Mill property: Peace of mind about a piece of the future

YAKIMA, Wash. -- When word got out that the former Boise Cascade property was on the market for $29 million, the nervousness was palpable at Yakima City Hall.

Were the property owners backing out of their talks with city officials about possible development?

What about the conversations with the Bears about a new baseball stadium?

Where's the site plan that was supposed to be completed in June?

Several business and city leaders said they called the property owners, seeking assurance that the project was still on track.

"I followed up with them because there has been some question in the community," said Doug Picatti, chairman of the Committee for Downtown Yakima, which represents some of the city's top business owners. "There is a lot of concern."

For years, the city has pinned its economic future on the old mill site. Situated along Interstate 82 just north of downtown are 211 acres of undeveloped property -- large enough for people with imagination to dream up all sorts of possibilities.

An aquatic park? A lifestyle shopping area like Redmond Town Center? A baseball park for the Bears?

The owners, three businessmen from Oregon, shut down the wood-chipping operation earlier this year and in April had the area cleared of logs that, last year, fueled a massive fire that nearly shut down the Central Washington State Fair and threatened nearby homes and businesses.

Brad Hill, a Yakima representative for the property ownership group, which includes Norman and Melvin McDougal of Creswell, Ore., and Greg Demers of Veneta, Ore., said last week the owners are going to work with the city to complete the initial phase of a project, which includes the site plan.

Hill said Yakima residents and city leaders should not worry that the property has been listed for sale.

"We had a number of inquiries about buying the property, and so simply created a web-based means to respond to interested parties," he said in an e-mail Friday.

He and Demers said the owners -- who purchased the site in 2004 for $3.25 million -- never intended to hold onto the property for decades, which is what they expect the timeline to be for full development.

Demers said he doesn't understand all the fuss over the property's $29 million listing. It has been on the website of the Oregon Land Co., the marketing arm for the property owners, for at least a year.

The owners put the listing on commercial property listing site LoopNet recently to extend their reach to potential end users, such as retailers, Demers said.

They are aiming to have the project shovel-ready by next year.

"It puts the property out there and lets people know it's available for development," he said.

Indeed, it was the LoopNet listing that got everyone's attention. LoopNet is a commercial property listings website closely followed by Yakima's real estate community.

Demers didn't completely brush off the idea of selling the entire 211-acre property but said his group probably won't get any offers at this point. It has no water, roadways, sewer or power source. And because it's the site of a former mill, the site will require some form of environmental cleanup.

Transportation also has caused some disagreement. The property owners want a new freeway interchange on I-82 so people can get to the site more easily. But a recent Department of Transportation study proposes less intrusive and less expensive street improvements to help improve access.

"Anything could be sold for a price, but it's highly unlikely anyone would buy this property without the entitlement process being finished," Demers said. "That's what we intend to see through."

He and Hill acknowledged the land isn't worth much without infrastructure and that they remain focused on completing the planning process with the city of Yakima, Yakima County and the state Department of Transportation.

And that's assuring for city leaders.

"(Brad Hill) satisfied me that the ownership group is committed to the project and to see it develop," said Councilman Dave Edler, a member of the city's Economic Development Committee.

Others point out that it's not unreasonable for the ownership to continue pursuing the public planning process while being open to potential buyers.

While $29 million might seem eye-popping to some people, that would amount to a little more than $3 per square foot, a bargain in the commercial property market, said Bill Almon Sr., owner of Almon Commercial Real Estate in Yakima.

Going through the planning process and making the property more turnkey would make it worth more, said David McFadden, president of New Vision-Yakima County Development Association, the county's economic development arm.

"It's an investment that makes this site more marketable in the months and years ahead," McFadden said.

If nothing else, the listing has prompted city and business leaders to make sure they have a good working relationship with the property owners. And given the importance Yakima has placed on the old mill site, the relationship is more like a courtship -- with the city bending over backward to keep the property owners committed.

"I think, personally, from my perspective, it's time for us as a community to (invest in) the project so we do start to see a return," Edler said.

The Oregon property owners say they're satisfied with the city's efforts and assistance with the development process.

There's general agreement that because of the sluggish economy, the catalyst for development will lie with a public facility -- perhaps a 3,000-seat baseball stadium.

Yakima Bears general manager K.L. Wombacher said the ownership group has verbally promised to donate 10 acres toward the project but he won't get a written agreement until the city secures construction financing.

The Bears have agreed to put in $5 million, but the team and the Oregon property owners are counting on the city to help tap public funding to cover the remainder of the $23 million price tag for a new stadium.

"Until the financing plan is concrete, there isn't any reason for anything in writing for them," Wombacher said.

The Bears also hope to take advantage of some of the $25 million in state funds secured by the city for infrastructure on the mill site. To get that money, Yakima must match an equal amount.

"We've got to show the developer that this is going to happen," Wombacher said.

Still, some city officials are realistic about the economics of real estate and say there's still a possibility the old Boise Cascade property might end up with new owners.

When escrow closed on the property six years ago, Jeff Demers, who was vice president of the parent company that managed the mill, said his firm intended to run the mill for the long-term but only if operations continued to be profitable.

The sawmill was shut down a year later. The plywood mill was shut down in August 2006.

Earlier this year, the zoning was changed from industrial to regional commercial.

If there's any lingering concern at City Hall, it's that the 211 acres of undeveloped land might be sold off in pieces.

And Hill said that's what owners intend to do once the infrastructure is in place.

Selling land in chunks may be more profitable, but it could make it more difficult for city leaders to direct the course of development.

Currently, the property owners and city officials are putting together a site plan that is supposed to lay out the vision.

"If it's this ownership or a piecemeal group of several owners, my hope is that there is always a commitment and what ends up there is something we can be proud of far into the future," said Edler, a former mayor. "But I really like this ownership group and I would hate (for them to sell the property)."

* Mai Hoang can be reached at 509-577-7685 or mhoang@yakimaherald.com.