Illinois Valley News, Cave Junction, Ore. Wednesday, March 21, 2018
LOG
...
Conrinued from A-8
Ecotrust said when it
put the deal together that the
public’s investment would
create much-needed jobs in
unemployment-racked Cave
Junction.
“This project will
bring back 70 jobs in an
economically depressed
region of the state with
unhealthy forests,” Ecotrust
said on its application.
“Working people are
productive, pay taxes and
are not a drain on the state
resources. . Rural Oregon
communities need a
sustainable economic engine
to support the quality of life
we all desire.”
Davis, the laid-off mill
worker, said his younger
brother, Chuck, and a
neighbor went back to work
when the retooled mill started
sawing logs again. But, Davis
noted, “It didn’t last very
long.” For Chuck - who joined
the Marines right after the
mill closed again - the mill’s
second shuttering brought
grief. “He was so upset,” said
Davis’ wife, Lynne.
Out of Ecotrust’s 25
new market tax credit deals,
Lane said only two have run
into problems like Rough &
Ready’s. Still, he said “this is
heartbreaking for us because
when we put this deal together
we were incredibly excited
about the job creation, not
only at Rough & Ready but
the surrounding landowners.”
As for the state’s
contention Ecotrust got the
subsidies improperly by
counting ineligible expenses,
Lane said, “We are not saying
that is correct.” However,
Lane said Ecotrust agrees with
the state that “this is a good
solution” to spend any money
left to purchase timberland for
the Phillippis to manage.
“We’re working with
the Phillippis, or monitoring
them, because they’re the
ones that sort of have to drive
it,” Lane said.
In light of the problems
that arose, Ecotrust will repay
$250,000 — half of the fees
it earned for handling the
tax credits — and use it to
purchase timberland in low-
income tracts, Lane said.
Ecotrust is not ruling
out future tax credit deals
involving lumber mills, Lane
said. “Ecotrust has a strong
forestry team. We know a lot
about it.”
NINETY YEARS,
THEN CLOSED
Rough & Ready
had been sawing logs
continuously since 1922 and
was the last working mill in
Josephine County when it
closed in February 2013. Its
holdings spanned two mills
located side by side. One
was a 1940s-era mill and had
recently been upgraded with
$2.5 million of taxpayer help
to more efficiently saw large
diameter logs. The second
mill, added in the 1970s,
was capable of sawing small
logs but had been dormant
since 2002 because it wasn’t
capable of turning a profit.
The Phillippis closed the
large log mill in 2013, citing
the shortage of logs from
federal lands. The infusion of
taxpayer financing in 2014
was to retool the small-
log mill and put it back in
business after 12 years.
They were bullish about
the chances of success.
“Demand is good right
now,” Link Phillippi said at
the time. “Our markets are
good. Our customers are
begging for wood.”
Critical to any mill’s
success is its ability to acquire
raw logs.
Both Lane and Jennifer
Phillippi said they had reason
to believe Rough & Ready
would be able to buy enough
timber to successfully reopen
and keep running. The mill
had eight federal timber tracts
under contract at the time
the state and Ecotrust were
putting together the deal to
reopen the mill, they said.
Rough & Ready had not
bought a lot of federal timber
sales in 10 years, Phillippi
said. But by 2014 they had
enough in the pipeline to
keep the mill busy for at
least a year, she said. The
political outlook for area
timber harvests also looked
better, thanks to an effort
to find consensus among
groups including loggers and
environmentalists, Phillippi
said. “It just seemed things
had changed.”
The outlook was
apparently still good enough
as of Nov. 6, 2014, for the
Phillippis to accept another
$4.3 million in federal tax
credits, this time arranged
through United Fund Advisors
in Portland. The group gave
the mill that money so it could
buy a costly new planer and
have “working capital” to buy
logs.
Just over a year later, the
Phillippis told Ecotrust they’d
have to call it quits. They
couldn’t get enough logs.
“Rough and Ready has been
bleeding and is ready to pull
the plug,” von Hagen emailed
to Lane and two Ecotrust vice
presidents.
Phillippi said it became
obvious the mill couldn’t stay
open when they landed only
two federal timber sales in
2015. They were given first
shot at another but declined,
since they would have had to
haul the logs 75 miles, she
said. Their largest private log
supplier suffered disastrous
fire seasons in 2014 and 2015
and reduced its harvest by 75
percent, she said. They simply
didn’t have enough logs to
keep operations going beyond
early 2016, she said.
Through another
company of theirs, the couple
also own 25,000 acres of
timber in Douglas, Jackson,
Josephine and Morrow
counties. In an interview,
Jennifer Phillippi said their
privately-held timber supply
isn’t large enough to have
sustained the mill.
She and her husband
were sorry the mill had to
close and had gone to lengths
to prevent it, she said. “We
risked a lot of our own money
and had lost a lot of money
during the recession to try to
keep the mill going,” Phillippi
said. “We just care so much
about our community, we
just were doing whatever we
could.”
It’s not clear the federal
timber supply dried up as
Phillippi described. The
Bureau of Land Management,
which manages some of the
federal land in the Illinois
Valley where Rough &
Ready was located, offered
38 million board feet for
sale in that general area in
Rough and Ready responds
On March 10, the Oregonian (the same
story is published in this edition) published
an article about Rough & Ready Lumber and
the 2014 tax credit financing we tapped to add
to our own large investment in an upgraded
sawmill. It appears to us that the story was
designed to evoke scandal and hook readers,
rather than tell the less tantalizing narrative
ofour intention to modernizeour small log mill
and createa competitive operationthat could
sustain jobs for the Illinois Valley families with
whom we’ve lived and worked.
The inaccuracies and misrepresentations
in the Oregonian story require clarification.
1. The tax credit programs are complex
“all in” projects in which equity and credit
funds are rolled together. The $4 million
equity funds were all invested directly in the
project to rebuild a small log sawmill and
planer and were not cycled back to the owners.
All funding was invested in the
project,minuslegal and placement fees. The
structure brought the existing mill into the
project. Neither Rough & Ready nor related
parties walked away with tax credit funds.
2. The article criticizes Rough & Ready
for not anticipating log shortages while
accepting tax credit support. The reporters lay
out a puzzling contradiction. They charge us
within adequate analysis at the start in respect
to log supply; followed by a conclusion that
we had access to an ample log supply which
didn’t justify our closing.
Just the reverse is true. At start-up
we had on-hand over 12-months of federal
timber under contract, along with a report
from a respected local forest collaborative
that supported annual harvest of 28 million
board feet around our facility. At closing, a
June 2015 legal decision had decimated an
expanding federal timber sale program, and
the expected timber offerings near the Illinois
Valley didn’t materialize.
The article notes that 38 million board
feet of BLM timber were available and not
used, but neglects to mention that this meager
volume was offered in northeastern Jackson
County, near two large business manufacturers,
and far away from our plant.
3. The reporters conclude that we did
not give a potential buyer time to assess the
business and possibly continue the operation.
Wrong again. We found an interested
purchaser and worked intensively with him
for 4 months. He eventually declined due to
an increasing uneasiness about log supply in
an area where the forests are 80% federally
owned. Then, immediately prior to the auction
of the mill, a last effort was made to rescue
the business through reigniting his interest
in purchasing the operation. This is the brief
period during which “there wasn’t enough
time for him to complete due diligence.”
The authors imply this pertains to the entire
business review rather than the last few days.
4. It is curious that the reporters
neglected to ask us about the tax credit
structure. We are confident that the
arrangement was appropriate. Business
Oregon’s suggested path forward aligns
with our plans to reinvest proceeds from
the sawmill sale into timberlands and thus,
continue tosupport the local economy.
5. The article fails to acknowledge
the benefits provided during the 20 months
the mill was running. Business Oregon
awarded tax credits for the project in
hopes it would provide jobs in an area with
highunemployment and an alarming poverty
rate. The funds did permit 20 months of full-
time, living-wage jobs for construction crews
and mill employees, with several million paid
in payrolls over this time.
The story is more sad than scandalous.
Everyone involved is unhappy that the
project fell short. We and the government
suffered losses, but much of this is mitigated
by the economic benefits provided during
construction and operation. Timberland
purchased with funds redeployed from the
sawmill sale will be managed to promote jobs
and provide logs to neighboring manufacturers
desperate for wood.
Our family spent over 90 years operating
this business, providing jobs to thousands of
local employees,jobs that took many of them
through to retirement.
In scrutinizing economic development
tax dollars, journalists should judge the
expenditures fairly and give an honest
assessment of the inherent risk, the good
faith efforts of those involved and the high
stakes for an ailing community in need of life
support.
Jennifer and Link Phillippi
fiscal year 2015, according to
spokeswoman Maria Thi Mai.
Much of that was set aside to
give small local businesses
first shot at buying it. At
the time it closed, Rough &
Ready was the only business
on that list, Thi Mai wrote in
an email.
A NEW OWNER FOR
THE MILL?
Although the Phillippis
were ready to cut bait,
Ecotrust was not. Staffers
scrambled to find a buyer who
would take over the mill and
assume responsibility for the
tax credits.
The group negotiated
with Bruce Burton, co-owner
of California-based Willits
Redwood Company. But
Burton said there wasn’t
enough time for him to
complete due diligence
before the Phillippis started
auctioning off mill equipment
in November 2016.
“It just seemed at that
point it was a Hail Mary,”
Burton said. “I don’t have
the deep enough pockets to
play in that league, with that
elevated risk.”
Jennifer Phillippi said
the couple badly wanted to
keep the mill going. Selling it
to Burton “would have been
our first choice,” she said.
Page A-9
“We would have had our
employees still working.”
After the mill equipment
was auctioned off and the
property sold, roughly $5
million was left from the
$12.3 million of incentives
taxpayers spent on project,
according to an Aug. 9, 2017,
email Ecotrust’s Adam Lane
sent to a representative at
Chase and others involved.
“Of course this is not the
outcome for which we had
hoped when we originally did
the transaction but is the best
that can be achieved at this
point,” Lane wrote.
The sale of the mill
for use as a garden products
distribution center in
summer 2017 prompted state
regulators to ask questions
about why the mill project
failed. They concluded that
Ecotrust’s spending at the
launch of the mill retrofit was
out of line.
In a Feb. 2 notice
to Lane, Ray, the Oregon
Department of Revenue
director, wrote that Ecotrust
mischaracterized its plans
to regulators. Almost half
the $10 million project
involved using a one-day,
$4.9 million loan from JP
Morgan Chase Bank to allow
a new entity 99 percent owned
by the Phillippis to acquire
the mill and its equipment
from a company owned by
the Phillippis, it says. But
Ecotrust’s application did not
disclose that plan to Business
Oregon. For the Phillippis to
in essence buy the mill from
themselves for themselves
cannot be counted toward a
state new market tax credit,
Ray wrote. So Ecotrust must
repay the state $1.2 million
or invest $2.9 million in an
approved project.
Ecotrust has indicated
it plans to make such an
investment, probably in
forestland.
Buehler said Business
Oregon will closely monitor
Ecotrust to make sure all
spending is proper and that
conflicts of interest don’t
arise.
Business Oregon
officials took their questions
about Ecotrust’s dealings
to Oregon Department of
Justice, where prosecutors
considered a criminal or civil
investigation. They looked
into the deal, spokeswoman
Kristina Edmunson said, but
decided not to investigate
further.
___ Information from:
The Oregonian/OregonLive,
http://www.oregonlive.com
PUBLIC NOTICE
IN THE CIRCUIT COURT OF THE
STATE OR OREGON FOR JOSEPHINE
COUNTY THE CITY OF CAVE JUNCTION,
A POLITICAL SUBDIVISION OF THE
STATE OF OREGON, Plaintiff,
vs.
JUDITH ANNE RICHARDSON, ANY
UNKNOWN HEIRS OF AVERY CLYDE
TEMPLE, III, OR PERSONS WHO HAVE OR
CLAIM ANY RIGHT, ESTATE, LIEN, OR
INTEREST IN 425 E. RIVER STREET, CAVE
JUNCTION, OREGON, LORI ANN TAYLOR,
KELLY SMITH, JOSEPH ERICKSON,
KARON BLAIR, DONEVIN MALONEY,
RICHARD SCOTT MOORE, RAY KLEIN,
INC. AN OREGON CORPORATION DBA
PROFESSIONAL CREDIT SERVICE, THE
STATE OF OREGON, AND THE UNKNOWN
OCCUPANTS OF 425 E. RIVER STREET,
CAVE JUNCTION, OREGON,
DEFENDANTS. Case
No.:
18CV04868
PUBLISHED SUMMONS
TO:
ANY UNKNOWN HEIRS
OF AVERY CLYDE TEMPLE, III, OR
PERSONS WHO HAVE OR CLAIM ANY
RIGHT, ESTATE, LIEN, OR INTEREST IN
425 E. RIVER STREET, CAVE JUNCTION,
OREGON; THE UNKNOWN OCCUPANTS
OF 425 E. RIVER STREET, CAVE JUNCTION,
OREGON
Plaintiff, The City of Cave Junction,
has filed a Complaint asking for Suit for The
Application for The Appointment of a Receiver
Pursuant to ORS 105.420 Through ORS 105.455
For 425 E. River Street, Cave Junction, Oregon.
If you do not file the appropriate legal papers
with the court in the time required (see below),
Plaintiff, The City of Cave Junction, may ask
the court for a judgment against you that orders
the relief requested.
NOTICE TO THE RESPONDENT:
READ THESE PAPERS CAREFULLY!
You must appear in this case or the other
side will win automatically. To appear you must
file with the court a legal paper called a Motion
or Response. The Motion or a response must be
given to the court clerk or administrator within
30 days of the date of the first publication
specified herein along with the required filing
fee. It must be in proper form and proof of
service on the petitioners’ attorney or, if the
petitioner does not have an attorney, proof of
service upon petitioner. The location to file your
response is at the court address indicated here:
500 NW 6th St., Grants Pass, OR 97526. If
you have questions, you should see an attorney
immediately. If you need help in finding an
attorney, you may call the Oregon State Bar’s
Lawyer Referral Service at (503) 684-3763
or toll-free in Oregon at 1 (800) 452-7636. If
special accommodation under the Americans
with Disabilities Act is needed, please contact
your local court at the address above; telephone
number: 541.476.2309.
Information required by ORCP 7(D)(6)(b):
(1) The object of this Complaint is Suit for The
Application for The Appointment of a Receiver
Pursuant to ORS 105.420 Through ORS 105.455
For 425 E. River Street, Cave Junction, Oregon.
(2) Plaintiffs demand for relief is as follows:
1. For a judgment and order appointing
Jason Hayward, Attorney at Law, or such other
person the court should appoint as the receiver
for Defendants’ property, (which is described
as: THE LAND REFERRED TO HEREIN
BELOW IS SITUATED IN THE COUNTY
OF Josephine, STATE OF OR, AND IS
DESCRIBED AS FOLLOWS:
A PARCEL OF LAND IN THE
NORTHWEST
QUARTER
OF
THE
NORTHWEST QUARTER OF SECTION
22, TOWNSHIP 39, SOUTH, RANGE 8
WEST, OF THE WILLAMETTE MERIDIAN,
JOSEPHINE
COUNTY,
OREGON,
MORE
PARTICULARLY
DESCRIBED
AS FOLLOWS: COMMENCING AT THE
NORTHWEST CORNER OF SAID SECTION
22; THENCE SOUTH 0°10’00” EAST 30.00
FEET ALONG THE WEST LINE OF SAID
SECTION 22 TO AN IRON ROD ON THE
SOUTHERLY RIGHT OF WAY LINE OF RIVER
STREET; THENCE ALONG SAID RIGHT OF
WAY LINE SOUTH 89°55’00” EAST 145.00
FEET TO AN IRON ROD, WHICH IS THE
TRUE POINT OF BEGINNING; THENCE
ALONG SAID RIGHT OF WAY LINE SOUTH
89°55’00” EAST 210.50 FEET TO AN IRON
ROD; THENCE SOUTH 0°05’00” WEST
10.00 FEET TO AN IRON ROD AND SOUTH
89°55’00” EAST 101.55 FEET TO AN IRON
ROD; THENCE SOUTH 19°11’40” EAST
233.06 FEET TO AN IRON ROD; THENCE
NORTH 89°55’00” WEST 388.00 FEET TO
AN IRON ROD; THENCE NORTH 0°10’00”
WEST 230.00 FEET TO THE TRUE POINT OF
BEGINNING. EXCEPTING THEREFROM
THE WESTERLY 95.0 FEET THEREOF.
ALSO EXCEPTING THEREFROM THE
FOLLOWING: COMMENCING AT THE
NORTHWEST CORNER OF SECTION 22,
TOWNSHIP 39 SOUTH, RANGE 8 WEST,
OF THE WILLAMETTE MERIDIAN,
JOSEPHINE COUNTY, OREGON; THENCE
SOUTH 0°10’00” EAST 30.00 FEET ALONG
THE WEST LINE OF SAID SECTION TO
AN IRON ROD ON THE SOUTHERLY
RIGHT OF WAY LINE OF RIVER STREET;
THENCE ALONG SAID RIGHT OF WAY
LINE SOUTH 89°55’00” EAST 145.00 FEET
TO AN IRON ROD; THENCE CONTINUE
ALONG SAID RIGHT OF WAY LINE
SOUTH 89°55’00” EAST 210.50 FEET
TO AN IRON ROD; THENCE SOUTH
0°05’00” WEST 10.00 FEET TO AN IRON
ROD AND SOUTH 89°55’00” EAST 101.55
FEET TO AN IRON ROD FOR THE TRUE
POINT OF BEGINNING; THENCE SOUTH
19°11’40” EAST 233.06 FEET TO AN IRON
ROD; THENCE NORTH 89°55’00” WEST
76.15 FEET, MORE OR LESS, TO A POINT
SOUTH 0°10’00” WEST FROM THE TRUE
POINT OF BEGINNING; THENCE NORTH
0°10’00” EAST 220.0 FEET, MORE OR LESS,
TO THE TRUE POINT OF BEGINNING.), to
accomplish the immediate abatement of the
nuisance conditions and zoning violations on
Defendant’s property. Pursuant to 105.430.
2. For a judgment and order requiring
Defendants JUDITH ANNE RICHARDSON,
LORI ANN TAYLOR, KELLY SMITH,
JOSEPH ERICKSON, KARON BLAIR,
DONEVIN MALONEY, RICHARD SCOTT
MOORE, AND ALL OTHER PERSONS
OCCUPYING SAID PROPERTY, RESIDING
AT 425 E. RIVER STREET to reimburse
Plaintiff for the reasonable and necessary
costs incurred by Plaintiff in performing the
abatement on Defendant’s property pursuant to
ORS 105.440.
3. For a judgment and order requiring
Defendants, JUDITH ANNE RICHARDSON,
ANY UNKNOWN HEIRS OF AVERY CLYDE
TEMPLE, III, OR PERSONS WHO HAVE OR
CLAIM ANY RIGHT, ESTATE, LIEN, OR
INTEREST IN 425 E. RIVER STREET, CAVE
JUNCTION, OREGON, LORI ANN TAYLOR,
KELLY SMITH, JOSEPH ERICKSON,
KARON BLAIR, DONEVIN MALONEY,
RICHARD SCOTT MOORE, AND THE
UNKNOWN OCCUPANTS OF 425 E. RIVER
STREET, CAVE JUNCTION, OREGON to
pay Plaintiff a reasonable administrative fee for
the abatement, or 15% of the total costs of the
abatement pursuant to ORS 105.435(3).
4. Plaintiff’s claim of lien is superior
and prior to the lien claims of RAY KLEIN,
INC. AN OREGON CORPORATION DBA
PROFESSIONAL CREDIT SERVICE and
THE STATE OF OREGON pursuant to ORS
105.445(4).
5. For Plaintiff’s costs and disbursements
incurred in filing this action.
6. For any other relief the Court deems
just and equitable.
(3) The date of first publication is Feb. 28,
2018
PATRICK J. KELLY, OSB #792882
Attorney for Petitioner
717 Northwest 5th St., Grants Pass, OR
97526
Telephone No. 541.474.1908
Fax No. 541.471.2488
Published in the Illinois Valley News Feb.
28, March 7, 14, and 21, 2018.