News
Jordan Schnitzer: Mulling over the mill
April 10, 2013
Daily Journal of Commerce
Jordan Schnitzer: Mulling over the mill
by Lee Fehrenbacher

Published: April 10th, 2013

Jordan Schnitzer's company, Harsch Investment Properties, has been in business for more than 60 years. It has amassed a portfolio with approximately 21 million square feet of space. Schnitzer is a veritable real estate tycoon. So, the fact that redevelopment of Centennial Mills frightens him is significant. “I’m scared and should be,” Schnitzer said. “Anyone that isn’t scared touching this project is a fool. But …you lessen the concern by bringing in a lot of great minds around it, and saying, ‘We, on behalf of the city and its citizens, need your help.’ ”
 
On Tuesday, the Portland Development Commission approved a memorandum of understanding with Harsch Investment Properties for it to explore redevelopment potential of the century-old former flour mill. The PDC is jump-starting the effort with a $350,000 predevelopment loan to assist Harsch with due diligence and schematic designs. Harsch will match that investment over the next 12 months. Schnitzer has high hopes, but said Centennial Mills is the most complicated site he’s ever seen – many of the aged structures have weathered significantly. Nevertheless, he can’t deny his nostalgic feelings about the ex-mill.

He recalled his childhood, when he joined his father, the late Harold Schnitzer, Harsch’s founder, on a drive along the waterfront and watched the flour mill spew dust and grain onto the street. Production came to a stop in 2000; now Schnitzer has called on his design dream team to try and preserve Centennial Mills’ legacy. Players include Bing Sheldon of SERA Architects, Timothy Eddy of Hennebery Eddy Architects, Thomas Meyer of Minneapolis-based Meyer Scherer & Rockcastle, and landscape architect Laurie Olin of the Olin Studio in Los Angeles. Other firms involved include Glumac, KPFF and CH2M HILL. Notably, Venerable Properties will only be part of the leasing team. This past September, the PDC was prepared to issue a similar joint contract to Harsch and Venerable when Venerable’s president, Art DeMuro, died after a brief battle with cancer. Negotiations came to a halt. “I was heartbroken … Art told me months before it became public about the beginning of the knowledge of his disease that took him far too soon,” said Schnitzer, who said he is holding a place at the Centennial Mills table for Venerable’s new president, Craig Kelly, who is busy handling duties as the executor of DeMuro’s estate. “We’re
there, ready for Craig’s help whenever he has some time, but we respect the unforeseen situation that he found himself in.”

In addition to challenges associated with construction – Harsch has budgeted more than $500,000 for civil, structural and architectural planning and analysis – Schnitzer said there are competing interests for the site. Historic preservationists want to save the buildings; environmental advocates want to preserve the river; and park proponents want more green space. Consensus among those groups may be essential because Harsch will likely need a significant public investment to make any redevelopment effort feasible. The PDC has approximately $17 million in urban renewal money budgeted for Centennial Mills through 2016. PDC spokesman Shawn Uhlman said that only four of the five PDC commissioners were present (Charles Wilhoite was absent) Tuesday when they approved Harsch’s predevelopment loan, and that Commissioner Steven Straus, Glumac’s president, abstained because of a perceived conflict of interest. As a result, the PDC must wait 30 days before it can issue the money.

According to the PDC’s report, Harsch would repay the loan with construction financing or as part of the property purchase; however, it may not have to repay it at all. A big part of the redevelopment effort will be market-driven. Should construction start, Harsch envisions reactivating the site with 80,000 square feet of cluster industry/traded sector employment space; 71,000 square feet of retail space; 36,000 square feet of arts-related space; 42,000 square feet of multifamily units; and 295 parking spaces. If Harsch can’t find tenants, adequate income or equity investment – or all of the above – it can ask for loan forgiveness at the PDC’s discretion. Schnitzer is taking his time to evaluate the site carefully. He likens the process to one once experienced by the famed Hope diamond at the Smithsonian Institution National Museum of Natural History. “The diamond cutter sat there for a year and just studied that big rock before he made the first cut, and this is the same way,” he said. “This is an absolute jewel. We don’t have any structures like this left that tell the story of what the waterfront was like in 1915.”

Built in 1910 by Balfour, Guthrie & Co., a San Francisco commodity trading firm, Centennial Mills opened when Portland was the industrial milling capital of the Northwest. The site has 11 historic buildings, from flour mills to grain elevators, which the PDC purchased in 2000 for $7.7 million. Redevelopment has been a logistical quandary since, but Schnitzer thinks that with a lifetime of contacts established in real estate, development and historic preservation, he can tap the right people to move the project forward. It’s important to him because Centennial Mills reminds Schnitzer of his family’s hard-boiled heritage.
His grandfather emigrated from Russia to Astoria in 1905, and began walking from cannery to cannery, picking up old rags, rubber boots, bales of wire and scraps. He sold those until he had enough money to buy a horse and wagon, which he rode to Portland to lease a store on the waterfront. The rest, as they say, is history.

Centennial Mills would be a good place to tell those stories, Schnitzer said, but only if it’s feasible. “If we don’t have moms and dads bringing their kids down on Saturday mornings; if we don’t have high school and college kids coming down on dates or just to be together in the late evenings; if we don’t have seniors walking across the property and thinking about when life was maybe simpler; if we don’t have a reason for all those people to come to this site,” Schnitzer said, “then we’ve not succeeded.”