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Riverwalk developer wants to build hotel at location, but he owes $39,000 in water, sewer bills

JONATHAN HOUSE - A public riverwalk in front of the old Blue Heron paper mill is delayed, impacting the redevelopment of the area as part of the Willamette Falls Legacy Project.Public partners in a proposal to build a walkway to Willamette Falls have tried to purchase the 23-acre site from its property owner, while the developer owes more than $39,000 to Oregon City for years of unpaid utilities at the Willamette Falls site.

These were two of the biggest revelations found through public-record requests as the public-private partnership grapples with disagreements in the face of an April deadline to use $12.5 million in state funding to construct the public riverwalk.

As previously reported, Willamette Falls developer George Heidgerken stopped paying his taxes two years ago, but the previous story didn't mention he had stopped paying his utility bills as well. Heidgerken's Falls Legacy LCC currently owes the city $39,176.11 in unpaid water and sewer services at his Willamette Falls properties. Between the county property taxes and city utility bills, Heidgerken's company owes more than $80,000 on the site.

"All you're talking about is nickles and dimes," Heidgerken told this newspaper with regard to the relative amount of his debts at Willamette Falls compared to his millions of dollars in investments. "Whether it's taxes or anything else, they charge me interest. It's none of your business which of my bills I paid."

But the debts are the business of the public partners, according to a Feb. 23 letter to Heidgerken signed by the heads of the four public agencies involved. The letter asks Heidgerken for payment of the utility and tax bills — along with signatures on permits and a $200,000 PHOTO COURTESY: METRO - George Heidgerken and Jim Desmond shake hands to finalize the signed agreement between the developer and Metro in 2014.payment past due as of January 2017, as he agreed to under the terms of the easement agreement — before the public spends any more time and money addressing the developer's concerns.

"Because of the lack of confidence the project partners have in Falls Legacy LLC to allow the riverwalk project to advance, we ask that you demonstrate your seriousness," the four public partners wrote in the letter. "Given that [April] deadline and your continued lack of assurance that we will be able to begin Phase 1 of the riverwalk, we cannot in good conscience — as stewards of taxpayer dollars — fund continued negotiations with you."

Heidgerken said that it didn't matter to him whether the public partners worked with him on his concerns.

"If they don't want to answer them, that's fine with me," he said. "They've changed their tune many times before on what they're going to do and not going to do."

WFLP - Artist rendition of Riverwalk concept at the Willamette Falls Legacy Project, which has hit a snag.

Developer rejects purchase offer

Heidgerken also recently rejected an offer from Metro, state, Clackamas County and city officials to purchase the property. Both the public partners and Heidgerken himself have refused to reveal to this newspaper the offer amount.

"What I can tell you is that $5 million from the state had been earmarked for two possible purposes — construction or acquisition of property," said Brian Moore, Metro's Willamette Falls project manager.

It's unclear whether the offer to Heidgerken included the entire $5 million in state lottery funds, or whether it was supplemented with funding from the other three public partners. Moore said that Oregon City was officially the partner that made the offer, but the city would have continued to work in tandem with the other three partners on developing the Willamette Falls site.

"One entity would still need to hold title to the property," Moore said.

Public partners made the decision to enter into the negotiation for purchase of the property during a closed-door executive session in October, Moore said. All four public entities were in consensus that it would be better for the Willamette Falls site to be publicly owned.

Heidgerken officially rejected the offer in a Jan. 23 letter, obtained by Pamplin Media Group this week through a public-records request to Metro. Heidgerken told the public partners that their offer amount was less than his December buyout of his business partner "based on our assessment of a fair market value," so he wasn't interested in selling the property.

Oregon City's top official has acknowledged the public partners' failure in May 2014 to purchase the property themselves as their "biggest mistake."

Heidgerken bid $2.2 million in bankruptcy court in 2014, when worried local officials tried to stage a bidding war, but they couldn't raise the funding in time for an eleventh-hour purchase attempt.

In his rejection letter of Oregon City's purchase offer, Heidgerken listed several "details" to be resolved before he would "consent to Metro's Phase 1 plan" of the riverwalk.

"No hotel operator will commit to the project if access cannot be guaranteed and view preserved," Heidgerken wrote.

Metro said it has since worked with Heidgerken on side agreements to allow for a hotel development to abut the riverwalk without any trees blocking its views of Willamette Falls. But Heidgerken also is asking to get out of his agreement in 2014 to pay for 20 percent of the ongoing riverwalk annual operating costs because the riverwalk plan has become "much more ambitious and costly" than he anticipated.

"Bottom line is that the agreement I got to sign was unrealistic," Heidgerken told this newspaper.

Moore said there's not consensus currently among the four public partners to sue Heidgerken to hold him to the agreement he signed in 2014.

"Any litigation on the project brings with it a whole suite of baggage," Moore said. "All of the four partners understand the complexities."

Moore said that litigation is a possibility the partners will have to re-evaluate as the deadline approaches for losing the state funding for the riverwalk.

"It's a moving target," he said. "As this situation unfolds, each of the agencies has to do that calculus themselves as to what the right thing to do is."

Another meeting of the four public partners is scheduled for 2 p.m. Wednesday, March 21, in Oregon City. Moore said that the meeting will include another executive session followed by a work session that will be open to the public to give an update on the status of the project. Further details about the agenda for the meeting aren't currently known.

"It's dependent on what happens between now and March 21," Moore said.

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