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Langley Investment Properties, two months after announcing its intention to purchase and redevelop the former Blue Heron mill site in Oregon City, has decided to pass.

“In our due diligence phase, we just ran out of time,” said Liam Thornton, managing director of investment and development for Langley. “It’s a big site; it’s very complex. There was a lot of data that was available that we were leveraging in order to do an accelerated due diligence, but we needed to do a lot of original due diligence that had not been done before, and we just did not have enough time.”

The Portland-based firm in December arranged a deal with the court-appointed bankruptcy trustee to purchase the 23-acre property for either $4.9 million (if closed within 12 months) or $5.75 million (if closed within 24 months). Starting this month, Langley was scheduled to begin making $30,000 monthly down payments while the developer conducted additional due diligence on the property.

Peter McKittrick, the trustee, said the down payments were necessary to help offset ongoing site maintenance costs (between $30,000 and $40,000 per month) while Langley considered its purchase.

“That was the theory,” he said. “It gave them time to do the due diligence, yet allowed me not to have to cover the carrying costs, which the bankruptcy just can’t afford to do.”

While beginning that process, however, Thornton said his team quickly identified significant issues (and costs) tied to site prep for vertical development, among other things. Thornton said McKittrick could not extend the initial due diligence period because of constraints on his end.

Langley is the latest company to pursue the property, but stop short of acquisition. Previously, Irvine, Calif.-based Eclipse Development Group bid to buy the property for $4.1 million, but the deal fell through in October when the company lost its funding. CenterCal Properties and Metro also expressed interest in the property in the past.

Meanwhile, Portland firm Walker Macy is developing a master plan to connect Oregon City’s downtown with the historic site. On Jan. 24, approximately 60 Portland-area design professionals and others visited the site – at the foot of Willamette Falls – to experience its potential firsthand.

Thornton said that work is critical to eventual redevelopment of the site.

“The effort they’re doing on creating the regulatory framework is actually moving forward in a very positive direction,” he said. “I hope they continue to move forward in that direction because what they’re doing is taking out a lot of the regulatory uncertainty associated with the site, and they’re getting some momentum now. And I think they should continue that movement because I think they’re making progress … It’s a fantastic site. Something good will happen there. It’s just a matter of time.”

McKittrick said he is now exploring other options, but also actively considering the possibility of a property auction or abandonment.

“I’m in the process of speaking with other potential buyers and trying to put together a sale quickly if I can,” he said.