. 

Even following a costly asbestos removal process by the trust, asbestos remains in the roofing of some key structures on the property.

Millions of dollars in environmental work later, the county is still sitting on this property smackdab in the center of Sweet Home. And there’s still a lot of uncertainty surrounding how much environmental work is still needed, making it risky for developers to take on. 

RFP process

The county received proposals from four developers detailing what they would do with the 154-acre property, which is zoned “recreation commercial.” Commissioners met several times in the spring and summer to discuss the applications and score them based on predetermined criteria.

“There was just not the combination of a solid vision and a hard financial commitment to make me feel comfortable going forward with any of the four proposals,” Commissioner Roger Nyquist said.

But what exactly did the county pass up and why?

The first proposal came from local developer Bill Lund, whose company proposed a five- to 10-year plan for multiuse residential, retail, commercial and light industrial properties. The plan included single and multifamily residences, a hotel right off the highway and a commercial complex built for medical offices, such as urgent care or a full-service clinic.

Lund offered $500,000 to the county to purchase the property, with $50,000 in up-front earnest money. The funding would have come from Eugene-based Cetan Funds.

The second proposal was from Sweet Home Real Estate Restorations, owned by developer Josh Victor, who owns residential lots next to the mill site.

Victor’s proposal was dubbed the “Jamboree proposal” in talks with officials because it centered on creating access from the property to a city-owned lot — the former Knife River Quarry that was once part of this same parcel — which could be used as the primary venue for the Oregon Jamboree. 

The proposal also included plans for homes and such businesses as breweries and restaurants. The purchase price offered was $1 million.

“I was always more interested in trading out,” Victor said in a follow-up interview. “The first thing I was going to do if I got it was to call the other companies in proposals and see what parts they needed to do what they wanted to do. … It would make the process go faster than waiting for one person to have all the money to invest; you can get four people who were willing to invest and hurry.”

Victor said he just wants to see something happen with the property. “Something is better than nothing.”

The next proposal was from Mt. Angel-based T.S. West, which envisioned low-income housing and an RV park along with retail and commercial buildings. The proposed purchase price for that offer was $1.2 million.

No one from T.S. West returned a call for comment.

The final proposal came in from Scott Lepman’s company. It was the most comprehensive, but despite supporting documentation, the details seemed to leave commissioners scratching their heads.

The crown jewel of the proposal was a two-story activity center in the middle of the property. It would include an open air commons area that could support a food court and farmers market. The second floor would contain courts for such sports as basketball, pickleball and racquetball, as well as a rock climbing wall and spa center.

Next door would have been a hotel with a conference center, designed as a destination for fishing and boating along the nearby Santiam River. There’d be an “active retirement community” on the northwest border of the property, along with chalets, townhomes and stand-alone cabins.

This proposal also included plans for a covered RV storage park, along with biking and hiking trails along the northern end of the property.

“Our proposal was not residential, industrial or commercial; it was consistent with the zoning for recreational development,” Lepman said in a follow-up interview. “We planned a destination resort with a multitude of different housing types, like transient housing types. The go-to is always residential, but that’s not what the zoning desires.”

His purchase price was listed as $950,000, but it contained a crucial caveat. Because of the unknowns surrounding the property, the Lepman proposal basically said that if the environmental cleanup ended up exceeding $950,000, the county wouldn’t receive any money.

In 2019, a firm called GeoSyntec estimated the cost of remaining underground environmental abatement at $1 million to $5.8 million.

“I offered, basically, ‘I’ll take this off your hands. … But to take that risk on, I’m not going to pay you anything,’” Lepman said.

He also cited a lack of infrastructure — no water, sewer or storm drain connections — on the site as another reason the purchase price would be low or non-existent.

Redaction battle

All of these details for the Lepman proposal were redacted when the materials for each application were requested by Mid-Valley Media on Sept. 7.

At that point, the county had already decided to drop the process because, as Nyquist put it, “there was just not the combination of a solid vision and a hard financial commitment to make me feel comfortable going forward with any of the four proposals.”

Mid-Valley Media, publisher of the Albany Democrat-Herald and Corvallis Gazette-Times, paid just over $86 to obtain the documents. Every other proposal came back unredacted, but the Lepman proposal had its specifics blacked out.

The company cited confidential trade secrets as the reason for the omission, and Lepman later explained that he included details of his business’ history and market strategies to show his experience with this kind of restoration work.

He said he did not realize submitting an RFP to the county would make those documents subject to a public records request.

“If I had known that it would have become public, I would have never made the offer or included the portions that I did,” Lepman said.

However, the affidavit for the RFP, which every applicant must sign to submit a proposal to the county, states, “I understand that the Proposal is a public record held by a public body and is subject to disclosure under the Oregon Public Records Law unless specifically exempt from disclosure under that law.”

Lepman said in follow-up interviews that he was worried about public disclosure of trade secrets, so he directed his legal team to fight the redaction review. His attorneys argued to the county that the redacted information was privileged and that it would harm the company’s ability to compete on the market if released.

The county’s legal department disagreed with the redactions and then a weeks-long legal review was triggered. The county’s legal team responded with an outline of their disagreements and then Lepman’s own attorneys submitted their responses.

Still, the records weren’t provided. That’s when the county got an outside law firm, Albany-based Davis, Wright & Tremaine, involved. They also believed the redactions weren’t warranted and, after weeks of waiting on a response from Lepman’s attorneys, the proposal was turned over to Mid-Valley Media.

It still contained redactions under a section titled “Trade Secrets,” though specifics about the company’s vision for the property were included.

Commissioners, who could view the original proposals unredacted, were hardly unanimous in what to do with them, if anything. Some argued to drop them altogether and start from scratch.  

Nyquist and Commissioner Will Tucker voted to forgo the RFP process, while Commissioner Sherrie Sprenger said she wanted to move forward with the proposal that scored the highest on the county’s grading matrix used for every proposal, which was the Lund proposal, the $500,000 offer that would see homes, a hotel and medical offices built.

“I was comfortable with moving forward with the proposal that scored the highest,” Sprenger, a former Oregon House Representative, said. “I’m not fighting with my two commissioners, reasonable people can disagree. And I’m not a stranger to being on the losing side of a vote, certainly in the Legislature.”

Her worry over the lack of moving forward stems from the basic question that has lingered on the property for more than a decade: What next? The environmental and infrastructural concerns on the property mean that the county could be stuck with it for decades to come.

“Not all of the property is property that I would want to buy,” Sprenger said. “So I’m concerned that we will continue to have to hold the property and not be able to sell it. … I like to have property on the tax rolls and used by the community.”

Commissioners also have waffled over whether the best course is to try and sell the entire property at once or parcel out the most marketable chunks while applying for grants to complete environmental work on the rest of the property.

“The cloud of the [Environmental Protection Agency] and [state Department of Environmental Quality] and the cloud of liens that were against the property, those all, in my mind, degraded the entire piece,” Tucker said in a follow-up interview. “Some of those plans had visionary things, … but for some of them, they didn’t catch the vision at all.

Tucker considers the parcel the “real key to changing Sweet home’s image and picture and position in our community.”

Currently, the county is waiting on a response from the DEQ on the county’s contamination abatement plan. Commissioners have repeatedly described the process of DEQ testing and reviews as frustratingly slow.

Regardless of the next steps, the result of the RFP has been thousands of dollars in costs to the county and the applicants, with little momentum to show for it. 

Linn County’s legal counsel said that the county was billed nearly $5,700 by the law firm that reviewed the redactions on the Lepman proposal, though that figure doesn’t include billable hours from the month of October.

The advertising costs for the RFP, which are required by law, were $2,229.12. The county estimated the cost of staff hours dedicated to this issue at nearly $4,000.

Lepman also voiced his frustration.

“This whole process has been frustrating,” he said. “We spent a lot of money to prepare that application and only to find that they still don’t know what they want to do with that property.”

Officials say that doesn’t mean the process was a failure.

The developers who submitted proposals may still have “a leg up,” Tucker said. “We’ve seen their proposals and visions. … We can and should be in touch with those individuals as we move forward with the process.”

While the county received the go-ahead from the Sweet Home City Council (which is also anxious to get the property back into productive use) to pursue an auction of the property, county officials have said that there are still a number of unknowns that hamper that process.

When the county sent the property out for auction in 2019, it received no bids.

Troy Shinn covers healthcare, natural resources and Linn County government. He can be reached at 541-812-6114 or [email protected]. He can be found on Twitter at @troydshinn.