I N T E R O F F I CE M E M O R A N D U M

TO:

PORTLAND PLANNING DIRECTOR

FROM:

KATE WASHINGTON

SUBJECT:

CENTENNIAL MILLS REDEVELOPMENT TO DATE

DATE:

JANUARY 23, 2015

INTRODUCTION
The status of the redevelopment of Centennial Mills is of particular importance to
the Portland metropolitan region, the City of Portland, and the Pearl District neighborhood.
As of this memo, the Centennial Mills complex has sat undeveloped, save for parts used by
the Portland Mounted Patrol Unit (MPU), for 14 years. Every subsequent year has
compounded the cost and complexity of redeveloping this site, making preservation less and
less viable.
HISTORY
The 4.7-acre Centennial Mills site sits at the northern boundary of the Pearl District,
between the Fremont and Broadway Bridges, perched on the west bank of the Willamette
River. It originally opened as Crown Mills in 1910, serving foreign markets for U.S. grain.
The 12-structure complex was added to, building by building, from 1910 to 1940 and in
1955 it was renamed Centennial Mills. After WWII, the mill was modernized and continued
in operation until the Portland Development Commission (PDC) acquired it in 2000.
Under Mayor Katz, PDC purchased the site for 7.7M$ using urban renewal funds
from the River District Urban Renewal Area (RDURA) and with money from the Bureau of
Environmental Services. The City shuttered the mills operations with the stated purpose of
fulfilling RDURA goals of connecting the community with the waterfront. At this point, the
MPU moved from its location at NW 9th and Lovejoy to the Centennial Mills site.
In 2004, under Mayor Tom Potter, PDC commissioned an engineering study to
explore redevelopment feasibility. The report recommended either wholesale demolition or
selective reuse. Both recommendations included exemptions for the facilities used by the
MPU. Historic preservationists protested demolition, resulting in City Councils Resolution
#36320, which recognizes Centennial Mills as a valuable symbol of Portlands rich maritime
history. The resolution directed PDC to work with community stakeholders to create a
comprehensive redevelopment plan for the site.
City Council adopted the Centennial Mills Framework Plan in 2006. Building on
public plans dating back to 1985, the framework envisions this site as a regional public

attractor and the document hails the redevelopment as the pinnacle of a rejuvenated and
burgeoning river district that exceeds the publics aspirations. A six month public
process distilled these aspirations down to five key principles: provide open space, capture
history, define a community focal point, strengthen connections and embrace sustainability.
THE LAB
Upon adoption of the Centennial Mills Framework, PDC issued an RFQ, casting its
net wide for interest outside the region. A selection committee winnowed several responses
down to three and PDC granted each firm a loan to assemble their proposals. The
committee eventually selected LAB Holdings (The Lab) proposal to transform the site into
a foodie and entertainment-themed destination. The Lab spent an additional 18 months
working with the community to explore the sites potential and, in 2008, City Council
unanimously approved The Labs 145,612 ft proposal of a culinary school, restaurants,
market stalls, galleries and public event space to be accomplished without significant
change to most of the buildings. PDC budgeted 10.15M$ for the project, The Lab
committed 40M$ and it was expected to open by 2012.
Around this time, the Burnside Bridgehead redevelopment stalled due to the inability
to secure anchor tenants, casting doubt on the viability of the Centennial Mills
redevelopment. Also around this time, the Great Recession struck the nation, Sam Adams
was elected as the next mayor and Patrick Quinton became PDCs next executive director.
Quinton and Adams introduced new priorities, insisting on the inclusion of traded sector
industries. PDC gave The Lab one month to rework their designs to add sufficient office
space.
Speculation arose that the move was intentional in order to scuttle the deal because
PDC chairman Scott Andrews was president of Melvin Mark Cos. and a division of Melvin
Mark was developing the James Beard Market, a project very similar, and possibly in
competition with, The Labs foodie-oriented proposal. This was never substantiated, but
never the less, the deal unraveled in 2010. The Lab claimed they would never have gotten
involved if office use was part of the requirement and sued the City for 1.7M$ to cover their
investment thus far. PDC settled for a $200,000 and forgave the initial $700,000 loan.
VENERABLE INVESTMENT PROPERTIES
Back at square one, now several years and millions of dollars behind schedule, PDC
sent out an RFP, receiving only two proposals. They chose Venerable Properties, a firm with
a strong reputation in historical preservation. Venerable had submitted a proposal in 2007,
but this time, removed plans for a maritime museum and for much of the retail in order to
align with PDCs economic development expectations. PDC signed a memorandum of

understanding with Venerable in 2011, but its president, Art DeMuro died unexpectedly in
2012, setting the project back once again.
Without DeMuros passion for the project, Venerable stepped aside, allowing partner
Harsh Investment Properties to take up the project. PDC approved a $350,000 predevelopment loan to Harsch and later awarded Harsch the contract in 2013. Harschs
preferred plan preserves two original structures, evicts the MPU and includes 24,000 ft of
retail, 80,000 ft of office and 120,000 ft of residential at a price tag of 117.5M$ 38.5M$ of
which is expected to come from public sources, though PDC has only allocated 16.2M$ to
the Centennial Mills project. The demolition alone will cost an estimated 18M$. By
comparison, The Labs proposal cost an estimated 60M$, with a 10.15M$ commitment from
PDC, preserved nearly every building and accommodated the MPU.
DEMOLITION EXPEDITED
An early 2014 assessment of the site by KPFF Consulting Engineers reported that
several structures were beyond rehabilitation. In response, PDC approved a modified
approval process in late 2014 allowing them to consider contractor proposals based on
factors other than price, such as experience, safety record and overall capabilities. This
exception was predicated on the premise that the decay of the buildings was unforeseeable
and, therefore, an emergency situation, though the PDC has been in regular contact with the
complex since acquiring it in 2000. After a mandatory pre-proposal meeting on January 12th
and a mandatory site tour that week, contractors will submit bids by January 27th, 2015.
Selective demolition is scheduled to begin summer 2015.
According to a January 20th presentation by PDC to the Pearl District Neighborhood
Association (PDNA), PDC budgeted $6,233,713 to the Centennial Mills project for the fiscal
year 2014-2015 and 1M$ for the fiscal year 2015-2016. PDCs entire financial commitment
will be allocated over five years and the financing gap between Harschs expectation and
PDCs budget has not been reconciled. PDCs project schedule shows Phase 1 demolition
starting July 2015 with Phase 2 demolition a year later. Public engagement will run
throughout the entire process with design open houses in May 2015, September 2015,
February 2016 and September 2016. The PDNA Planning and Transportation Committee
objects to the demolition, describing the preferred site plan as without vision, a
disappointing departure from the Centennial Mills Framework, and expressed concern about
the exclusion of public input before committing to demolition.