Developers seek high-tech occupants for east SH land

Sean C. Morgan

The owners of the approved Santiam River Club development are hoping to attract the attention high-tech companies potentially fleeing the California Silicon Valley’s high costs of doing business and high cost of living.

Owners Phil Ordway and Troy Cummins and commercial real estate broker Mark Illsley of Oregon Commercial Realty updated the City Council about their project, which has been mothballed since the onset of the Great Recession, during the council’s regular meeting on Feb. 24.

Their 311 acres were part of a larger 752-acre master plan roughly between 22nd and Wiley Creek north of Highway 20 along the South Santiam River. The earliest proposal called for an 18-hole golf course in the late 1990s. That proposal soon became a mix of residential and commercial uses, including affordable housing, high-end housing and a potters village concept.

In 2006, the project investors split the master plan into two pieces, 311 acres owned by Ordway, Cummins and their investors and 441 acres owned by the Western States Land Reliance Trust, managed by Dan Desler.

Linn County foreclosed on the WSLRT property at the end of 2010 for delinquent property taxes.

That land consisted of mill property formerly owned by Willamette Industries and then Weyerhaeuser and property owned by Morse Bros. and then Knife River.

The Sweet Home Economic Development Group is asking the county to deed some 220 acres of former Knife River property to SHEDG, and the county is continuing its effort to assess the environmental condition of about 172 acres of Weyerhaeuser property that might be suitable for high-tech development, Ordway told the council.

His and Cummins’ piece of the project became the Santiam River Club, which they planned to develop as a private second-home community for Arizona and California buyers looking for summer residences in Oregon.

Within the master plan area, the Santiam River Club is located east of Clark Mill Road. The WSLRT property is west. Knife River is in the northern part of that area, while Weyerhaeuser is in the southern part.

“In 2007, we ceased marketing and development in response to deteriorating market conditions and mothballed the Santiam River Club Project,” Ordway said. In 2008, the “Great Recession” devastated demand for second homes and vacation homes. That demand has not fully returned.

In 2013, the city rezoned the Santiam River Club property and separated the two parts of the master plan, he said.

Ordway told the council that, at this point, the Santiam River Club property is the only land parcel in Oregon that is development-ready along a major river with other abundant recreation and inside an urban growth boundary with the critical mass and approvals needed for new community and high-tech campus development.

It has all city services readily available and requires no major off-site utility expense, and it is part of a comprehensive 75-year development agreement with the city.

It is just the type of property that might interest high-tech companies interested in leaving the California Bay Area.

“More than 150 companies, many in high tech, are actively seeking to leave California for the Pacific Northwest or Midwest,” Ordway said. They’re trying to escape a high cost of doing business; traffic, congestion and long commutes; crowded, inferior public schools; a lack of accessible public recreation; and a high cost of living for key employees, some $6,000 per month to rent a two-bedroom flat in the Silicon Valley.

“High tech in California has exploded, but no one is providing open space, parks and recreation, reasonable housing and solutions to increased pressure on transportation,” Ordway said. Sweet Home offers a “friendly, nonurban way of life.”

It’s close to two universities, which are important to high-tech firms, Ordway said. A 40-minute drive may seem long to people in Sweet Home, but in Seattle or California, a 40-minute trip may be just four miles.

Sweet Home has good health services, good uncrowded schools, city leaders favorably disposed toward job-creating development, a reasonable cost of housing, ample water and sewer as well as the power capacity to support new development, Ordway said.

The recreation opportunities around Sweet Home are attractive, he said. “This is the kind of recreation the up-and-coming high-tech people are looking for that they can’t find in California unless they go to the high Sierras.”

Sweet Home is 90 minutes from the coast, Ordway said. The Bay Area has horrendous traffic, and it’s tough to drive.

The fiber optic capacity is already in place, he said. “That’s really good news. That’s one of the questions corporate relocaters are going to ask: What kind of Internet do you have here?”

Their property includes 305 acres ready to go for mixed use, including more than 70 acres suitable for a high-tech campus, up to 240,000 square feet, and some 173 acres are available nearby for potential high-tech users, Ordway said.

The Santiam River Club property has approval for some 1,250 homes, and 66 lots are ready to record, he said.

A 2004 economic impact study for the original 752-acre master plan predicted the creation of more than 1,300 construction jobs with payroll exceeding $51 million over 10 years, Ordway said. It would create 246 permanent jobs with an annual payroll of $15.1 million by the ninth year.

It would increase city tax revenue by an average of $6.1 million and the School District by $4 million annually by year 10, he said.

Corresponding operating cost increases to the city and School District would only be $3.1 million annually by year 10.

Ordway told the council he and his partners didn’t need permits except perhaps a special use permit, Ordway said, but they do need the council’s support.

“We ask you to be willing to talk to folks who may come into town,” Ordway said, and to be able to tell the governor’s office that they met with city officials, who are enthusiastic about the prospect of a new employer.

“We all need to have our marketing hats on,” Ordway said.

Councilor Dave Trask asked what the odds are that someone would relocate to Sweet Home.

They’re improving, Ordway said, but they’re probably less than 50-50 at this point.

For the first time, “we believe we’ve got an exciting opportunity for development,” Ordway said. “Since ’08, we’ve been looking for a catalyst to launch this part of town.”

With everything happening in California, from the economy to the drought, people in the Bay Area are getting fed up, Ordway said. If they relocate to Washington and Oregon, the question is how to get them to look at Sweet Home.

Ordway said they plan to launch a marketing program in April and he believes he will be able to better answer that question at the end of the year.

The city and its residents have been told for years that Sweet Home is too far from Interstate 5 to expect a company to locate here, Trask said, and Sweet Home has resigned itself to the fact it is a recreation community.

“This is the first I’ve heard about anyone trying to attract something here,” Trask said.

“I think the tide is finally shifting,” Ordway said.

“You’re highly focused on types of businesses that could locate here,” Mayor Jim Gourley told Ordway in response to Trask’s comment. Those are a different type than Sweet Home has hoped for in the past.

“We have not even come close to tapping into our recreational opportunities,” said Councilor Greg Mahler.

The property is owned by Santiam River Development Company, LLC. Ordway is the CEO.

Santiam River Development Company is owned in turn by Santiam River Partners, LLC, and Destination Development Group, LLC. Cummins is the managing partner. The company includes investors from Oregon.

Ordway is board chairman and CEO of the Destination Development Group. The company includes investors from Portland, the San Francisco area, Arizona and Florida.