The company ordered to pay $100,000 for tearing down the historic crane shed in Bend’s Old Mill District under cover of darkness two years ago lost a court appeal Wednesday.

Crown Investment LLC had appealed a Deschutes County judge’s 2004 contempt ruling handed down after it demolished the building. On Wednesday, the Oregon Court of Appeals upheld the judge’s decision.

The appeals court agreed that Crown was in contempt of court. After failing to win a demolition permit from the Deschutes County Historic Landmarks Commission, the company had filed a lawsuit asking a judge to order the city to issue one.

But before the case was decided, Crown hired a demolition crew that took the building down after darkness fell.

”At the least, Crown’s deliberate decision to execute an action, the legality of which was still pending in court, was an obstruction of the court’s authority and process,” Oregon Court of Appeals Judge David Schuman wrote. ”Crown committed a flagrant contempt. In doing so, it injured the city.”

Crown representatives did not return phone calls Thursday and Peter Livingston, a Portland attorney who argued the appeal, declined to comment on the decision.

The ruling was welcome news to Bend City Attorney Jim Forbes, but he said the sanction doesn’t come close to making up the loss the city suffered.

At an earlier court hearing, witnesses testified that the timber used to build the shed had a resale value of more than $500,000, Forbes said.

”Some of the most important testimony was that the timbers that made up this shed simply aren’t available anymore,” he said. ”Some were 24 by 48 inches in girth and 40 feet in length. That kind of timber can only be made by old growth ponderosa, and we don’t have anything like that anymore.”

Lawyers for Crown argued on appeal that the city suffered no damage when the building was destroyed because a demolition permit would inevitably have been issued.

The court rejected that argument, noting that the permit could have been denied or issued with conditions – such as preservation of parts of the building – attached.

The crane shed was built in 1937 by the Brooks-Scanlon Mill for drying logs. It was named for a 70-foot-tall traveling crane used to stack 30 million board feet of lumber inside.

The 500-foot-long shed sat on the south side of Industrial Way for 67 years and was listed as one of Deschutes County’s historical landmarks.

Crown Investment bought the 4.3-acre site south of downtown that was home to the crane shed for $2.75 million in October 2003. In December, the company announced plans to take it down and replace it with a replica that would house retail, office space, condominiums and underground parking.

Under Bend’s Historic Preservation Code, demolition of such a site must be approved by the Deschutes Historic Landmarks Commission.

Crown sought approval but was denied, then filed suit against the city of Bend to force issuance of a permit.

Crown razed the crane shed after dark on Aug. 19, 2004, just a day after city councilors voted to settle the lawsuit. Crown officials said they believed the building permit was a ”formality.”

Councilors said at the time they intended to issue Crown a permit for the demolition with several conditions. Those conditions included offering the public and local historic preservationists the opportunity to photograph and otherwise document the building for the city’s historic records.

The local landmarks commission also sought an opportunity to identify specific parts of the building for preservation.

Bend attorney Martin Hansen sat on the commission when Crown sought approval to demolish the shed.

”When the Crown people came before our commission they recognized the wood was valuable and offered to donate it in exchange for a tax write-off,” Hansen said. ”By flattening the building the way they did they destroyed tens of thousands of dollars in wood they could have sold. Letting that go is just crazy.”

He said that testimony contradicts Crown’s assertion that the city suffered no damage when the shed was torn down.

”That argument fell about as flat as the building did,” Hansen said.

After the shed was destroyed, state environmental regulators reported that Crown failed to remove asbestos before demolishing the building.

Officials from the Oregon Department of Environmental Quality said open accumulation of asbestos on the site likely led to air contamination.

The DEQ issued a $64,523 fine against Crown. It levied a $7,200 penalty against the contractor, SMAF Construction of Prineville, for razing the shed without a license.

Crown appealed the fine and lost. An administrative law judge who heard the case upheld the DEQ fine but reduced it to $24,000.

Bend-based Trono Group LLC bought the property for $5.1 million from Crown in March 2005, $2.35 million more than Crown paid for the property less than two years earlier.

Trono is proposing a development with shops, offices and condominiums oriented toward the Deschutes River and pushed back from Industrial Way.

Crown could appeal the ruling to the Oregon Supreme Court. But at some point, there may be a crane shed memorial site nearby.

Under the terms of the lower court order, the $100,000 must be paid to the city of Bend to be used ”to mitigate the loss of the crane shed and memorialize it as a historic site.”

”It’s certainly enough to build a memorial but it won’t replace the timber,” Forbes said.