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The city of Portland has pulled the plug on Harsch Investment Properties‘ redevelopment plans for the Centennial Mills site in Northwest Portland.

In March 2013, the Portland Development Commission and Harsch signed a nonbinding memorandum of understanding that the two parties would work toward successful negotiation of a binding disposition and development agreement for redevelopment of Centennial Mills. That MOU expired earlier this year, but was being renewed on a month-to-month basis.

On Wednesday, PDC Executive Director Patrick Quinton sent Harsch President Jordan Schnitzer a letter informing him that the agency had decided that the MOU would not be renewed again.

鈥淎s you well know,鈥� Quinton wrote in the letter, 鈥渢he landscape and development options and budget have dramatically changed during this time. Now that we have a better picture of the demolition costs, the plans for the Mounted Police Unit site and the size of the remaining public resources available for the project, the original development concepts both you and we had in 2013 are no longer practical.鈥�

Schnitzer was not immediately available to comment.

The Harsch team’s preferred plan for redevelopment would have cost $115.8 million. The company in October 2014 proposed covering $77 million of that amount, and relying on public subsidies totaling $38.8 million. That project had called for revitalizing the 4.75-acre site to hold 120,000 square feet of multifamily units, 80,000 square feet of office space and 24,000 square feet of retail space. Of that total, 50,000 square feet would have been in the only two buildings that could be saved 鈥� the Feed Mill and the Flour Mill.

The PDC acquired Centennial Mills in 2000. Bruce Wood, real estate and construction services manager for the agency, said that Wednesday 鈥渨as just another day in the progression of decisions that will determine ultimately what’s going to happen here. The decision yesterday was to basically say that the project has changed. If you read the MOU, it describes a very, very, very different type of project. What we know at this point is that that project is not going to move forward.

鈥淲e’ve been working on Centennial Mills for quite some time. It’s not like decisions are made at the spur of the moment. There has been 15 years of process as this very complicated project works toward whatever its ultimate outcome is going to be.鈥�

The decision to let the MOU expire was announced at the PDC’s board meeting on Wednesday. Also at the meeting, an update was given on the estimated costs to preserving/demolishing the Feed Mill and the Flour Mill buildings.

The Feed Mill, a five-story, 25,000-square-foot building with a basement, was built in 1920. The cost to demolish it was approximately $57,113, while the cost to renovate it was approximately $8,334,350. The Flour Mill, a six-story, 44,000-square-foot building with a basement, was built in 1910. The cost to demolish it was estimated at $1,134,726, while the cost to restore it was estimated at $14,586,560.

In July, Mayor Charlie Hales requested that the PDC investigate the costs and feasibility of preserving more structures.

鈥淚t’s really generated a lot more questions than answers,鈥� said Irene Bowers, senior project/program coordinator for the PDC.

City staffers announced at the PDC board meeting that Phase I demolition of warehouses A, B, C, D and F as well as elevators A, B and C began the first week of October and will conclude in June 2016. Demolition crews have witnessed several instances of structural collapse and accelerating deterioration. Non-demolition personnel are no longer permitted on the property.

Whatever happens with Centennial Mills, it is not certain that Harsch, or another developer will not be a part of it.

鈥淲e have not abandoned the possibility of a private development on the site,鈥� Quinton wrote to Schnitzer. 鈥淚f we ultimately reach a decision to pursue a substantial private development component on the site, we will come back to you to see if Harsch is interested in leading a private development effort.鈥�

Wood, who has worked for Harsch, said he expects the PDC and the development company to be on good terms moving forward.

鈥淲e’ve worked well with Harsch,鈥� he said. 鈥淲e’ll work well with Harsch in the future.鈥�