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The Blue Heron paper mill occupies 23 acres on the Willamette River waterfront in Oregon City.

(Benjamin Brink/The Oregonian)

A California development company has signed a purchase agreement for the historic Blue Heron mill site at the base of Willamette Falls, an industrial property deeply rooted in Oregon history.

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Eclipse Development Group of Irvine, Calif., known for mid-level retail projects, is the first buyer to make an offer since the bankrupt paper mill closed for good in early 2011, putting 175 employees out of work.

Terms of the deal were not disclosed, but details will be outlined in paperwork filed today with the U.S. Bankruptcy Court in Portland, said bankruptcy trustee Peter McKittrick.

Generally speaking, Eclipse plans a mix of office, retail and residential uses for the 23-acre site, President Doug Gray said.

The purchase is contingent on further investigation of engineering, environmental and traffic issues, McKittrick said. The deal will pay off secured creditors and provide some money to mill employees, he said.

Historic site

Pre-history: Several tribes traditionally fished at the base of Willamette Falls, which was also a gathering place for Native Americans from the Pacific Coast, Puget Sound, Great Plains and Alaska.

1829: British fur trader John McLoughlin, known as the Father of Oregon builds a sawmill at the site, powered by a millrace. It was Oregon's first industrial development.

1832-1850: Several lumber, flour and grist mills occupy the Oregon City side of Willamette Falls.

1863-1908: A succession of mills and power stations operate on the site, including the Imperial Flour Mills, Oregon Woolen Mill, Pioneer Paper Manufacturing Co., Willamette Falls Pulp and Paper Co. and Willamette Falls Electric Co.

1908: The Hawley Pulp and Paper mill takes over the site, and a paper mill operated there for more than a century.

2000: The Smurfit Stone Container Corp., the nation's largest producer of cardboard box material, sells the Oregon City facility to employees and a New York private equity fund, creating the Blue Heron Paper Co.

2009: The company files for bankruptcy protection.

2011: Blue Heron Paper Co. closes in February, leaving 175 people unemployed.

2013: California developer signs agreement to purchase the site.

Sources: The Oregonian, "Oregon City: Images of America," by Jim Tompkins

A bankruptcy court judge will decide whether to approve the purchase agreement on July 11. Then, there will be a period when other potential buyers could outbid Eclipse.

Gray said that until he has the site locked up, he's not going to detail his plans. "There is an overbid process, so my cards must be so close to my vest at this time, because I don't want to get in where I'm basically helping make the deal for someone else," he said Wednesday.

The property has some obvious constrains: It is wedged between the West Coast's main north-south railroad line and the Willamette River. Traffic access is difficult now and would get much worse with high-density development.

"I wish I had more detail," Gray said.

The property, with dramatic views of 40-foot Willamette Falls, was put into industrial use before Oregon became a state and has been the site of a paper mill for more than a century.

Gray said he envisions a pedestrian-friendly extension of downtown that highlights natural features. "We love the opportunity with the river and the falls and using that as an amenity we're going to play off of," Gray said. "How we're going to achieve that is yet to be determined," he said.

The developer is sensitive to criticism, which began bubbling online shortly after his offer became public, that he envisions a low-end strip mall or a couple of big-box stores. Eclipse has redeveloped sites in California, Connecticut and Hawaii. The company's website identifies several national retailers as tenants, among them: Target, Wal-Mart, Home Depot, Kroger, Best Buy, Staples, Toys R Us, and Bed Bath & Beyond.

Gray said that, while the project will require anchor tenants, they won't be huge retailers. The site isn't big enough, big stores are a bad fit, and it would not be the best use of the land, he said.

A Target or Toys R Us is "not even a consideration," Gray said. "Our intent is to have a continuation of downtown Oregon City" with buildings on a scale similar to the historic business district.

If recent Oregon City Commission meetings give any indication, local elected officials and advocates for historic preservation will apply pressure on whomever develops the Blue Heron site to save and reuse as many of the mill buildings as possible.

Gray said that's his intent, but economic reality is a counterweight to preservation. Before Eclipse seals the deal, he said he needs to know a lot more about the land and buildings.

"There so much we're trying to get our hands around. Is there a chance to utilize much, if any, of the existing structures for adaptive reuse? I really don't know until we get in to a lot of engineering and planning," Gray said. "Maybe we can save some of the facades, maybe we can utilize some whole buildings."

Oregon City is just beginning to draft a master plan for the site, a public process that will involve the developer, said Tony Konkol, the city's community development director. Oregon City and Metro have been studying the site for almost two years, exploring the regulatory issues, environmental problems and the conditions of buildings. Both Metro and the city want to preserve buildings when feasible and provide public access to Willamette Falls.

Oregon City Mayor Doug Neeley said it's too early to assess Eclipse's offer. "I know very little about them," said Oregon City Mayor Doug Neeley, and the city is still going through a master planning process. "I expect the developer will be part of that and work with the city to meet those core values we put forward."

Gray said his company is eager to begin the process.

"Once the court gives the nod, we roll up our sleeves and see if we can make it make sense," Gray said. "There's a lot of work to do on this thing," said Gray, who laughed as he spoke.

-- Steve Mayes