Officials with the Vancouver, Wash., development company who were considering the purchase of the former Twin City Foods property in downtown Lewiston have backed out, dealing a blow to the city’s hopes for a huge push forward in its efforts to redevelop the historic district.

Lewiston Community Development Director Laura Von Tersch revealed the news at Tuesday’s Urban Renewal Agency meeting. She didn’t identify the development company since its name has been confidential since it first began exploring the 11.5-acre property about eight months ago, but Phil Wuest, chief development officer at the Ginn Group, confirmed his company was the prospective buyer.

Wuest said there were a lot of things Ginn liked about Lewiston, but the sheer amount of predevelopment work that needed to be done to the site ultimately led the company to look elsewhere.

“It’s a pretty big bite for a private developer in a market that is unproven,” he said.

All the site’s infrastructure needs to be redone, including electrical, water and sewer, he said. The entire parcel also needs to be replated into city blocks and streets.

“To get that done is quite a big investment, and it has to be done before you get the first building on the ground and get an opportunity for a return on your investment,” Wuest said.

Von Tersch said Ginn officials estimated it would take a total of about $8.5 million to improve the “horizontal infrastructure” like roads, power, water and sewer lines. But the work doesn’t have to be done all at once, and a future owner could tackle it in phases as projects are built in various locations on the relatively large site.

City of Lewiston officials have also held past discussions about buying the parcel and making improvements in advance so the property would be more attractive to development. But Von Tersch declined to say Tuesday whether that option is now back on the table. The most recently disclosed list price for the property was $2.5 million in November 2019.

Public Works Director Dustin Johnson said the city is in the middle of a downtown water study that will create a plan to use American Rescue Plan Act funds to replace aging water lines, including to the Twin City Foods site. That and other improvements can only serve to make it more attractive, he said.

“So every year the expectation is that the site becomes a little more appealing for development as we get more water, more sewer and more of the literal weeds cleaned up,” he said. “We’re excited about that.”

Von Tersch said geotechnical analysis of the soils at the site also revealed that they wouldn’t support the multistory, mixed-use buildings Ginn planned to build. Many of the structures would have had multifamily housing in the upper floors with ground-floor retail spaces. She also pointed to Ginn’s market study, which showed favorable conditions for both commercial and residential development.

“But the depth of that market isn’t really known,” she said. “So they could take that same level of investment — which they figured was $150 million to $200 million — into Vancouver or Bellevue or Portland and know that they could get their return on investment, where here it might take longer.”

Another obstacle to development is the site’s status as a brownfield for the arsenic contamination of some of the soils. That could be fixed by hauling soil to a landfill, but that presents another expensive predevelopment task for a potential buyer.

URA officials recently created a new revenue allocation area in the downtown district that is now accumulating property taxes generated by new growth, and that funding could eventually be used to tackle some of the issues, such as cleaning up the soil. URA board member and city Administrative Services Director Dan Marsh also suggested using agency funds to clean up some of the blight in the vicinity, including old warehouses and unused railroad tracks. He noted the agency recently doubled its allocation to tackle blight to $400,000.

One silver lining is that Ginn offered to share its predevelopment work with the city to help it prepare for future opportunities.

“They spent more than $115,000 on geotech, preliminary design and clearing the title,” she said. “So we’re that much further along.”

Wuest complimented city staff for being supportive and working closely with Ginn throughout the process. The company suggested that if the city bought the site and did some improvements to at least a portion of the property, a developer with a smaller proposal might come along and bite at the opportunity to develop one or two blocks, rather than the whole parcel. That way, they could test Lewiston’s market incrementally, rather than putting all its eggs in one untested basket.

“We liked the site,” Wuest said, adding that downtown seems poised for growth, especially in the area of multifamily housing. “I was personally sorry to reach the conclusion that it wasn’t something we would move forward with.”

Mills may be contacted at jmills@lmtribune.com.