Through The Mill

[August 16th, 2006] Whether or not a defunct co-op plywood mill in Northwest Portland becomes new hot condo space, the biggest gains from the property's sale will be limited to a handful of former workers.

You may have read elsewhere that the Linnton Neighborhood Association wants to rezone the vacant mill for condos and commercial space. Industrial groups counter that the city shouldn't give up prime industrial property. A final zoning showdown comes before City Council on Aug. 24. But what you haven't read is that most of the 190 workers who ran the mill as a co-op from the 1950s until 2001 will not see the retirement payouts they were counting on, regardless of what happens.

Most hung on to their shares in the co-op awaiting a payout from the mill's sale. Since rezoning the waterfront site to mixed-use would raise the land's selling price to as much as twice its $6 million estimated value, these shareholders and Linnton residents have enthusiastically supported rezoning at previous council hearings, based on the belief that all shareholders would benefit from a more lucrative sale.

At the July 19 council meeting, for example, Linnton resident Edward Jones said that a failure to rezone would provide "a windfall to whichever speculator later stiffed the mill workers and purchased the property at the artificially reduced industrial zone price."

Yet some of the newer mill shareholders changed the co-op bylaws four years ago to divert the biggest share of the sale to themselves, according to shareholder representative Doug Weiss and Ed Trompke, a lawyer who represents Weiss and other shareholders. Both say workers who retired before 1991 will get only a fraction of their original co-op shares' value, plus cash previously withheld from their paychecks to cover mill operations. The rest will go to workers who retired after 1991.

Calculations based on this information and the mill's 2002 independent audit report show about 140 workers who retired before 1991 would get an average estimated payout of $18,000. The average payout for the 50 remaining shareholders, depending on the mill's final sale price, would be $70,000 to $190,000.

The mill's top officials and its attorney declined to speak about the bylaw changes or return WW's calls. But a March 2004 letter from mill attorney Bill Hutchison to Trompke states that once older shareholders are paid what they've been owed, all gains from the property's sale would go to those "who worked during the last ten years ended on March 31, 2001."

"It's simple greed," says Randall Kurkinen, who started working at the mill alongside his father and brother after graduating from Lincoln High School in 1972. Shares cost $40,000 then, which Kurkinen managed through monthly payments of $250 until 1988. "My dad told me, 'You're not just buying a job, you're buying the land and everything else. If it folds, you're getting a chunk of change back.'"

But the co-op still owes pre-'91 shareholders such as the 52-year-old Kurkinen money it withheld to cover operation expenses, according to former mill accountant Paul Fellner. A group of 67 such ex-workers sued the mill in 2000 in an attempt to collect that money. The eventual settlement in Multnomah County Circuit Court said the mill had to begin repaying the older workers, or liquidate the property and settle all debts.

The mill closed the following year. Now five years later, ex-workers like 81-year-old Al Koehmstedt are still waiting for that money.

"We spent a lot on keeping that mill up," says Koehmstedt, who worked at the mill for 30 years before retiring in 1990. "I expect something."